occurrences
On March 26, 2024, the company released its 2023 annual report. The company's revenue was 507.843 billion yuan, up 6.92% year on year, and net profit to mother was 30.446 billion yuan, up 10.34% year on year. On April 23, 2024, the company released its 2024 quarterly report, achieving operating income of 134.495 billion yuan, up 3.70% year on year, including main business of 124.347 billion yuan, up 5.00% year on year, net profit to mother of 8.597 billion yuan, up 7.70% year on year, net profit without return to mother of 9.160 billion yuan, up 5.40% year on year.
reviews
1. The company's traditional business is growing steadily, and the digitalization of the industry is developing rapidly. In 2023, the company's mobile communication service revenue reached 195.7 billion yuan, up 2.40% year on year. Among them, mobile value-added and application revenue reached 25.8 billion yuan, up 12.40% year on year, the net number of mobile users increased 16.59 million, the number of users reached 408 million, and the mobile user ARPU reached 45.40 yuan, up 0.40% year on year. In 2023, the company's fixed network and smart home service revenue reached 123.1 billion yuan, up 3.80% year on year, smart home business revenue reached 19 billion yuan, up 12.80% year on year, the net number of broadband users increased by 9.26 million to 190 million households, and the comprehensive broadband ARPU reached 47.60 yuan, up 2.80% year on year. The company's production volume business maintained rapid development, with revenue reaching 138.9 billion yuan, up 17.90% year on year, accounting for 29.90% of service revenue, up 2.8pp year on year.
2. Capital expenditure has slowed in 24, computing power investments have been actively deployed, and dividend payout rates have continued to grow.
In 2023, the company completed capital expenditure of 98.8 billion yuan, of which 34.8 billion yuan was invested in mobile networks and 35.5 billion yuan in industrial digitization. The company expects capital expenditure of 96 billion yuan in 2024, and the digitalization of new businesses and industries will become the focus of investment. The estimated share of this business expenditure in capital expenditure will increase 2.5pp to 38.5% year-on-year from 36.0% in 2023. Among them, the cloud-/computing power investment is expected to invest 18 billion yuan, and the intelligent calculation scale reaches 11EFLOPS. Starting in 2024, the company's profits distributed in cash within three years gradually increased to more than 75% of the profits that shareholders should have accounted for in that year.
3. The company's operations were steady, moderate and positive in the first quarter of this year. 24Q1's mobile communication service revenue was 52,226 billion yuan, up 3.20% year on year, and mobile user ARPU was 45.80 yuan, up 0.90% year on year. The company's fixed network and smart home service revenue was 31,824 billion yuan, up 2.20% year on year, broadband comprehensive ARPU reached 48.60 yuan, up 2.10% year on year, and industrial digital business revenue was 38.679 billion yuan, up 10.60% year on year.
4. We expect the company's net profit to be 328.96, 358.71, and 39.85 billion yuan respectively, up 8.05%, 9.04%, and 8.96% year-on-year. Corresponding to the current stock price PE, it is 17, 15, and 14 times, respectively, covered for the first time, and gives it a “buy” rating.
Risk warning:
The company's revenue growth rate falls short of expectations; capital expenditure is once again increasing the risk; there is a risk that the digital revenue growth rate of the industry will decline.