China Telecom Corporation Limited(601728) (601728)
Event: on December 6, 2021, tianyiai music culture technology, a wholly-owned holding subsidiary of China Telecom Corporation Limited(601728) , released the announcement on comparison and selection of meta universe virtual human customization and content production projects in 2021, and specially invited potential candidates with intention and ability to provide subject matter to participate in the election. According to the announcement, the procurement content is "meta universe digital human production", including digital human image modeling, digital human image modeling, graphic production, video short play production, video CG short film production and KOL cooperation promotion.
Yuancosmos has increased users' willingness to pay for traffic, and the company's ARPU value is expected to continue to increase By October 2021, China Telecom Corporation Limited(601728) 5g users had reached 160 million, and the penetration rate had reached 42.1%, 17.5pct higher than that in 2020. The significant increase in the number of 5g users and penetration rate led to the continuous month on month increase in the company's mobile ARPU value, with a year-on-year increase of + 2.9%. Entering the meta universe era, users are willing to pay for incremental traffic for better immersive interactive experience, and the company's ARPU value is expected to continue to increase.
Layout to become a new infrastructure builder of the meta universe: on November 12 this year, New Guomai Digital Culture Co.Ltd(600640) under China Telecom Corporation Limited(601728) announced the launch of the "Pangu plan" in 2022 at the China Telecom Corporation Limited(601728) 5g innovation and application Cooperation Forum. The plan is positioned as a new infrastructure builder of the meta universe, based on innovative application achievements, and layout the XR ecological chain to meet the arrival of the meta universe era. Relying on the China Telecom Corporation Limited(601728) cloud to digital transformation strategy, the New Guomai Digital Culture Co.Ltd(600640) meta universe layout will increase 5g business and terminal innovation around product R & D, content aggregation and application innovation, promote ecological cooperation such as Tianyi Ultra HD, cloud VR, cloud AR and cloud games, help the rapid implementation of meta universe scenes and meet the needs of beautiful digital culture. As an infrastructure builder, the company has entered the meta universe and expanded the content supply business of the meta universe, which is expected to open the b-end revenue ceiling, and the future performance growth can be expected.
Investment suggestion: we expect the company's operating revenue from 2021 to 2023 to be 435.5 billion yuan (+ 11.7%), 477.71 billion yuan (+ 9.7%) and 520.73 billion yuan (+ 9.0%) respectively; The net profit attributable to the parent company is expected to be 26.2 billion yuan (+ 25.6%), 30.61 billion yuan (+ 16.8%) and 33.51 billion yuan (+ 9.5%) respectively. Considering the company's history and comparable company valuation, we give the company 15 times PE in 2022, corresponding to the target price of RMB 5.70 in 2022, maintaining the "Buy-A" investment rating.
Risk tips: policy supervision risk, AR / VR / XR popularity is lower than expected, and the implementation of meta universe application is slower than expected
