\u3000\u3000 China Telecom Corporation Limited(601728) (601728)
Key investment points:
“Cloud to digital transformation”, the pioneer of digital industry transformation
The company is a leading large-scale comprehensive intelligent information service operator. The company actively embraces the opportunities of digital transformation, deeply cultivates customer needs and application scenarios, fully implements the “cloud to digital transformation” strategy, takes 5g and cloud as the core, creates a new information infrastructure, operation support system and scientific and technological innovation hard core strength of cloud network integration, deepens the reform of system and mechanism, constructs differentiated advantages with innovation and integration, and is committed to serving individuals (to c) Family (to h) and government enterprise (to B / g) customers provide flexible and diverse, integrated and convenient, quality experience, safe and reliable comprehensive intelligent information services.
Industry policy driven industry inflection point confirmation, data economy opens up new growth space
In the reform of state-owned enterprises, the assessment index of “two fees and four rates” was determined, the state defined the requirements for high-quality development, driven the improvement of the competition pattern of the industry, and the ARPU value of mobile communication and home broadband hit the bottom and rebounded. The development goals of gigabit network, IDC computing power and industrial digitization set in the “14th five year plan” for the development of information and communication industry provide growth space for traditional and emerging businesses in the operator industry. While confirming the inflection point of the operator industry, it is expected to enter a new round of growth cycle.
Build and share, improve the quality of 5g network, and cloud resources help the growth of emerging industries
Benefiting from the co construction and sharing policy, while the company saves investment, 5g network coverage is expected to align with the leading operators and help the growth of mobile communication business. High quality backbone networks and IDC resources constitute the company’s cloud resource advantages. Tianyi cloud maintains the first public cloud in China’s operator industry. The advantage of cloud network resources makes the company have better growth in the field of industrial digitization. In 2021, the company’s IDC, industry cloud and Internet of things business revenue continued to maintain industry leadership and maintained rapid growth.
Earnings forecast, valuation and rating
It is estimated that the company’s revenue from 2021 to 2023 will be 4378 / 4751 / 520.6 billion yuan respectively, the net profit attributable to the parent company will be 255 / 284 / 32.7 billion yuan respectively, the EPS will be 0.28/0.31/0.36 yuan / share respectively, and the corresponding PE will be 15 / 14 / 12 times respectively. Considering that the net profit attributable to the parent company in the first three quarters of 2021 increased by 17.3% year-on-year, 10.24 percentage points higher than that of the leading operator. In 2020, the scale of industrial digital business is 58% higher than that of China Mobile and 57% higher than that of China Unicom. With reference to the company’s PE in 2012 and 2020, 20 times of the target PE in 2022 is given, corresponding to the share price of 6.2 yuan. For the first time, give a “buy” rating.
Risk tips
Industry policy risk, increased market competition risk, 5g industry development less than expected risk
