\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 728 China Telecom Corporation Limited(601728) )
Event:
On the evening of March 17, 2022, China Telecom Corporation Limited(601728) released the annual report for 2021. In 2021, the company achieved an operating revenue of 434.2 billion yuan, a year-on-year increase of 11.3%; Among them, the service revenue was 402.8 billion yuan, a year-on-year increase of 7.8%, and the net profit attributable to the parent company was 26 billion yuan, a year-on-year increase of 24.4%.
Comments:
5g penetration increased rapidly, and mobile and fixed network revenue increased steadily
In 2021, the company had a net increase of 21.41 million mobile users, ranking first in the industry for four consecutive years. 5g penetration rate increased to 50.4%, and the whole industry remained in the lead. The ARPU value of mobile users increased by 2% year-on-year, and the mobile business revenue increased by 4.9% year-on-year. The business income of smart home increased by 25.1%, driving the fixed network business income to increase by 4.1%. The traditional services of mobile and fixed networks maintained steady growth.
More than half of the contribution of industrial digitization has formed a two wheel drive income pattern
In 2021, the revenue of Tianyi cloud increased by 102%, driving the revenue of industrial digital business to increase by 19.4% year-on-year. In 2021, the company’s operating revenue increased by 32.8 billion yuan, of which the contribution rate of industrial digital business was as high as 54.3%. The revenue growth pattern driven by traditional business and industrial data business has been formed. According to the company’s performance guidelines, in 2022, the company’s capital expenditure was 93 billion, and industrial digitization accounted for 30%, supporting the growth target of 20% of industrial digitization business revenue in 2022.
Earnings forecast, valuation and rating
Our forecast deviation of the company’s revenue in 2021 is 1.8%, and the forecast deviation of the net profit attributable to the parent company is 1.8%, which is basically in line with the expectation. Considering the company’s cloud network resource advantages, business development objectives and other factors, we expect the company’s revenue from 2022 to 2024 to be 4813 / 5302 / 580.3 billion yuan respectively, the net profit attributable to the parent company to be 311 / 367 / 428 billion yuan respectively, the EPS to be 0.34/0.40/0.47 yuan / share respectively, and the corresponding PE to be 12 / 10 / 19 times respectively. We give the 2022 target pe18x, corresponding to the stock price of 6.12 yuan, maintaining the “buy” rating.
Risk tips
Systemic risk, industry policy risk, increased market competition risk, 5g development is less than expected risk.
