Huachuang Securities·2024-08-21 17:06Investment Rating - The report maintains a "Recommendation" rating for China Telecom, with a target price of 6.96 CNY, while the current price is 6.04 CNY [5][9]. Core Views - China Telecom's communication service revenue growth is leading the industry, with a steady increase in profits. In H1 2024, the company reported total revenue of 265.973 billion CNY, a year-on-year increase of 2.82%, and a net profit attributable to shareholders of 21.812 billion CNY, up 8.23% [2][3]. - The company emphasizes shareholder returns, planning to maintain a dividend payout ratio of over 75% in the next three years, with an interim dividend of 0.1671 CNY per share for 2024, reflecting a 16.7% increase year-on-year [2][3]. Financial Performance Summary - In H1 2024, service revenue reached 246.2 billion CNY, growing by 4.3% year-on-year, which is consistently above the industry average. The mobile communication service revenue was 105.2 billion CNY, with a net increase of 9.08 million mobile users, bringing the total to 417 million [2][3]. - The capital expenditure for H1 2024 was 47.2 billion CNY, accounting for approximately 17.7% of revenue, with a focus on optimizing the capital structure. The company expects the capital expenditure to revenue ratio to drop below 20% for the full year [2][3]. - Operating cash flow showed a decline of 11.2% year-on-year, but this was the lowest decrease among the three major operators, with a net inflow of 58.34 billion CNY [2][3]. Future Projections - The report forecasts net profits for China Telecom to be 32.746 billion CNY, 34.826 billion CNY, and 37.034 billion CNY for 2024, 2025, and 2026 respectively, with corresponding EPS of 0.36 CNY, 0.38 CNY, and 0.40 CNY [3][9].