\u3000\u30006 Zhongrun Resources Investment Corporation(000506) 00050)
Event overview: on March 11, 2022, the company released its 2021 annual report, realizing an operating revenue of 327854 billion yuan, a year-on-year increase of 7.9%; The net profit attributable to the parent company was 6.305 billion yuan, a year-on-year increase of 14.2%; The net profit deducted from non parent company was RMB 6.452 billion, with a year-on-year increase of 18.4%.
The revenue and profit increased both, the basic business made progress while maintaining stability, and the innovative business grew rapidly
Double acceleration of revenue and profit: the company achieved a main business income of 296153 billion yuan in 21 years, with a year-on-year increase of 7.4%. The growth rate of main business hit an 8-year high, and the growth rate of deducting non net profit was 18.4%, far exceeding the growth rate of revenue.
Make progress while maintaining stability in basic services: the growth rate of mobile and broadband services has increased significantly, 5g user penetration is the industry leader, and the net increase of broadband users has reached a record high. In terms of mobile business, the main business income of mobile reached 164.1 billion yuan in 21 years, with a year-on-year increase of 4.8% (over the same period + 0.2%); The total number of mobile users and 5g users increased, including a net increase of 11.3 million mobile users (the same period – 12.66 million), highlighting the improvement of service capacity. The net increase of 5g package users was 155 million, and the penetration rate of 5g users increased to 48.9%, exceeding the industry average (44%), driving the ARPU of mobile billing users to increase by 4.3% to 43.9 yuan year-on-year. In terms of fixed line broadband services, the company’s broadband access revenue in 21 years was 44.8 billion yuan, with a year-on-year increase of 5.2% (the same period + 2.4%); The company is committed to differentiated competition. The coverage of Gigabit broadband in the North accounts for 92%, while accelerating the development of the southern market. The total number of fixed network broadband users reached 95.05 million, with a net increase of 8.95 million throughout the year, a record high; The penetration rate of converged services among fixed line broadband users reached 71.5%, with a year-on-year increase of 7.4pct. Industrial Internet business releases long-term momentum. In 21 years, the company’s industrial Internet revenue was 54.8 billion yuan, with a year-on-year increase of 28.2%, accounting for 18.5% of the main business revenue. In 21 years, the contribution of industrial Internet to the growth of main business revenue reached 59%, becoming the “first engine” of the company’s revenue growth. Seizing the new opportunities of “digital economy” and “digital computing from the east to the west”, the company is positioned as the national team of digital information infrastructure operation services, the main force in the construction of Digital China’s intelligent society as a network power, and the leader in digital technology integration and innovation. It has made great efforts to create “connection + perception + computing + intelligence” integrated computing and network services, and the R & D expenses have increased by 61.7% in the past 21 years, The number of authorized patents increased by 120%. We believe that the growth momentum of the company’s innovative businesses such as industrial Internet is abundant.
The results of joint construction and sharing, cost reduction and efficiency improvement are remarkable, and the actual capital expenditure in 21 years is lower than the guidelines
The company continues to deepen the network co construction and sharing with China Telecom Corporation Limited(601728) and has achieved remarkable results in saving investment and low-carbon emission reduction: the two sides have saved 210 billion yuan of capital expenditure, more than 17.5 billion kwh of annual power saving and more than 6 million tons of carbon dioxide emission reduction. The two sides have built the world’s largest 5g co construction and sharing network. In 21 years, the two sides have opened 6900005g base stations and 6 Guangzhou Baiyun International Airport Company Limited(600004) G base stations. The company’s 21-year capital expenditure was 69 billion yuan, lower than the previous guideline of 70 billion yuan, and the investment efficiency was further improved. In the long run, with the further promotion of co construction and sharing, the investment and operation and maintenance pressure on the network construction end faced by the company will be significantly relieved, and the profitability is expected to be further improved.
Pay attention to shareholder returns, increase the proportion of profit dividends and share operating results
The company attaches great importance to shareholders’ return and plans to pay a final dividend of RMB 0.0391 per share, with a total annual dividend of RMB 0.0879 per share, a year-on-year increase of 31.4%. The dividend proportion of A-share profits has increased from 37% to 43%. With the enhancement of the company’s profitability in the future, the proportion is expected to further increase in 22 years.
Investment suggestion: on the income side, the short-term traditional business ushers in an obvious inflection point in volume or price. The medium and long-term industrial Internet is expected to open up growth space. On the cost side, co construction and sharing will bring about the improvement of profitability. It is estimated that the net profit attributable to the parent company in 20222024 will be RMB 7.224/82.90/9.530 billion respectively, and the corresponding PE multiple will be 16x / 14x / 12x, The valuation of the company in recent five years is 40 times. Maintain a “recommended” rating.
Risk warning: capital expenditure investment exceeds expectations; The effect of co construction and sharing is less than expected; The development of industrial Internet is less than expected
