\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 728 China Telecom Corporation Limited(601728) )
Event: the company released the report for the first quarter of 2022. In 2022q1, the operating revenue reached 118576 billion yuan, an increase of 11.53% year-on-year; The net profit attributable to the parent company was 7.223 billion yuan, a year-on-year increase of 12.14%; Net profit deducted from non parent company was 7.985 billion yuan, with a year-on-year increase of 10.39%. The continuous development of the business in the three sections has driven the company's performance growth in the first quarter: in 2022q1, the company's mobile communication service revenue was 49.014 billion yuan, a year-on-year increase of 5.0%; The revenue from fixed network and smart home services was 29.645 billion yuan, a year-on-year increase of 4.9%; Industrial digital business revenue was 29.414 billion yuan, a year-on-year increase of 23.2%.
Mobile fixed network services are moving forward, and 5g migration and smart home development drive ARPU. In terms of mobile communication services, the company continued to promote 5g migration. In 2022q1, the net number of 5g package users of the company increased by 22.95 million to 211 million, the penetration rate increased from 50.4% at the end of 2021 to 55.5%, and the ARPU of mobile users increased to 45.1 yuan. In terms of fixed network and smart home services, the number of wired broadband users of 2022q1 company reached 173 million. Focusing on different types of situational needs, the company focused on creating a new digital life of smart sharing. The income of smart families increased by 22.5% year-on-year, driving the comprehensive ARPU of broadband to 46.7 yuan. In the future, the company will continue to deepen mobile fixed network business, accelerate 5g migration and smart home development, and ARPU will be steadily improved.
The contribution value of industrial digitization is accelerated to give full play to the market competitiveness of Tianyi cloud. In 2021, Tianyi cloud of the company was fully upgraded to a distributed cloud. In 2022q1, the company accelerated the promotion of customers' "using digital intelligence to go to the cloud", enriched edge cloud products and solutions, built a cloud network base in the computing age, and enabled the transformation and upgrading of traditional industries. In 2022q1, the company's industrial digital business revenue was 29.414 billion yuan, a year-on-year increase of 23.2%, which significantly exceeded the growth rate of mobile fixed network business and contributed an important increment to the company's performance. In the future, the company will continue to strengthen the construction of intelligent comprehensive digital information infrastructure and launch more high-quality and efficient comprehensive intelligent information products and services. Industrial digitization is expected to become a key business driving the development of the company.
Increase investment in research and development, and ensure accurate and scientific cost control. In 2022q1, the company moderately increased investment in capacity-building, and the operating cost reached 81.780 billion yuan, a year-on-year increase of 12.1%. The company's R & D / sales / management expenses were RMB 1.118/14.239/9.798 billion respectively, with a year-on-year growth rate of 56.8% / 12.2% / 7.2% respectively. Among them, R & D expenses increased most rapidly, mainly because the company strengthened the R & D of core technologies such as cloud network integration and 5g; The increase in sales expenses is mainly due to the company's investment of necessary marketing resources during the 5g development opportunity period; The increase in administrative expenses is mainly due to the increase in expenses such as stock appreciation rights of the company. The scale of the company's interest paying bonds decreased effectively, and the cash flow was in good condition. The financial expense in 2022q1 was 195 million yuan, a year-on-year decrease of 64.2%.
Investment suggestion: in 2022q1, the company's revenue and net profit attributable to the parent company have achieved double-digit high-quality growth. With the gradual implementation of the "east to West computing" project, the company continues to give full play to the advantages of cloud network integration and deeply promote the "cloud to digital transformation" strategy. It is expected that the company's performance is expected to achieve better growth in 2022. We estimate that the company's revenue from 2022 to 2024 will be 477575/520557/562201 billion yuan respectively; The net profit is 29.19/32.168/35.432 billion yuan respectively, and the corresponding EPS is 0.32/0.35/0.39 yuan respectively. Maintain the target price of 5.70 yuan and maintain the "Buy-A" investment rating.
Risk tip: 5g construction is less than expected, industrial digital development is less than expected, economic and policy environment risks, and the improvement of ARPU value of the company is less than expected
