\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 728 China Telecom Corporation Limited(601728) )
Event: the company released its annual report on March 17. In 2021, it achieved a revenue of 434159 billion yuan, a year-on-year increase of 11.3%, of which the service revenue was 402827 billion yuan, a year-on-year increase of 7.8%; The net profit attributable to the parent company was 25.952 billion yuan, a year-on-year increase of 24.44%.
The performance continued to improve, and the digitization of the industry led to the increase of the overall revenue growth of the company. In 2021, the company’s revenue and profit increased comprehensively. On the revenue side, the company’s service revenue was 402827 billion yuan, a year-on-year increase of 7.8%, an increase of 3.2pct over 2020; Among them, the revenue of mobile communication service business was 184157 billion yuan, a year-on-year increase of 4.89%, maintaining a stable growth; The business income of fixed network and smart home services was 113522 billion yuan, a year-on-year increase of 4.13%, maintaining a stable growth; Industrial digital service revenue was 98.945 billion yuan, with a year-on-year increase of 17.84%, significantly higher than that in 2020, driving the overall revenue growth of the company. On the profit side, benefiting from the accurate grasp of the opportunity of digital transformation and the full play of the advantages of cloud services, the company realized a net profit attributable to the parent company of 25.952 billion yuan in 2021, with a year-on-year increase of 24.44%, the highest growth rate in nearly a decade.
5g + smart family promotes the steady improvement of ARPU. In 2021, the company’s mobile users reached 372 million, and the net increase of users remained the industry leader for four consecutive years. The ARPU of mobile users was 45.0 yuan, an increase of 2.0% year-on-year; There were 188 million 5g package users, with a penetration rate of 50.4%. The increase of 5g penetration rate promoted the ARPU value of mobile services to increase slightly. In 2021, the company’s wired broadband users reached 170 million, and the scale of users increased steadily; Tianyi housekeeping and whole house WiFi penetration continued to improve. The income of smart families increased by 25.1% year-on-year, driving the comprehensive broadband ARPU to 45.9 yuan, a year-on-year increase of 3.4%.
Grasp the development trend of cloud network integration and continuously improve cloud network capabilities. In 2021, Tianyi cloud of the company will be upgraded to a distributed cloud in an all-round way, realizing a revenue of 27.9 billion yuan, doubling the growth of revenue and obvious industry-leading advantages; IDC’s business revenue was 31.6 billion yuan, with a year-on-year increase of 12.96%, and its market share ranked first in the industry. By the end of 2021, the company has more than 700 data centers and 470000 racks, of which about 80% are located in four economically developed regions: Beijing Tianjin Hebei, Yangtze River Delta, Guangdong Hong Kong Macao Dawan district and Chengdu Chongqing. Cloud resources realize the “2 + 4 + 31 + X + O” cloud network integration layout. It is the first cloud service provider in China to realize “one province and one pool”. It has formally planned and constructed the largest cloud security capability pool in the industry and continuously improved the cloud network security protection capability. In 2021, the company continued to deepen co construction and sharing. The number of 5g base stations exceeded 690000. The 5g network covered all cities and counties and some developed towns in China, and built the world’s largest 5gsa co construction and sharing network. The company further promoted the construction of optical network, built ROADM all-optical transmission network with the largest capacity in China and the world, and the high-speed Internet network of data center covers the eight hub nodes of “counting from the east to the west” and the data centers of major cities in China. The company’s cloud network integration layout is highly in line with the deployment of “East digital West computing” and the national integrated big data center. The advantages of cloud network integration will effectively promote the implementation of “East digital West computing” project.
Free cash flow continued to improve and the proportion of dividends increased. In 2021, the company’s free cash flow was 46.683 billion yuan, with a year-on-year increase of 3.32%. With the enhancement of profitability and the continuous improvement of cash flow creation ability, and comprehensively considering the future capital demand, according to the dividend adjustment policy approved on June 20, 2021, the company adjusted the cash dividend in 2021 from 40% to 60%, that is, 0.170 yuan per share, and increased to more than 70% within three years after the issuance and listing of a shares. At the same time, the company will declare an interim dividend from 2022, Share development achievements with shareholders.
Investment suggestion: we expect the company’s revenue from 2022 to 2024 to be 477575/520557/562201 billion yuan respectively; The net profit is 29.19/32.168/35.432 billion yuan respectively, and the corresponding EPS is 0.32/0.35/0.39 yuan respectively. Maintain the target price of 5.70 yuan and maintain the “Buy-A” investment rating.
Risk tips: Economic and policy environment risks, industrial digital development is less than expected, 5g construction is less than expected, and the improvement of ARPU value of the company is less than expected
