On March 17, China Telecom Corporation Limited(601728) ( China Telecom Corporation Limited(601728) . SH) released the annual report of 2021. According to the annual report, its revenue in 2021 was 434.2 billion yuan, a year-on-year increase of 11.3%, and the net profit attributable to the shareholders of the parent company was 25.952 billion yuan, a year-on-year increase of 24.4%.
In terms of business, emerging businesses such as data center and cloud computing have become the main growth force of China Telecom Corporation Limited(601728) and even the whole telecommunications industry. This can be seen from the capital expenditure plan of China Telecom Corporation Limited(601728) 2022. According to the promotional materials of China Telecom Corporation Limited(601728) performance presentation meeting, China Telecom Corporation Limited(601728) it is estimated that the capital expenditure in 2022 will be 93 billion yuan, of which the capital expenditure of 5g network will decrease by 10.39% year-on-year, while the capital expenditure in the field of industrial digitization will increase by 61.67%.
Obviously, China Telecom Corporation Limited(601728) is full of confidence in its future development prospects. Taking cloud business as an example, among comparable companies in the industry, China United Network Communications Limited(600050) ( China United Network Communications Limited(600050) . SH) has a cloud revenue scale of 16.3 billion yuan, while China Telecom Corporation Limited(601728) has a cloud revenue scale of 27.9 billion yuan China Telecom Corporation Limited(601728) executive director, chairman and CEO Ke Ruiwen also said recently that he would explore the possibility of Tianyi cloud’s spin off and listing.
However, the performance of China Telecom Corporation Limited(601728) is in sharp contrast to its performance in the capital market, and its share price is still lower than the issue price. In this regard, China Telecom Corporation Limited(601728) said at the performance presentation meeting on March 17 that it would stabilize the stock price by increasing the shareholding of the parent company and increasing the level of dividend payout ratio.
improve the sales of end products, and the penetration rate of 5g package users is ahead of that of China Unicom
In terms of business segments, commodity sales business is one of the two carriages driving the growth of China Telecom Corporation Limited(601728) revenue.
According to the annual report, commodity sales and other businesses mainly sell mobile terminal equipment and fixed network communication equipment to users. In 2021, China Telecom Corporation Limited(601728) sales of goods and other business income reached 31.332 billion yuan, an increase of 15.191 billion yuan (an increase of 94.11%) compared with 2020, accounting for 34.35% of its annual revenue growth.
In contrast, China United Network Communications Limited(600050) in 2021, the revenue realized by selling communication products was 31.701 billion yuan, with a year-on-year increase of only 13.12%Source: P = “align” screenshot of financial report
China Telecom Corporation Limited(601728) can catch up, or it is related to the improvement of 5g terminal commodity sales. According to the annual report of 2021, during the reporting period, China Telecom Corporation Limited(601728) the advertising expenses were about 2.904 billion yuan, a year-on-year increase of 9.11%; The customer service fee was about 4.104 billion yuan, a year-on-year increase of 24.56%. At the same time, China United Network Communications Limited(600050) ‘s advertising and business publicity expenses were about 2.682 billion yuan, a year-on-year decrease of 1.51%, and the increase of user service and other expenses was far less than China Telecom Corporation Limited(601728) .
In addition, China Telecom Corporation Limited(601728) has a slightly better 5g coverage at the C-end. From 2020 to 2021, China Telecom Corporation Limited(601728) the penetration rate of 5g package users increased from 24.6% to 50.4%, with 188 million 5g package users. At the same time, China United Network Communications Limited(600050) the penetration rate of 5g package users increased from 23% to 48.9%, with 155 million 5g package users.
Looking ahead, China Telecom Corporation Limited(601728) said at the performance presentation meeting that it plans to add 15 million mobile business users and 80 million 5g package users in 2022. In addition, China Telecom Corporation Limited(601728) currently has more than 6900005g base stations in use. It plans to invest about 34 billion yuan in 5g in 2022. It is expected that the number of 5g base stations in use will exceed 990000 by the end of this year.
industry digital investment proportion increases greatly, Tianyi cloud may be split and listed
Industrial digital business is another carriage driving the growth of China Telecom Corporation Limited(601728) revenue. According to the annual report, the business is to provide users with internet data center, cloud services, digital platform services, special line services and other services.
In 2021, the digital business revenue of China Telecom Corporation Limited(601728) industry reached 98.945 billion yuan, with a year-on-year increase of 19.4% (excluding the impact of the sale of subsidiaries), which was significantly higher than that in 2020 (9.7%); The specific growth was 14.976 billion yuan, accounting for 33.87% of its annual revenue growth.
According to the China Telecom Corporation Limited(601728) performance briefing, it will significantly increase the investment scale of industrial digitization business in 2022, and the capital expenditure in the field of industrial digitization will increase by 61.67% to 27.9 billion yuan, accounting for 19.9% to 30% of the total capital expenditure; Meanwhile, the capital expenditure of 5g network will be reduced by 10.39% to 34.038 billion yuan, and the proportion in total capital expenditure will be reduced from 43.8% to 36.6%.
In fact, in recent years, the growth rate of users in the telecommunications industry is facing downward pressure. Cloud computing, big data, data centers and other emerging digital services for enterprises have become the first driving force for the growth of telecom business revenue.
At present, the income of industrial digital business has accounted for 22.79% of China Telecom Corporation Limited(601728) total revenue, becoming the third largest source of income after traditional businesses such as mobile communication services, fixed network and smart home services China Telecom Corporation Limited(601728) said that in the next three years, the proportion of industrial digital revenue will increase to more than 30%.
In addition, according to the annual report of 6 Lvjing Holding Co.Ltd(000502) 021, although the revenue scale of its industrial Internet business is less than China Telecom Corporation Limited(601728) , the revenue growth rate of this business is a little faster than China Telecom Corporation Limited(601728) with a year-on-year growth rate of 28.2%, accounting for 18.5% of the overall main business revenue.
However, the revenue gap between the two in cloud business is still large. Among them, China Telecom Corporation Limited(601728) “tianyiyun” revenue increased by 102% year-on-year in 2021, reaching 27.9 billion yuan China United Network Communications Limited(600050) “Unicom cloud” revenue was 16.3 billion yuan, an increase of 46.3%.
It is worth mentioning that Ke Ruiwen, executive director, chairman and CEO of China Telecom Corporation Limited(601728) said at the performance briefing recently that China Telecom Corporation Limited(601728) will actively explore the possibility of Tianyi cloud’s spin off and listing under the condition of meeting the regulatory rules.
On the other hand, China Telecom Corporation Limited(601728) also admitted that there is still a gap between its industrial digitization level and the requirements of the development of digital economy. In the past two years, with the rapid development of digital economy, the renewal and iteration of products and services have accelerated, and the needs of customers have become more diversified and personalized China Telecom Corporation Limited(601728) there is still a certain gap between the category, performance and experience of products and services and the needs of customers.
after return to a, the interest payment debt decreased by nearly 70%, and the stock price is still under pressure
In 2021, China Telecom Corporation Limited(601728) returned to a for listing, raising about 47.5 billion yuan. Affected by this, the financial indicators of China Telecom Corporation Limited(601728) 2021 have been improved.
Specifically, China Telecom Corporation Limited(601728) ‘s monetary capital increased by 42.119 billion yuan, a year-on-year increase of 127.28%. At the same time, as the funds raised by A-Shares met the capital needs of key projects, China Telecom Corporation Limited(601728) ‘s external financing needs decreased, with short-term loans down 82.37% and long-term loans down 68.95% year-on-year.
Overall, in 2021, the scale of China Telecom Corporation Limited(601728) interest paying debt decreased from 53.342 billion yuan to 16.496 billion yuan, a year-on-year decrease of 69.1%; The asset liability ratio decreased from 48.8% to 43.4%; Free cash flow also rose from 14.276 billion yuan to 15.139 billion yuan. In this regard, China Telecom Corporation Limited(601728) in the promotion materials of the performance description meeting, the company described as “stable capital structure and abundant cash flow”.
However, although the performance level and financial strength of China Telecom Corporation Limited(601728) continue to grow, the capital market still seems to hesitate. As of March 18, 2022, China Telecom Corporation Limited(601728) closing price is 4.05 yuan per share, which is still lower than its issuing price. At the same time, a number of securities companies give a target price of 5 yuan or even more than 6 yuan.
China Telecom Corporation Limited(601728) the measures to stabilize the stock price are mainly to increase the shares held by the parent company and increase the dividend payout ratio. According to China Telecom Corporation Limited(601728) relevant announcements, its parent company China Telecom Corporation Limited(601728) group plans to increase its holdings of shares of listed companies within 12 months from September 22, 2021, with an increase amount of no less than 4 billion yuan. In addition, China Telecom Corporation Limited(601728) group will increase its holdings by no less than 500 million yuan within 12 months from January 28, 2022.
On the other hand, China Telecom Corporation Limited(601728) said that it would pay a dividend of 0.17 yuan per share (including tax) to all shareholders at a dividend rate of 60% this year. “According to this dividend yield level, A-share dividend (yield) can exceed 4% and H-share dividend (yield) can exceed 7%, which is an attractive dividend return level,” Craven said at the performance briefing. In addition, China Telecom Corporation Limited(601728) also promises that within three years after the issuance and listing of a shares, the annual profit distributed in cash will gradually increase to more than 70% of the profit attributable to the shareholders of the company in that year.
