Key investment points
Event: China Mobile, China United Network Communications Limited(600050) , China Telecom Corporation Limited(601728) successively released the performance report for 2021. China Mobile’s operating revenue reached 848258 billion yuan, yoy + 10.4%, and China United Network Communications Limited(600050) operating revenue reached 327854 billion yuan, yoy + 7.9% China Telecom Corporation Limited(601728) operating revenue reached 434159 billion yuan, yoy + 11.3%, and the performance achieved steady growth.
The three major operators have made outstanding achievements, the traditional business is stable and the innovative business is full of motivation: the growth rate of China Mobile’s operating revenue has reached a new high in recent 10 years, and the net profit of China United Network Communications Limited(600050) , China Telecom Corporation Limited(601728) parent company has achieved double-digit growth. By the end of 2021, the 5g penetration rate of the three major operators has exceeded 40%, of which China Telecom Corporation Limited(601728) penetration rate has reached 50.4%. Secondly, the innovative business is full of momentum. The digital transformation revenue of China Mobile is yoy + 26.3%, accounting for 21.2% of the main business revenue, and contributes 59.5% to the increment of the main business revenue. In 2021, China United Network Communications Limited(600050) industrial Internet business yoy + 28%, contributed 59% to the growth of the company’s main business revenue, and has become the “first engine” of revenue growth. In 2021, the digital business revenue of China Telecom Corporation Limited(601728) industry was yoy + 19.4%, and its contribution to incremental service revenue reached 51.6%.
Increase the investment and construction of computing power network to create a stronger core technology driving force: with the gradual increase of the incremental contribution of innovative business, IDC, servers and other computing power networks are invested and constructed. According to the announcement of China Mobile, it is estimated that about 48 billion yuan will be invested in the construction of computing power network in 2022. It is estimated that 450000 racks and 660000 cloud servers will be accumulated in 2022. By the end of 2021, China Telecom Corporation Limited(601728) has 470000 available IDC racks, yoy + 11.90%. According to China Telecom Corporation Limited(601728) announcement, in 2022, it is expected to invest 6.5 billion yuan in IDC projects, build 45000 racks, invest 14 billion yuan in cloud resources projects and put into operation 160000 cloud servers. In terms of cloud business, China Telecom Corporation Limited(601728) and China Mobile doubled their annual growth in 2021, with revenue growth reaching 102% and 114% respectively. At present, the overall level of China Mobile is accelerating towards the first camp, Tianyi cloud is also in the leading position in the industry, and the public cloud ranks first.
Broaden business boundaries and build an industrial core ecosystem: the three operators actively build a mutually beneficial and win-win ecosystem, change the development mode and growth mode, and focus on the upstream core competence enterprises and downstream industry application enterprises of the industrial chain. Among them, China Mobile has established a special industrial investment fund to achieve wide investment coverage, and has invested in more than 40 projects with a scale of more than 180 billion yuan China Telecom Corporation Limited(601728) continues to expand in mobile communication, smart home and other fields. At the same time, Tianyi cloud carries out equity diversification reform, promotes the integration of cloud computing ecological resources, and enhances China Telecom Corporation Limited(601728) ‘s market expansion ability in the field of industrial digitization.
Pay attention to shareholder returns and employee incentives, and increase the proportion of dividends. Repurchase, shareholding increase and equity incentives show confidence in business growth: in 2021, the proportion of dividends paid by China Telecom Corporation Limited(601728) (H shares), China Mobile (H shares) and China United Network Communications Limited(600050) (H shares) will reach 60%, 60% and 46% respectively. China Telecom Corporation Limited(601728) said to increase the proportion of dividends to 70% three years after the listing of a shares, and China Mobile will increase the proportion of dividends to 70% within three years from 2021. China Mobile (A-share, 2022) and China Telecom Corporation Limited(601728) (A-share, 2021) respectively issued plans to increase their holdings, with an increase amount of no less than 3 billion yuan (no more than 5 billion yuan) and 4 billion yuan respectively. China Mobile (Hong Kong stock) announced a repurchase plan at the beginning of 2022, with a total repurchase amount of no more than 10% of the total issued Hong Kong shares. China United Network Communications Limited(600050) also issued a restricted stock incentive plan at the beginning of 2022. We believe that operators pay full attention to shareholder returns and employee incentives. With the rapid development of innovative business, they are full of performance confidence.
Investment suggestion: as of March 30, the Pb valuation of China Mobile (A / h) is 1.23x/0.79x, the Pb valuation of China Telecom Corporation Limited(601728) (A / h) is 0.86x/0.54x, and the Pb valuation of China United Network Communications Limited(600050) (A / h) is 0.74x/0.29x. At present, the Pb valuation of the three major operators is at a historical low. With the improvement of C-end business and the rapid growth of innovative business, there is still room for valuation repair and improvement; With the gradual improvement of b-end business and steady improvement of profitability, we believe that compared with comprehensive solution providers and foreign operators, the PE valuation of operators is expected to be further improved. It is suggested to pay attention to China Mobile (covered), China Telecom Corporation Limited(601728) (covered), China United Network Communications Limited(600050) (covered).
Risk warning: the pressure of raising speed and reducing fees increases; The development of cloud business is less than expected; ARPU improvement was less than expected; 5g penetration rate is lower than expected.
