分业务来看：1）移动业务：1-3Q24ARPU 仍然承压、DOU 恢复增长。截至3Q 末移动客户10.04 亿户，同比+1.4%，其中5G 网络客户5.39 亿户，5G 网络客户渗透率达到53.7%，1-3Q24 移动ARPU 49.5 元，同比-3.3%，下滑幅度较1H24 扩大；1-3Q 手机上网流量同比+2.1%，手机上网DOU 15.7GB 同比+0.6%，较1H24 有所改善。2）家庭业务：用户快速增长、ARPU 稳步提升。截至3Q 末有线宽带客户总数3.14 亿户，同比+6.4%，1-3Q 家庭综合ARPU 为43.2 元，同比+2.6%。3）DICT 良好增长、新兴业务快速增长。1-3Q24，DICT 业务收入保持良好增长；新兴业务中内容媒体收入、国际业务收入均保持快速增长。Performance review
1-3Q24's main business revenue is basically in line with market expectations, and net profit is in line with market expectations. The company announced 1-3Q24 results: operating income of 791.5 billion yuan, +2.0% year over year; main business revenue of 678 billion yuan, +2.0% year over year; net profit to mother of 110.9 billion yuan, +5.1% year over year. In 3Q24, operating income was 244.7 billion yuan, -0.1% year over year; main business revenue was 214.5 billion yuan, +1.0% year over year; net profit to mother was 30.7 billion yuan, +4.6% year over year. 3Q24's main business revenue was basically in line with market expectations, but the revenue was slightly lower than market expectations. It mainly came from 3Q's other business revenue (mainly selling mobile phone hardware) -7.0% year-on-year, but since the gross margin of this business was about 2%, the impact on profit was small, and 3Q24's net profit was in line with market expectations.
Development trends
By business: 1) Mobile business: 1-3Q24ARPU is still under pressure and DOU growth has resumed. As of the end of 3Q, 1.004 billion mobile customers were +1.4%, including 0.539 billion 5G network customers, the 5G network customer penetration rate reached 53.7%; 1-3Q24 mobile ARPU was 49.5 yuan, -3.3%, and the decline was greater than 1H24; 1-3Q mobile Internet traffic was +2.1% year over year, and mobile Internet DOU 15.7GB was +0.6% year over year, an improvement over 1H24. 2) Home business: Rapid user growth and steady increase in ARPU. By the end of 3Q, the total number of wired broadband customers was 0.314 billion, +6.4% year-on-year, and the comprehensive ARPU for 1-3Q households was 43.2 yuan, +2.6% year-on-year. 3) DICT is growing well and emerging businesses are growing rapidly. 1-3Q24, DICT business revenue has maintained good growth; content media revenue and international business revenue have maintained rapid growth in emerging businesses.
The decline in depreciation supports a steady increase in net profit margins. 1-3Q24, A-share gross margin was +2.1ppt to 30.8% year over year. We think it was mainly due to the year-on-year decline in depreciation due to depreciation period adjustments and the decline in hardware sales revenue with low gross profit in the third quarter. 1-3Q24 sales, management, and R&D expenses were +8.1%, +2.6%, and +34.4%, respectively, and the net profit margin was +0.4ppt to 14.0% year over year.
The decline in 1-3Q24 OCF has narrowed markedly, and the 3Q OCF recovery is increasing year-on-year; in terms of accounts receivable, the focus is on 4Q repayments. As of the end of 3Q, accounts receivable were 90.21 billion yuan, +26.5% year-on-year; 1-3Q24, credit impairment losses amounted to 18.07 billion yuan, accounting for 2.7% of main business revenue. Referring to the situation and business model of previous years, 4Q usually experienced a decline in accounts receivable and credit impairment loss reimbursement. 1-3Q24's OCF was -5.7% YoY, and the decline was significantly narrower than 1H24 (1H24 YoY -18.2%). We believe that the OCF improvement mainly stems from the good control of cash from purchasing goods and receiving labor payments. The 3Q24 indicator was -9.2% year-on-year. In 3Q24, the company's OCF was 92.7 billion yuan, +20.15% year-on-year.
Profit forecasting and valuation
The profit forecast for 24/25 remains largely unchanged. The current A share price corresponds to a price-earnings ratio of 16.5 times/15.7 times in 24/25. The current Hong Kong stock price corresponds to a price-earnings ratio of 10.3 times/9.5 times in 24/25. Based on the SOTP valuation, A shares maintained an outperforming industry rating and a target price of 110 yuan, corresponding to a price-earnings ratio of 17.0/16.2 times 24/25, with 3.5% upside compared to the current price. Hong Kong stocks maintained an outperforming industry rating and a target price of HK$85, corresponding to 11.9/11.0 times the 24/25 price-earnings ratio, with 16.0% upside compared to the current price.
risks
The decline in mobile ARPU exceeded expectations, and the extension of accounts receivable periods exceeded expectations.
