China Mobile (600941)
Key investment points
The world's leading mobile communication service operator and the core base of Digital Economy: China Mobile is the world's leading communication service operator, which is at the industry-leading level in terms of user scale and communication base station; With the rapid development of digital economy, as an important infrastructure, operators play a key and important supporting role in the digital transformation of enterprises, the landing of 5g innovative applications and the interconnection of all things.
ARPU is steadily rising, and the certainty of fundamentals continues to rise for a long time: with the gradual increase of 5g user penetration and the gradual release of the pressure of superimposed speed increase and fee reduction, mobile service ARPU will be steadily rising. The ARPU growth rate will reach 6% in the first three quarters of 2021. Therefore, we expect that with the gradual increase of ARPU value, the performance of China Mobile will gradually improve; The company's N-end business drives the upgrading of industrial ecology. The company makes full use of 5g network, Gigabit broadband and other leading technologies and relies on the advantages of customers and channel scale to build "Migu" series products including Migu video. At the same time, it actively builds a third-party platform and vigorously promotes the development of emerging businesses such as insurance brokerage and payment. China Mobile has strengthened the construction of internal digital transformation, further realized precision marketing in sales, accelerated internal digital operation, and jointly built and shared with radio and television to further save capital and achieve cost reduction and efficiency improvement. To sum up, we are optimistic that China Mobile's performance will continue to improve steadily in terms of steady increase in revenue and cost reduction.
Broad investment territory and build a core ecosystem: China Mobile has established a special industrial investment fund, covering domestic and foreign basic telecommunications services, new media, new technology and other TMT related fields. In the future, it will implement the pull plan of 100 billion industries and enrich its business layout by means of M & A + equity participation + venture capital. We believe that with the gradual construction of the core ecosystem, we will have a deeper understanding of the development trend of the industry, Enhance the boundless expansion capacity of the broader investment territory.
At present, it is at a historical low valuation, and there is still room for valuation repair and improvement: with the steady increase in performance brought by the improvement of ARPU value and the gradual emergence of the driving force of b-end business, there is still room for valuation repair. Secondly, from the perspective of cloud, the current market makes a unified valuation of China Mobile according to the traditional business, and does not give a corresponding reasonable valuation to the existing cloud business. In the first half of 2021, China Mobile's cloud revenue was 9.7 billion yuan, Over the whole year of 2020, compared with Ucloud Technology Co.Ltd(688158) , Jinshan cloud and Qingyun, we believe that China Mobile also has advantages in basic resources and technology. Therefore, with the rapid growth of mobile cloud business, the valuation of China Mobile will be further promoted.
Pay attention to shareholder returns and employee incentives: on January 26, 2022, China Mobile plans to repurchase no more than 2.048 billion Hong Kong shares, which demonstrates business confidence. At the same time, in order to effectively stimulate the vitality of the enterprise, it grants about 306 million stock options to 9914 management backbones and core talents, and attaches importance to employee incentives; As of March 17, the dividend yield of China Mobile was 6.19%.
Profit forecast and investment rating: we estimate that the operating revenue of China Mobile from 2021 to 2023 will be 826.29/895807/977040 billion yuan, the net profit attributable to the parent company from 2021 to 2023 will be 116229125699/136777 billion yuan, the EPS will be 5.44/5.88/6.40 yuan respectively, and the PE corresponding to the current stock price will be 11 / 10 / 9.5 times. We think that China Mobile is currently in the forefront of the world in terms of comprehensive strength. At the same time, the C-end business will improve, the b-end business will progress smoothly, and the valuation will be gradually improved, Referring to the valuation level of foreign operators, in 2022, we will give 2x Pb target valuation and 20x PE target valuation, with the corresponding average target price of 109.02 yuan, and give a "buy" rating for the first time.
Risk warning: the pressure of increasing speed and reducing fees increases; Intensified market competition; 5g penetration rate is lower than expected.
