China Mobile (600941)
The first coverage is given a “buy” rating. The company is the world’s leading telecom operator. The company has the largest number of mobile users and broadband users in China. With the continuous rise of 5g penetration rate and the recovery of operator ARPU value, the company’s C-end business is expected to return to steady growth. At the same time, in terms of b-end business, the company provides 5g + aicde one-stop solution for enterprise customers based on 5g. In recent years, it has realized the continuous and rapid growth of customers and revenue. The resonance between the company’s C-end and b-end is expected to open a new growth curve.
The C-end and b-end services resonate, and the operator boom is upward. With the increase of 5g penetration rate in recent years and the end of the superposition speed-up and fee reduction policy, the ARPU value of China Mobile’s mobile business has obviously warmed up. China Mobile has the largest number of mobile users and broadband users among the three major operators. It is expected to further expand its leading advantage with the recovery of per capita tariff. At the same time, in terms of b-end business, the company provides 5g + aicde one-stop solution for enterprise customers based on 5g. In recent years, it has realized the continuous and rapid growth of customers and revenue. B-end and C-end resonate, and the company’s revenue is expected to continue to grow steadily. With stable 5g construction and 700m advantages, the company’s profit is expected to increase. At present, the construction of 5g base station has entered a stable range. From the perspective of the company’s capital expenditure plan, the growth has slowed down. Meanwhile, the depreciation period of 5g base stations is longer than that of 4G base stations, so the subsequent depreciation pressure of operators will gradually reduce and thicken the profit side. Meanwhile, China Mobile has a 700m frequency band shared with radio and television, with a larger coverage of a single base station, which will significantly reduce the network optimization and operation and maintenance costs in the later stage and further thicken the profits. We believe that with the steady pace of 5g construction, reduced depreciation and the coverage advantage of China Mobile’s 700m band, China Mobile is expected to open up profit growth space in the future.
The “a + H” capital structure is expected to open up room for rising valuation. The company was officially listed on A-Shares on January 5. Without exercising the over allotment right, the company raised 48.1 billion yuan for C-end and b-end business development such as 5g network construction and cloud resource pool construction, further increasing the growth power of the company. On January 4, the company issued an announcement authorizing the board of directors to repurchase and cancel up to 10% of Hong Kong listed shares on the Hong Kong stock exchange, which is expected to further thicken the company’s earnings per share and dividend per share. We believe that as a leading operator in China and even in the world, China Mobile Pb is seriously undervalued compared with foreign operators Verizon and T-Mobile. With the progress of A-share listing and repurchase, the company is expected to open up room for valuation rise.
Investment suggestion: we believe that with the resonant development of the company’s b-end and C-end businesses, 5g depreciation and 700m operation and maintenance expenses are reduced, thickening the profit end. The company’s revenue and profit are expected to achieve rapid growth. We expect that the company’s revenue in 2021, 2022 and 2023 will be 8487 / 9253 / 1002.2 billion yuan, and the net profit attributable to the parent company will be 1154 / 1250 / 134.4 billion yuan. With the listing of Huia, the company’s repurchase, and the growth of revenue and profit, the company’s A-share valuation space is expected to approach the more mature North American market in the medium and long term, and the valuation is expected to reach 1.5 times Pb, with 50% upward space compared with the current one.
Risk tip: 5g construction progress is less than expected, and 5g application development progress is less than expected
