Incident: The company released its 24-year semi-annual report, and 24H1 achieved revenue of 197.3 billion yuan (YoY +2.87%), including main business revenue of 175.7 billion yuan (YoY +2.7%), net profit of 13.75 billion yuan (YoY +10.39%), and net profit to mother of 6 billion yuan (YoY +10.93%), achieving double-digit growth for eight consecutive years.

Looking at a single quarter, 24Q2 achieved revenue of 97.8 billion yuan (YoY +3.42%), net profit of 8.184 billion yuan (YoY +12.44%), and net profit of 3.6 billion yuan (YoY +13.04%).

Deeply promote integration and improve quality development. The 24H1 network communication business grew steadily, with revenue reaching 125.1 billion yuan (+2.1% year over year). Among them, there was a net increase of 6.09 million mobile users to 0.339 billion, the penetration rate of 5G package users reached about 81%, and a net increase of 3.52 million fixed-line broadband users reached 0.117 billion. The value of integration increased significantly. The net number of integrated users increased by 1.82 million to over 80 million, and the ARPU value of integrated users was outstanding, reaching 103 yuan (90 yuan + in the same period last year).

Continue to contribute to core growth momentum, and expand the scale of computing power to build a solid foundation. Networked digital intelligence business was 43.5 billion yuan (+6.6% YoY). Unicom Cloud revenue was 31.7 billion yuan (YoY +24.3%); data center revenue was 13.1 billion yuan (YoY +5%); data service revenue was 3.2 billion yuan (+8.6% YoY), digital intelligence applications 3.7 billion yuan (YoY +13.5%); Netcom Security 1.4 billion yuan (YoY +58.2%). The network's intelligent computing power reached 10EFLOPS, and the total computing power grew rapidly, building Wanka intelligent computing centers in Shanghai and Hohhot. Accelerate innovation in intelligent technology, enhance the intelligent Yuanjing Big Model and continue to advance the evolution of the parameter level from 100 billion to trillion, and more than 35 major industry models have been formed.

International business is moving towards more space. 24H1's international business revenue was 6 billion yuan (+8.4% year over year), overseas roaming and overseas mobile phone business revenue achieved a high growth rate, and the Internet of Things achieved a breakthrough in overseas connectivity capabilities, with revenue +93.4% year-on-year. In June, according to a report by People's Post and Telegraph, the company mentioned continuing to strengthen international digital infrastructure construction at an international partner conference; in July, the company received approval permits from the Qingdao and Haikou International Bureaus issued by the Ministry of Industry and Information Technology, and international business accelerated.

Effective control of investment. 24H1's capital expenditure reached 23.9 billion yuan (-13.4% year over year) and is expected to remain within 65 billion yuan for the whole year. The sales, management, R&D, and financial expense ratios were 8.99% (-0.04pct), 5.61% (y-1.35pct), 1.52% (+0.25pct), and -0.01% (y-o-0.08pct), respectively.

Profit forecasting and investment advice. The company expects to achieve steady annual revenue growth and double-digit growth in total profit. It plans to pay an interim dividend of RMB 0.0959 per share (+20.5% year over year), and the red chip dividend ratio will reach 55%. Currently, the corresponding 24E dividend ratio for H shares/A shares is 6.5%/3.5%. We expect the company's revenue for 24-26 to be 389.045 billion yuan, 404.696 billion yuan, and 419.39 billion yuan, respectively, and net profit to mother of 9.092 billion yuan, 10.023 billion yuan, and 10.989 billion yuan, respectively. Referring to PB, the mainstream telecom operator in the world, the 2024 PB range was given 1.4-1.6 times, corresponding to a reasonable value range of 7.20 yuan to 8.23 yuan, and a “superior to the market” rating.

Risk warning. The progress of DICT's business fell short of expectations; the marginal improvement in the mobile business fell short of expectations.