Key investment points
From January to February 2022, the revenue of the telecommunications industry increased by 9.0% year-on-year
From January to February in 2022, the total revenue of telecom services totaled RMB 258.6 billion, with a year-on-year increase of 9.0%, maintaining a rapid growth trend, and the total volume of telecom services calculated according to the price of the previous year increased by 23.4% year-on-year.
The cumulative revenue of telecom services has continued to grow from 0.0% from January to August 2019 to 9.0% from January to February 2022. Our previous judgment on the formation of the inflection point of telecom service revenue has been verified, and the high-quality development trend is clear. Under the trend of digital transformation and 5g evolution, we continue to be optimistic about the development of operators during the 14th Five Year Plan period.
Emerging / mobile traffic / fixed broadband pull 5.5/0.7/1.3pct respectively
Emerging businesses: revenue increased by 33.4% year-on-year, the proportion of telecom business revenue increased to 19.6%, and the revenue of cloud computing, big data, data center and Internet of things increased by 124.6%, 58%, 20.6% and 21.9% year-on-year.
Mobile data traffic business: revenue increased by 1.5% year-on-year. From January to February, the number of mobile users / 5G users increased by 7.78 million / 29.05 million respectively, and the penetration rate of 5g mobile phone users was 23.3%, an increase of 1.7 PCT compared with the end of 2021.
Fixed Internet broadband services: revenue increased by 8.5% year-on-year, with a net increase of 9.3 million users from January to February.
The proportion of emerging businesses increased significantly, and continued to increase investment
The contribution of emerging business growth was significantly improved. In 2021, the revenue of telecom business increased by 8.0% year-on-year, and the growth of emerging business was 3.6pct, reflecting the effect of continuous optimization of industry revenue structure China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) all indicated to moderately increase investment to promote development, China Telecom Corporation Limited(601728) the company’s target capital expenditure increased by 7.2% year-on-year in 2022, of which the investment in industrial digitization increased by 62% year-on-year, accounting for 30%. The investment planned for computing power (cloud resources) and IDC was 14 billion yuan and 6.5 billion yuan respectively. It is expected that the proportion of emerging business revenue will continue to increase under the digital trend, further effectively driving the revenue growth of the telecommunications industry.
The annual report reflects high-quality growth and improves the dividend payout return of shareholders
China Telecom Corporation Limited(601728) : the communication service revenue / net profit attributable to the parent company increased by 7.8% / 24.4% year-on-year in 2021; In 2022, the growth rate of operating income and comparable net profit will strive to double-digit growth; The board of Directors proposes to pay 0.17 yuan per share in 2021, with a dividend rate of 60%, which is significantly higher than 40.3% in 2020. The interim dividend will be paid in 2022.
China United Network Communications Limited(600050) : the communication service revenue / net profit attributable to the parent company in 2021 increased by 7.4% / 14.2% year-on-year; The board of directors proposed to pay an annual final dividend of RMB 0.0391 per share (tax included), together with the paid interim dividend of RMB 0.0488 per share (tax included), the total annual dividend was RMB 0.0879 per share (tax included), an increase of 31.4% year-on-year.
Investment suggestion: highlight the value of the sector
At present, H shares of China Mobile, China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) 080 times, 0.52 times and 0.29 times are still significantly lower than 1.09 times, 0.67 times and 0.66 times of the five-year historical center, more significantly lower than 1.56 times of the global comparable level, and have a high dividend yield; Continue to recommend.
Risk warning: the operator’s expenses exceed expectations; 5g application development is not as expected.
