\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 728 China Telecom Corporation Limited(601728) )
The business accelerated, and the revenue and profit achieved double-digit and double-digit growth
China Telecom Corporation Limited(601728) 2021 was successfully listed on A-share market on August 20, 2021. By accelerating ecological layout, broadening financing channels and promoting deepening reform, it continued to strengthen the momentum of development. According to the company’s annual report, the company achieved an operating revenue of 434.16 billion yuan in 2021, with a year-on-year increase of 11.3% and an EBITDA of 402.2 billion yuan 500 million yuan, a year-on-year increase of 8.1%, and the net profit attributable to the parent company was 25.95 billion yuan, a year-on-year increase of 24.4%. The company’s revenue accelerated high-quality growth, the contribution of the three business segments continued to increase, the operating income increased significantly, the profit side was released, and the financial strength continued to increase. We believe that the ratio of capital expenditure to revenue of Chinese operators is much higher than that of overseas operators, and the occupation of free cash flow makes Sinotrans Limited(601598) operators have a fault in the global industry valuation system. With the improvement of revenue conditions in 2021 and the steady trend of capital expenditure, it is expected that the ratio is expected to decline from 2021 to 2022, driving the recovery of valuation of Chinese operators.
The construction of 5g network has been steadily promoted, and the joint construction and sharing has achieved remarkable results. It is expected that the capex is expected to gradually decline in the later stage, alleviate the pressure of depreciation, focus on industrial digitization and accelerate the growth momentum
We believe that as 5g network construction enters the post cycle, the decline in capex investment in mobile network is expected to alleviate the pressure of depreciation. At the same time, with the full coverage of 5g network, relevant applications are expected to start. Therefore, the company will increase the investment in cloud and industrial digital business, focus on the growth momentum, and is expected to continue to maintain a leading edge in the digital field.
A number of 5g application scenarios will help the development of innovative business in the future
(1) 5g industry terminals have entered the replication acceleration stage, and tob applications have been continuously improved.
(2) Tianyi cloud stabilized its market position, focused on key areas and accelerated the expansion of application scenarios.
(3) build an intelligent comprehensive digital information infrastructure, give full play to the advantages of cloud network integration, and fully promote the implementation of “counting from the east to the west”.
Undervalued and high dividends, operators have become a safe haven for funds in repeated market fluctuations
Investment advice
Considering that the overall valuation level of the operator industry is at a historically low level, and during the period of 5g network construction and promotion, the company significantly reduces the pressure of its own capital expenditure and operating expenditure by relying on co construction and sharing, increases scientific and technological innovation, and vigorously develops cloud and industrial digital business by relying on its own cloud network synergy, the company’s revenue from 2022 to 2024 is expected to be 4863.8/5372.6/592.43 billion yuan respectively, and the expected earnings per share are 0.33/0.37/0.42 yuan respectively, Corresponding to the closing price of 4.03 yuan / share on March 21, 2022, PE is 12.3/10.8/9.6 times and Pb is 0.84/0.81/0.78 times respectively, which is still lower than the global industry average. It is rated as “overweight” for the first time.
Risk tips
5g network construction and promotion are not as expected; The development of industrial digital business is less than expected; The development of smart home business is less than expected; Systemic risk.
