\u3000\u30006 Zhongrun Resources Investment Corporation(000506) 00050)
Report guide
The whole business has developed with high quality, and the revenue growth rate has reached a new high in recent years; Effective control of costs and expenses and gradual realization of investment results; Moderately increase investment to promote development, be optimistic about the future, 5g and innovative business will continue to drive growth, and maintain the “buy” rating.
Key investment points
The performance in 2021 is in line with expectations
In 2021, the company’s main business income was 296.15 billion yuan, with a year-on-year increase of 7.4%, an increase of 3.1pct compared with the year-on-year growth rate of 4.3% in 2020, reaching an 8-year high; The net profit attributable to the parent company was 6.31 billion yuan, a year-on-year increase of 14.2%, an increase of 3.4pct compared with the year-on-year increase of 10.8% in 2020; EBITDA was 96.1 billion yuan, a year-on-year increase of 2.3%; Free cash flow was 43.01 billion yuan, an increase of 8.4% year-on-year. The performance is in line with expectations.
Achieve high-quality development in the whole business
1) industrial Internet maintained a high growth: in 2021, the revenue was 54.8 billion yuan, a year-on-year increase of 28%, accounting for 18.5% of the main revenue, an increase of 3PCT over the previous year, and a contribution to the growth of main revenue of 59%. Among them, the revenue of China Unicom cloud, Internet of things and big data was 16.3 billion yuan, 6.0 billion yuan and 2.6 billion yuan respectively, with a year-on-year increase of 46.3%, 43% and 48.7%. In terms of IT services, it has implemented more than 8000 industrial application projects with self-research as the core, driving the industrial application revenue of 6 billion yuan.
2) 5g drives the growth of mobile business: the revenue in 2021 increased by 4.8% year-on-year, 4.6pct higher than 0.2% in 2020. In 2021, the number of users increased by 11.3 million, reversing the downward trend of last year; 5g package user penetration reached 49%, with a year-on-year increase of 26pct, effectively driving ARPU to increase by 4.3% to 43.9 yuan year-on-year.
3) the growth rate of fixed line broadband reached a new high: in 2021, the revenue increased by 5.2% year-on-year, and the growth rate reached a new high in recent years. The net number of broadband users increased by 8.95 million, and the integration penetration rate reached 72%, an increase of 7pct year-on-year.
Effective control of costs and expenses, moderately increase investment and promote development
The net interest rate in 2021 was 4.4%, 0.3pct higher than that in 2020.
The cost structure was further optimized: the depreciation and amortization rate decreased by 1.2pct; Labor costs and sales expenses increased by 5.7% and 5.7% year-on-year, accounting for 0.4pct and 0.2pct of revenue; With the further putting into use of 5g network, the network transportation cost increased by 14.7% and the proportion in revenue increased by 1.0pct; Moderately increase investment to promote the development of innovative business, and other operating costs and administrative expenses increased structurally, accounting for 1.2pct of revenue.
The investment results are gradually reflected. In 2021, the investment income of associated enterprises and joint ventures was 3.94 billion yuan, a year-on-year increase of 39%, and the net profit of Zhaolian consumer finance in 2021 was 3.06 billion yuan, a year-on-year increase of 84%.
In 2021, the capital expenditure was 69 billion yuan, of which the capital expenditure of mobile network was 33.9 billion yuan, accounting for 49%. By the end of 2021, the capacity of 5g base stations had reached 690000 stations. Continue to deepen co construction and sharing, share 660000 base stations with China Telecom Corporation Limited(601728) 4G, and promote cooperation and sharing in cloud network integration fields such as scientific and technological innovation and IDC.
According to the company’s performance press conference, the growth of the company’s capital expenditure in 2022 is expected to keep pace with the growth of revenue; 5g capital expenditure is expected to maintain the level in 2021; Under the guidance of the action plan for the construction of new digital information infrastructure, accelerate the construction of “four high-quality networks” and moderately advance the core competitiveness of innovative products; The increased investment in transmission network and infrastructure mainly meets the capacity layout of data center, and moderately increases the investment in East digital and West computing network; The increased investment in broadband and data is mainly used to speed up the deployment of broadband gigabit network and the construction of government enterprise boutique network.
Pay attention to shareholder returns, and the dividend per share increased by 31% year-on-year
The board of directors proposed to pay an annual final dividend of RMB 0.0391 per share (tax included), together with the paid interim dividend of RMB 0.0488 per share (tax included), the total annual dividend was RMB 0.0879 per share (tax included), an increase of 31.4% year-on-year.
Profit forecast and valuation
At present, the company is in the period of strategic transformation. Focusing on the construction of “network power, digital China and smart society”, the company strives to sail the main channel of digital economy, set sail for the new future of digital economy, the continuous pull of 5g and innovative business in the future, and the expectation of revenue growth of the company continues to be optimistic; Superimposed with high-quality development, precise investment and continuous cost structure optimization, we are optimistic about the continuous improvement of the company’s profitability in the future.
It is estimated that the revenue of the company will grow by 7.58%, 6.91% and 6.48% in 202224, and the net profit attributable to the parent company will grow by 13.96%, 10.57% and 10.52%, maintaining the “buy” rating.
Risk warning: the development of innovative business is not as expected; The increase of cost is higher than expected; The ARPU trend of mobile users is lower than expected.
