CHINA TELECOM(SH:601728) GF SECURITIES·2024-08-23 02:43Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of China Telecom, with a target price of 7.34 CNY per share for A-shares and 4.98 HKD per share for H-shares [2][6]. Core Views - China Telecom reported a revenue of 266 billion CNY for the first half of 2024, representing a year-over-year increase of 2.8%. Service revenue reached 246.2 billion CNY, up 4.3% YoY, while net profit attributable to shareholders was 21.8 billion CNY, reflecting an 8.2% YoY growth. The company maintained a dividend payout ratio of 70% [1][6]. - The mobile communication service revenue grew against the trend, with a revenue of 105.2 billion CNY, up 3.6% YoY. The value-added services and applications segment saw a significant increase of 17.1% YoY, generating 18.1 billion CNY. The penetration rate of 5G users increased by 14.3 percentage points YoY, and the average revenue per user (ARPU) for mobile users rose to 46.3 CNY [1][6]. - The company is focusing on upgrading its digital information infrastructure, with capital expenditures amounting to 47.2 billion CNY in the first half of 2024, which is 49.2% of the annual guidance. Investments in industrial digitalization reached 16.1 billion CNY, accounting for 34% of total capital expenditures [1][6]. - The report forecasts net profits for the years 2024 to 2026 to be 33.0 billion CNY, 35.5 billion CNY, and 38.1 billion CNY, respectively, with corresponding earnings per share (EPS) of 0.36 CNY, 0.39 CNY, and 0.42 CNY [1][6]. Summary by Sections Financial Performance - Revenue for H1 2024: 266 billion CNY (YoY +2.8%) - Service Revenue: 246.2 billion CNY (YoY +4.3%) - Net Profit: 21.8 billion CNY (YoY +8.2%) - Capital Expenditure: 47.2 billion CNY (YoY +13.5%) [1][6]. Business Segments - Mobile Communication Revenue: 105.2 billion CNY (YoY +3.6%) - Value-added Services Revenue: 18.1 billion CNY (YoY +17.1%) - Fixed-line Smart Home Revenue: 64 billion CNY (YoY +3.2%) - Cloud Services Revenue: 55.2 billion CNY (YoY +20.4%) [1][6]. Investment Outlook - Expected Net Profit: 33.0 billion CNY in 2024, 35.5 billion CNY in 2025, 38.1 billion CNY in 2026 - Target Price: 7.34 CNY for A-shares, 4.98 HKD for H-shares - Maintained "Buy" rating for both A and H shares [2][6].