Key points
Event: the three operators released the results for the fourth quarter of 2021. China Mobile, China United Network Communications Limited(600050) , China Telecom Corporation Limited(601728) achieved revenue of RMB 1996 / 834 / 110.3 billion respectively, with a year-on-year increase of 3.1% / 6.2% / 9.3%, of which China Telecom Corporation Limited(601728) performance exceeded our expectations, mainly due to the year-on-year increase of 47% in the sales of communication products; EBITDA was 73.5/21/27.6 billion yuan respectively, corresponding to a year-on-year increase of 8% / 3% / 3%; The net profit was 29 / 14 / 2.6 billion yuan respectively, with a corresponding year-on-year growth rate of 10% / – 13% / 22%. The year-on-year decline in China United Network Communications Limited(600050) net profit was mainly due to the company’s increased investment in network operation and support and innovative business technical support.
In 2021, 5g penetration continued to increase, and the mobile business of operators improved significantly: in 2021, the revenue of China Mobile, China United Network Communications Limited(600050) , China Telecom Corporation Limited(601728) mobile business increased by 3.2% / 4.7% / 7.5% respectively, mainly driven by the improvement of ARPU caused by the improvement of user structure. Specifically: 1) in 2021, 5g users with higher APRU penetrated as scheduled. As of 4q21, the 5g user penetration of the three operators reached 40% / 49% / 50% respectively, driving their mobile service ARPU to increase by 3% / 4% / 2% year-on-year to 49 / 44 / 45 yuan / month / user in 2021; 2) At the end of 2021, the total number of mobile users in China reached 1.65 billion, a slight increase of 3% year-on-year, of which China Telecom Corporation Limited(601728) growth rate was 6%, significantly exceeding the industry average. We believe that this is mainly due to the improvement of network quality brought by the company’s continuous investment in network operation and support. At present, 5g user penetration has not been completed. We expect that the mobile business of operators will still benefit from the improvement of user structure and maintain growth from 2022 to 2023. In the longer term, C-end ARPU and revenue continue to rise, waiting for the emergence of specific 5g application packages with higher value contribution, such as HD video packages.
Continue to increase investment in industrial Internet, and it is expected that the b-end business will continue to grow at a high rate: in 2021, the industrial Internet revenue of China Mobile, China United Network Communications Limited(600050) , China Telecom Corporation Limited(601728) and China Telecom Corporation Limited(601728) will be 137 / 548 / 98.9 billion yuan respectively, with a year-on-year increase of 36% / 28% / 18%, and the proportion in revenue will expand to 16% / 17% / 23%. In 2022, the three major operators will continue to increase their investment in industrial Internet business: China Mobile expects the capital expenditure on computing power network to be 48 billion yuan in 2022, plans to add about 40000 externally available IDC racks, and has put into operation more than 660000 cloud servers in total China United Network Communications Limited(600050) in 2022, we will focus on increasing the investment of “counting from the east to the west” China Telecom Corporation Limited(601728) it is estimated that the capital expenditure for industrial Internet in 2022 will be 27.9 billion, with a year-on-year increase of 62%. It is planned to increase 45000 racks and 160000 cloud servers. We expect that the b-end business of the three operators is expected to continue the rapid growth trend and maintain double-digit growth in 2022.
Investment suggestion: in the 5g era, the operator industry shows a certain growth, mainly relying on the marginal improvement of C-end business and the innovative business of b-end to open up new market space. Maintain the forecast of China Mobile’s net profit of 128.5/1433 billion yuan in 22-23 years, with a year-on-year increase of 11% / 12%; Considering that the control of China United Network Communications Limited(600050) and China Telecom Corporation Limited(601728) sales expenses exceeded expectations, the forecast of China United Network Communications Limited(600050) net profit for 22-23 years was raised by 4% / 7% to 16.6/19.3 billion yuan, with a year-on-year increase of 15% / 17%; The forecast of China Telecom Corporation Limited(601728) net profit for 22-23 years was raised by 4% / 5% to 28.7/32.1 billion yuan, with a year-on-year increase of 11% / 12%. In the later stage, the switching of market capital allocation style and the improvement trend of operating business performance are verified quarterly, which is expected to drive the opportunity of comprehensive value revaluation of the sector. Maintain the “buy” rating of the operator industry; Maintain the “buy” rating of China Mobile, China United Network Communications Limited(600050) , China Telecom Corporation Limited(601728) .
Risk analysis: the fund allocation style is switched, the internal market-oriented reform of the enterprise is less than expected, and the b-end business slows down.
