Key investment points
Event: on March 7, 2022, China Telecom Corporation Limited(601728) announced that since September 22, 2021, China Telecom Corporation Limited(601728) group has increased its holdings of China Telecom Corporation Limited(601728) shares by 466948944 A shares through the Shanghai stock exchange system, accounting for 0.51% of the total issued shares of China Telecom Corporation Limited(601728) shares; As of the implementation of this shareholding increase, China Telecom Corporation Limited(601728) group holds 63.21% of the total issued shares of China Telecom Corporation Limited(601728) shares.
The repurchase and shareholding increase plans of the three operators continued to advance, demonstrating full business confidence: on January 27, 2022, China Mobile Group directly held 26208210 A-share shares of the company and indirectly held 14890116842 Hong Kong shares of the company through China Mobile Hong Kong (BVI) Co., Ltd., accounting for about 69.96% of the total issued shares of the company. As of February 18, the number of shares repurchased by China Mobile has reached 3.63 million, involving an amount of 199 million yuan. As of February 28, 2022, China United Network Communications Limited(600050) ( China United Network Communications Limited(600050) . SH) has repurchased 513314385 shares through centralized bidding, and the proportion of repurchased shares in the total share capital of the company is about 1.66%. As of March 7, 2022, China Telecom Corporation Limited(601728) group holds 63.21% of the total issued shares of China Telecom Corporation Limited(601728) shares. The three major operator groups continue to deploy share repurchase and shareholding increase plans, fully demonstrating the firm confidence and high recognition of the operators on the group’s future development prospects and medium and long-term investment recognition. The three operators will vigorously promote the expansion of business boundaries and constantly boost investor confidence.
The “Eastern digital computing and Western computing” project has been fully launched, benefiting both supply and demand of operators: from the supply side, the “Eastern digital computing and Western computing” will accelerate cloud network collaboration and reduce the construction cost of data center by relying on the advantages of low land, network and power costs and abundant energy consumption indicators in the western region. According to the announcements of the three major operators, by the end of 2020, China Telecom Corporation Limited(601728) idc has more than 420000 racks, 80% of which are deployed in four economically developed regions. About 22000, 28000 and 36000 new racks will be added from April to December 2021 and 2022 to 2023 respectively. The number of available racks of China Mobile at the end of 2020 and in 2021 is 260000 and 372000 respectively. As the main force of IDC construction, operators will continue to increase investment in data centers, and “counting from the east to the west” will drive operators and supporting industry players to continue to benefit. From the demand side, the state-owned asset cloud dominated by operators will accelerate its development. By the middle of 2021, Tianyi cloud’s revenue had reached 14 billion yuan and mobile cloud’s revenue had reached 9.721 billion yuan, with an increase of more than 100%. We believe that the digital transformation will continue to deepen, and the business development of operators dominated by mobile cloud and Tianyi cloud and state-owned cloud of central enterprises will be further accelerated with the promotion of the policy of “counting from the east to the west”.
The C-end and b-end help the business fundamentals to gradually improve and continuously increase the dividend proportion: at present, the pressure of increasing speed and reducing fees is gradually released. With the gradual increase of 5g penetration, the operator ARPU is gradually improved and the C-end business is gradually stabilized and upward; Secondly, operators continue to make efforts to innovate the b-end business, among which the cloud business has a rapid momentum. We believe that with the gradual improvement of C-end business, the proportion of b-end business has gradually increased, and the fundamentals have gradually improved; In terms of dividend ratio, China Telecom Corporation Limited(601728) announced that the dividend payout rate in 2021 will not be less than 60%, and the A-share issuance will be adjusted to more than 70% within three years China United Network Communications Limited(600050) in the 2021 interim report, it is indicated that China Unicom red chip company plans to increase the profit distribution rate for the whole year of 2021. We believe that the current operating business has improved performance, underestimated value and high dividends, and continues to focus on recommendation.
Recommended stocks: operators: China Telecom Corporation Limited(601728) (A / h), China Mobile (A / h), China United Network Communications Limited(600050) (A / h);
Risk warning: the start-up rhythm of “counting from the east to the west” project is not as expected; The development of state-owned assets cloud is less than expected.
