China Mobile (600941)
Event: the company released its annual report for 2021 on March 23. In 2021, the company achieved an operating revenue of 848.3 billion yuan, a year-on-year increase of 10.4%, of which the main business revenue reached 751.4 billion yuan, a year-on-year increase of 8.0%; The net profit attributable to the parent company was 115.9 billion yuan, and the basic earnings per share was 5.66 yuan, a year-on-year increase of 7.5%.
Excellent business performance, revenue growth hit a ten-year high, and net profit grew well. On the revenue side, the company’s communication service revenue reached 751.4 billion yuan in 2021, with a year-on-year increase of 8.0%, and the growth rate increased by 4.8 PCT compared with 2020. Chbn achieved comprehensive growth in customer scale and revenue scale. HBN revenue accounted for 35.7% of communication service revenue, with a year-on-year increase of 4.3pct, and the revenue structure was further optimized. Thanks to the rapid expansion of smart home, dict, mobile cloud, digital content and other businesses, the digital transformation revenue reached 159.4 billion yuan, a year-on-year increase of 26.3%, and the incremental contribution to the revenue of communication services reached 59.5%, which is the first driving force to promote the revenue growth of the company. Overall, the company’s revenue growth has broken through the inflection point, and the “second curve” of digital transformation revenue is leading the company to explore a broader market space in the blue ocean of information services. On the profit side, in 2021, the company realized a net profit attributable to the parent company of 115.9 billion yuan and a basic earnings per share of 5.66 yuan, with a year-on-year increase of 7.5%. Its profitability continued to maintain the leading level of world-class operators, providing a solid guarantee for the future development of the company.
The scale and value of 5g customers increased, and the ARPU value continued to grow. In 2021, the number of mobile customers of the company reached 957 million, with a net increase of 14.97 million, of which the number of 5g package customers was 387 million, with a net increase of 222 million, maintaining the leading scale in the industry. The number of equity integration customers reached 190 million, with a net increase of 112 million; And Caiyun reached 135 million monthly active customers, with a net increase of 32.43 million. Driven by the value growth of customer upgrading 5g and the integrated operation of “connection + application + equity”, the mobile ARPU was 48.8 yuan, a year-on-year increase of 3.0%. In 2021, the number of wired broadband customers of the company reached 240 million, including 218 million household broadband customers; The comprehensive ARPU of home broadband reached 39.8 yuan, a year-on-year increase of 5.6%.
Strive to build a new information service system of “connection + computing power + capability” based on 5g + computing power network + smart platform, and create a new model of value growth. The company deeply implemented the “5g +” plan, vigorously promoted the co construction and sharing with China’s Radio and television 5g network, and opened more than 7 Toread Holdings Group Co.Ltd(300005) g base stations, including 2 Shenzhen Quanxinhao Co.Ltd(000007) 00MHz 5g base stations, basically realizing the continuous coverage of urban areas, counties and towns, serving 207 million 5g network customers, and ranking first in the world in terms of 5g network scale and customer scale. In terms of computing power network, the company accelerated the construction of ubiquitous and integrated computing power network, implemented the national project deployment of “computing in the East and computing in the west”, optimized the layout of “4 + 3 + X” data center, and the externally available IDC racks reached 407000, with a net increase of 47000; Continuously improve the cloud infrastructure, continuously optimize the layout of “n + 31 + X” mobile cloud, and reach 13 central nodes; More than 480000 cloud servers have been put into operation. In terms of smart middle office, the company has built a “business + data + technology” smart middle office capability service system (AAAS) with operator characteristics and the company’s own characteristics to promote the full operation of smart middle office. At present, the company’s intelligence platform has 325 common capabilities, with an average monthly adjustment of more than 8.1 billion times, and more than 2000 internal and external scene applications; Wutong big data accumulated value data over 600PB, scale industry leading.
Adhere to precise investment and steady growth of capital expenditure. The company always adheres to forward-looking planning and precise investment. On the one hand, it is creatively built according to the layout of new information infrastructure focusing on “5g + computing network + smart middle platform”, actively promotes the cloud and intelligent upgrading of the network, ensures the leading in network coverage, quality, technology and customer perception, and strongly supports the omnidirectional and integrated development of chbn; On the other hand, strengthen investment control and classified management, optimize investment structure, ensure investment efficiency and help high-quality development. In 2021, the total capital expenditure of the company is about 183.6 billion yuan, of which 5g related investment is 114 billion yuan. In 2022, the total capital expenditure of the company is expected to be about 185.2 billion yuan, which is mainly used to build a first-class 5g network, ubiquitous integrated computing network, industry benchmark smart platform and support the business development of chbn. Among them, the capital expenditure related to 5g is about 110 billion yuan, and the required funds are mainly from the cash flow of operating activities.
Investment suggestion: the company is the largest telecom operator in China, with good fundamentals, double increase in the scale and value of 5g customers, continuous growth in mobile ARPU value, deepening integrated operation and overall growth of chbn. At the same time, the company actively explores the blue ocean of digital economy, speeds up the construction of intelligent comprehensive digital information infrastructure focusing on 5g, computing network and smart console, unblocks the information “artery” of economic and social development, and its performance is expected to continue to grow in the future. We expect that the company’s revenue from 2022 to 2024 will be 9268 / 10011 / 1064.5 billion yuan respectively, and its net profit will be 1222 / 1312 / 1388 billion yuan respectively, corresponding to eps5.5 billion yuan 72 / 6.14 / 6.50 yuan, with outstanding growth. Give 13 times PE in 2023, corresponding to the 12-month target price of 79.82 yuan, and maintain the investment rating of “Buy-A”.
Risk warning: market competition further intensifies the risk, 5g business development is less than expected, the risk of domestic industry regulatory policy changes, and the risk of epidemic affecting the project progress
