\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 728 China Telecom Corporation Limited(601728) )
In the first quarter, the service revenue increased by 9.9% year-on-year, a new quarterly high in recent years; Industrial digital business revenue increased by 23% year-on-year, accounting for 26.7%, and moderately increased investment to support development; Maintain the “buy” rating.
Key investment points
The performance was in line with expectations, and the growth rate of service revenue hit a quarterly high
From January to March 2022, the company’s revenue was 118.58 billion yuan, an increase of 11.5% year-on-year, of which the service revenue was 110.02 billion yuan, an increase of 9.9% year-on-year, and the growth rate of service revenue reached a quarterly high in recent years; The net profit attributable to the parent company was 7.223 billion yuan, a year-on-year increase of 12.14%.
The growth of government and enterprises accelerated, and the growth of mobile / home users exceeded expectations
1) government and enterprise: from January to March, the industrial digital business revenue was 29.41 billion yuan, with a year-on-year increase of 23.1%, accelerating the growth, increasing by 5.4pct compared with the whole year of 2021, and the proportion of communication service revenue reached 26.7%. The company increased its investment in industrial digitization to help its development. In the target capital expenditure in 2022, the investment in industrial digitization reached 27.9 billion yuan, an increase of 62% year-on-year, accounting for 30.0% of the overall capital expenditure. The target is to increase the proportion of industrial digitization revenue to more than 30% in the next three years.
2) mobile: from January to March, the mobile communication service revenue was 49.01 billion yuan, with a year-on-year increase of 5.0%, which continued to grow well. From January to March, the number of mobile users / 5G package users increased by 7.11/22.95 million (the target is to increase by 15 / 80 million in 2022), and the 5g penetration rate reached 55.5%; Mobile user arpu45 1 yuan, a slight decrease of 1.1% over the same period.
3) households: from January to March, the business income of fixed network and smart home was 29.65 billion yuan, with a year-on-year increase of 4.9%, of which the income of smart home increased by 22.5% year-on-year, and the comprehensive ARPU of broadband increased by 0.9% year-on-year to 46.7 yuan; The number of wired broadband users has increased by 3.4 million (the target is to increase by 8 million in 2022).
Precise cost input and moderately enhance capacity-building
From January to March 2022, the operating cost of the company increased by 12.1% year-on-year, mainly due to actively supporting the development of 5g and industrial digital business and moderately increasing investment in capacity-building. Referring to H-share data, network operation and support costs, general and administrative expenses of sales and labor costs increased by 14.0%, 14.1% and 13.4% year-on-year, accounting for 1.15, 0.54 and 0.68pct of service revenue; Significant results were achieved in increasing 5g co construction and sharing and 4G network sharing. The depreciation and amortization cost increased by 3.3% year-on-year, accounting for 1.36pct of service revenue. In terms of expense ratio, sales, management and R & D expenses increased by 12.2%, 7.2% and 56.8% respectively year-on-year, accounting for ↑ 0.27pct, ↓ 0.22pct and ↑ 0.30pct respectively.
Profit forecast and valuation
The company’s new engine of industrial digitization has been further strengthened, and mobile and home 5g have driven sustained and high-quality development; It is estimated that the revenue growth rate of the company in 22-24 years will be 10.5% / 10.0% / 9.5%, and the profit growth rate will be 5.5% / 10.2% / 10.3%; Maintain “buy”.
Risk tip: the development of digital business in cloud and other industries is less than expected; The development trend of mobile ARPU is less than expected.
