Industry events. Recently, the three major operators have successively released the 2021 annual report. China Mobile’s annual revenue reached 848258 billion yuan, a year-on-year increase of 10.4%, of which the main business revenue reached 751409 billion yuan, a year-on-year increase of 8.0%, an increase of 4.8 percentage points over 2020, and the net profit attributable to the parent company was 115937 billion yuan, a year-on-year increase of 7.5% China Telecom Corporation Limited(601728) annual revenue was 434159 billion yuan, a year-on-year increase of 11.3%, and net profit attributable to parent company was 25.952 billion yuan, a year-on-year increase of 24.4% China United Network Communications Limited(600050) annual revenue reached 327854 billion yuan, up 7.9% year-on-year; main business income reached 296153 billion yuan, up 7.4% year-on-year; net profit attributable to parent company was 6.305 billion yuan, up 14.2% year-on-year.
Operators’ capital development supports continuous optimization and contributes to higher quality development. In 2021, the total capital expenditure of China Mobile was about 183.6 billion yuan, of which 5g investment accounted for about 60% China Telecom Corporation Limited(601728) the total capital expenditure of the whole year was about 86.7 billion yuan, of which 5g investment accounted for about 44% and industrial digitization investment accounted for about 20% China United Network Communications Limited(600050) accumulated capital expenditure is about 69 billion yuan, of which 5g investment accounts for 46%. In the future, the capital expenditure of operators will focus on ensuring the specialties of mobile network, broadband data network, infrastructure and transmission network, focusing on promoting the construction of 5g network, building a new information infrastructure for cloud network integration, and promoting emerging fields such as industrial digitization. In the context of stabilizing the overall capital expenditure, the investment structure of operators is expected to continue to optimize and help the development of information networks with higher quality.
2B and other innovative businesses are expected to drive the performance of operating businesses to exceed expectations. The scale of chbn customers of China Mobile continues to increase, of which hBN revenue accounts for 35.7% of the main business revenue, with a year-on-year increase of 4.3 percentage points. The digital transformation revenue reached 159.4 billion yuan, a year-on-year increase of 26.3%, and contributed 59.5% to the increment of main business revenue. It is the first driving force to promote the growth of the company’s revenue China Telecom Corporation Limited(601728) 5g package user penetration reached 50.4%, keeping the industry leading. Industrial digital business revenue reached 98.9 billion yuan, a year-on-year increase of 19.4%, significantly higher than that in 2020. The company provided 470000 service racks to the outside world, and promoted the effective implementation of the project of “counting from the east to the west” The 6 Hainan Jingliang Holdings Co.Ltd(000505) g business accelerated, with 155 million package users, and the penetration rate exceeded the industry average, reaching 48.9%. Big data revenue reached 2.6 billion yuan, a year-on-year increase of 48.7%, and its market share remained the first among telecom operators for three consecutive years. As the backbone of promoting the development of digital economy, the information and communication industry is expected to open up new space in the operator market and bring marginal improvement in performance.
The marginal fundamentals of operators are good, and the valuation of the sector is expected to be repaired. The profitability and cash flow of the three operators have been continuously improved, and the company continues to give dividends to shareholders. China Mobile adjusted its dividend per share to HK $2.43, a year-on-year increase of 38% China Telecom Corporation Limited(601728) each share pays a dividend of 0.170 yuan, with a dividend rate of 60%. The total annual dividend is 0.0879 yuan per share China United Network Communications Limited(600050) annual dividend totaled RMB 0.0879 per share, up 31.4% year-on-year. The three operators have maintained a high level of cash dividends, of which China Mobile has a high dividend rate. In addition, compared with the historical valuation, the three operators are at a low valuation, of which China Mobile PE is 12.30 times, China Telecom Corporation Limited(601728) pe is 14.39 times and China United Network Communications Limited(600050) pe is 17.40 times. We believe that the higher than expected performance of operators and the positive return shareholder strategy of high dividends are expected to drive the valuation repair of the operator sector, focusing on China Mobile, the leading operator (600941).
The risk indicates that the tob end business transformation of the operator is not as expected, and the innovative business model has not been formed; Factors such as intensified competition lead to the future ARPU trend of operators less than expected; 5g commercial promotion is less than expected
