Operators that hit the bottom and reversed are safe havens under the epidemic. Recently, due to the repeated impact of the epidemic, the operating rate and supply chain, the capital market has some concerns about the annual performance and product demand of various companies, and the market risk aversion is relatively strong. In this scenario, the triple attributes of “low debt” + “high dividend” + “required consumption” are superimposed, and the operator has become a high-quality asset haven. At the same time, from the perspective of fundamentals, the C-end business of operators hit the bottom and reversed in 2021, confirming the inflection point, the b-end business continued to develop at a high speed, and the scale of high value-added cloud business increased rapidly. In the medium and long term, it is expected to realize the continuous repair of the valuation.
The strong reversal of C-end business confirmed the inflection point of operation. According to the 2021 annual report of the three operators, the three mobile businesses achieved year-on-year growth in 2021, and China Mobile achieved year-on-year positive growth in mobile business revenue. From the perspective of ARPU value, the three ARPU values have shown an obvious stabilization and recovery trend. From the data level, the cold winter of operator C-end business has passed, and the fundamentals have ushered in an obvious bottom rebound.
B-end services are developing rapidly, and cloud services are advancing by leaps and bounds. With the continuous promotion of the digital transformation of the three operators, under the background of building “Digital China”, the rapid growth of b-end business is the main driving force for the return of operators’ revenue growth. The industrial digital revenue of the three operators has achieved a good growth rate. The most noticeable feature of cloud operators is that the revenue of cloud operators and enterprises is increasing rapidly, which is different from that of cloud operators.
Capital expenditure remained stable, and the focus shifted from 5g to cloud. The capital expenditure of the three operators in 2022 is basically the same as that in 2021. Among them, with the 5g construction entering the post cycle, the 5g capital expenditure of the three operators has decreased to a certain extent. Correspondingly, in 2022, the three major operators will invest more money in b-end business, mainly including IDC room investment and server investment, which also echoes the current business goal of operators to accelerate digital transformation.
The establishment of “a + H” capital pattern and further pay attention to the return of shareholders. With China Telecom Corporation Limited(601728) and China Mobile successively logging in a shares, the three major operators officially completed the capital market restructuring of returning to a, realizing the capital structure of “a + H” China Telecom Corporation Limited(601728) , China Mobile has announced that the dividend ratio will be increased to 70% within three years after the issuance of a shares. The high dividend yield and good asset quality of operators make operators have better stock price support in the current volatile market environment.
Recommended object:
China Mobile 600941: leading global operator, with strong reversal of C-end business and rapid development of b-end business. We expect the company’s net profit attributable to the parent company to be 124.5/132138.5 billion yuan in 2022 / 2023 / 2024. With the rise of dividend yield and the upward inflection point of the company’s operation, the company’s valuation space is expected to be further opened.
China Telecom Corporation Limited(601728) China Telecom Corporation Limited(601728) : the scale of b-end business is leading in the industry, and the net profit attributable to the parent company is expected to be 28.7/313/34.2 billion yuan. With the increase of dividend yield, the inflection point of the company’s operation is upward.
6 Zhongrun Resources Investment Corporation(000506) 00050: the industrial Internet business has accelerated and the operation quality has improved rapidly.
Risk tip: 5g penetration rate is lower than expected and market competition intensifies
