Seize digital opportunities and grow revenue steadily

In the first three quarters of 2024, the company achieved revenue of 391.968 billion yuan, up 2.85% year on year, of which the third quarter achieved revenue of 125.995 billion yuan, an increase of 2.92% year on year. The main reason is that the company seizes strategic opportunities for the rapid development of the digital economy, increases investment in key fields such as scientific and technological innovation and industrial digitalization, strengthens intelligent operations to reduce costs and increase efficiency, and continuously improves resource efficiency.

The two-wheel drive of the basic and production data business injected vitality into the company's performance 1) In terms of mobile communications, the company's products were rapidly integrated with new combat elements such as cloud, AI, quantum, and satellite, with a net increase of 14.9 million mobile users, reaching 0.423 billion, 5G package users reaching 0.345 billion, with a penetration rate of 81.6%, and the ARPU 1 for mobile users, which remained stable; 2) In terms of fixed networks and smart home services, wired broadband users reached 0.196 in the first three quarters of 2024 For billion households, smart household income increased 17.0% year-on-year, and the comprehensive broadband ARPU2 was 47.8 yuan, and the value contribution of smart homes continued to increase; 3) In terms of industrial digitalization, “network+cloud+AI+ application” was used to meet the digital needs of thousands of industries. In the first three quarters of 2024, the company's industrial digitization business revenue reached 105.549 billion yuan, an increase of 5.8% over the previous year.

Continue to increase R&D and innovation, with remarkable results in cost reduction and efficiency

The company continues to increase its R&D efforts. R&D expenses for the first three quarters of 2024 were 8.75 billion yuan, an increase of 19.3% over the previous year. It mainly focused on strategic emerging industries and future industries, continued to increase scientific and technological innovation efforts, strengthen key core technology research, and enhance core capabilities. In addition, the company strengthened intelligent operation to reduce costs and increase efficiency, and continued to improve resource efficiency. Among them, sales expenses were 39.435 billion yuan, down 3.2% year on year; management expenses were 26.884 billion yuan, down 0.6% year on year; and financial expenses were RMB 0.518 billion, 12.2% year over year, mainly due to a decrease in interest expenses on leasing liabilities.

Profit forecast

It is predicted that the company's revenue for 2024-2026 will be 530.746, 556.169, 582.921 billion yuan, and EPS will be 0.36, 0.39, and 0.41 yuan respectively. The current stock price corresponds to PE 19, 17, and 16 times, respectively. With the wave of data transformation, the production volume business will develop in depth, and the company will benefit from continuous increase in revenue and profit, coverage for the first time, and a “buy” investment rating.

Risk Alerts

Macroeconomic risks, risk of product development falling short of expectations, risk of increased industry competition, risk of downstream demand falling short of expectations.