Communications: revenue growth hit a ten-year high and capital expenditure remained stable

Investment summary:

Talk every Monday:

Recently, China Mobile released a performance forecast for 2021, with revenue growth hitting a ten-year high. In 2021, the operating revenue was 848.3 billion yuan, a year-on-year increase of 10.4%. The net profit attributable to the parent company was 115.9 billion yuan, a year-on-year increase of 7.7%. Capital expenditure was 183.6 billion yuan and free cash flow was 131.2 billion yuan, a year-on-year increase of 3.2%.

Chbn has made all-round efforts and integrated business development.

Personal market: scale growth and value promotion. The number of mobile customers totaled 957 million, with a net increase of 14.97 million, including 387 million 5g package customers, with a net increase of 222 million. The ARPU value was 48.8 yuan, with a year-on-year increase of 3%, driven by the value growth of 5g package and integrated operation.

Household market: strong growth and double increase in volume and income. Home broadband customers reached 218 million, with a net increase of 25.88 million, keeping the industry leading. The comprehensive ARPU of home broadband reached 39.8 yuan, a year-on-year increase of 5.6%.

Government enterprise market: revenue increasing engine, with strong momentum. The year-on-year revenue of dict reached 62.3 billion yuan, an increase of 62.3%. Mobile cloud revenue reached 24.2 billion yuan, a year-on-year increase of 114.4%, accelerating the sprint to the first camp in the industry.

Emerging markets: innovative layout, showing results. International business revenue reached 13.3 billion yuan, a year-on-year increase of 20.1%; The proportion of equity investment income in net profit is 10.1%; Digital content revenue increased by 47.1%. In 2022, the capital plan expenditure will remain stable and the investment in R & D will be strengthened.

In 2021, the capital expenditure was 183.6 billion yuan, including 114 billion yuan of 5g related investment. More than 7 Toread Holdings Group Co.Ltd(300005) g base stations were opened, including 2 Shenzhen Quanxinhao Co.Ltd(000007) 00MHz base stations, basically realizing the continuous coverage of cities, counties and townships.

Capital expenditure in 2022 was 185.2 billion yuan, with a year-on-year increase of 0.9%, and 5g capital expenditure was 110 billion yuan. At the end of the year, a total of 1.1 million 5g base stations were opened, including 48 Shenzhen Sdg Information Co.Ltd(000070) 0MHz base stations.

At the same time, the company continues to deepen scientific and technological innovation. Continuously increase R & D investment. In 2021, R & D investment was 18.6 billion yuan, accounting for 2.2% of revenue, and there were nearly 14000 R & D personnel.

Share the development achievements, and the company gradually improves the dividend distribution rate. The dividend payout rate of the company will reach 60% in 2021. The company will gradually increase the dividend payout rate to more than 70% within three years from 2021, and strive to create greater value for shareholders.

We believe that the company adheres to the value management based on scale and maintains the industry-leading profitability for many years. After 5g investment cycle, capex is expected to ease the pressure of depreciation. As the leader of operators with low value and high dividend yield, the company has prominent risk aversion value and continues to be optimistic about the long-term investment value of the company.

Market review:

This week (202203.21202203.25), the Shanghai Composite Index, Shenzhen Component Index and gem index increased by - 1.19%, - 2.08%, - 2.80% respectively, and the Shenwan communication index increased by - 1.48%, ranking 16th among the 28 primary industries of Shenwan.

This week (202203.21202203.25), the Shanghai Composite Index, Shenzhen Component Index and gem index increased by - 1.19%, - 2.08%, - 2.80% respectively, and the Shenwan communication index increased by - 1.48%, ranking 16th among the 28 primary industries of Shenwan.

Investment strategy: (1) 5g network coverage continues to improve, the number of 5g base stations exceeds 1.4 million, and the leading 5g equipment manufacturer is continuously recommended: Zte Corporation(000063) ; (2) The increase in the penetration rate of 5g package users drives the Arup value of operators. Operators give up the price war and improve user stickiness by providing more high-quality and differentiated services. It is suggested to pay attention to: China Mobile; (3) The development of the Internet of things industry has entered the fast lane, focusing on the investment opportunities of vehicle communication modules. It is suggested to pay attention to Fibocom Wireless Inc(300638) , Quectel Wireless Solutions Co.Ltd(603236) ; (4) In the context of double carbon, green energy conservation has become the main theme. The key recommendation is precision temperature control faucet: Shenzhen Envicool Technology Co.Ltd(002837) .

Risk tip: the development of 5g is not as expected, the trade friction between China and the United States has further escalated, and the epidemic has further spread.

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