China Mobile (600941)
Core view
Revenue and profit increased steadily in 2021. The company achieved a revenue of 848.3 billion yuan (+ 10.4%) and a net profit attributable to the parent company of 115.9 billion yuan (+ 7.5%) in 21 years. Among them, the revenue of 21q4 was RMB 1998 billion (+ 3.1%), and the net profit attributable to the parent company was RMB 28.98 billion (+ 10.3%). The performance is in line with expectations.
Revenue side: (1) mobile business rebounded and 5g business value increased. In the past 21 years, the company had 957 million mobile users, with a net increase of 14.97 million, including 387 million 5g users, with a net increase of 220 million (+ 134%), maintaining the leading scale in the industry. 5g ARPU value is 82.8 yuan, driving the mobile ARPU value to 48.8 yuan (+ 3.0%), and the number of mobile users and ARPU value have rebounded year-on-year. (2) The scale and value of home broadband have increased. The number of home broadband users reached 218 million, a net increase of 25.88 million, and the ARPU value of broadband integrated service was 39.8 yuan (+ 5.6%). The significant growth of home broadband benefited from the remarkable expansion of gigabit network and smart home.
(3) the momentum of business innovation is strong, and the performance of mobile cloud is eye-catching. The company’s digital transformation revenue was 159.4 billion yuan (+ 26.3%). Among them, the mobile cloud revenue is 24.2 billion yuan (+ 114%), and the public cloud ranks the top seven in the industry and the private cloud ranks the fifth. Dict’s revenue was 62.3 billion yuan (+ 43.2%), contributing 2.7pp to the growth of its main business.
Cost side: gradually shift from 5g to cloud construction, with good cost control. The company’s operating expenditure in the 21st year was 730.3 billion yuan (+ 11.4%). The depreciation and amortization expense is 193 billion yuan (+ 12%), which has exceeded the capital expenditure by 183.6 billion yuan. 5g terminal sales increased the cost of selling products by 31%, R & D investment by 40% year-on-year, and employee compensation by 11% year-on-year. In terms of capital expenditure, 5g capital expenditure is about 110 billion yuan. 7 Toread Holdings Group Co.Ltd(300005) g base stations will be opened in 21 years, and 5g construction will be gradually reduced in the future. The capital expenditure of computing power network is 48 billion yuan, including about 450000 IDC racks and 660000 cloud servers. The subsequent computing power network will increase investment. The company’s roe gradually rebounded. The profitability of the company is ahead of its peers, and the asset turnover rate is further improved. Both roe and ROIC have rebounded for the first time in the past three years, with roe of 10.2% (+ 0.3pp) in 21 years. The company’s asset liability ratio is 34%, lower than the average of peers by 43%. The cash flow and free cash flow from operating activities reached 314.8 billion yuan and 131.2 billion yuan respectively.
It is expected to continue to increase dividends. The total annual dividend of the company is HK $4.06 (+ 23.4%) per share, and the cash dividend accounts for 60% of the profit attributable to shareholders. The dividend payout rate and dividend per share of the company in the past 10 years are higher than those of its peers. It is planned to gradually increase the cash dividend to more than 70% of the profits attributable to shareholders in the next three years.
Risk tip: the number of mobile users is less than expected; The development of innovative business is less than expected; The impact of the epidemic has intensified. Investment suggestion: we believe that the company has good network resources, large customer scale, stable operation and strong profitability. Under the background of “digital economy”, we pay attention to the development of digital transformation and innovation business, and are optimistic about the omni-directional and integrated development of chbn, ushering in the return of value. It is estimated that the company’s operating revenue in 22-24 years will be 929.3/962.7/1008.6 billion yuan respectively, the net profit attributable to the parent company will be 125.9/136.7/149.3 billion yuan, the corresponding PE will be 11 / 10 / 9x, and the corresponding Pb will be 1.07/1.02/0.96x. It will be covered for the first time and given a “buy” rating.
