CHINA TELECOM(601728) Haitong Securities·2024-10-24 03:56Investment Rating - The investment rating for China Telecom (601728) is "Outperform the Market" and is maintained [1]. Core Views - The report highlights a double-digit growth in Q3 earnings, with revenue for the first three quarters reaching 391.968 billion yuan, a year-on-year increase of 2.85%. Service revenue was 362.886 billion yuan, up 3.8% year-on-year, and net profit attributable to shareholders was 29.299 billion yuan, reflecting an 8.11% increase year-on-year [3][4]. - The mobile ARPU remained stable, and the contribution from smart home services continued to rise. The mobile communication service revenue for the first three quarters was 156.823 billion yuan, up 3.2% year-on-year, with a net increase of 14.9 million mobile users, totaling 423 million [4][5]. - The Tianyi Cloud service has made significant advancements in AI self-research capabilities, launching the first domestic full-function pre-training cloud service platform with a capacity of 10,000 cards [4]. Summary by Sections Financial Performance - For the first three quarters, the company reported a revenue of 391.968 billion yuan, with a service revenue of 362.886 billion yuan and a net profit of 29.299 billion yuan. The gross margin was 29.99%, and the net margin was 7.47% [3][4]. - In Q3 alone, revenue was 125.995 billion yuan, with a net profit of 7.487 billion yuan, and a gross margin of 28.21% [3][4]. Business Segments - The revenue from mobile communication services was 156.823 billion yuan, with a net increase of 14.9 million mobile users, and 5G package users increased by 26.4 million, reaching 345 million [4][5]. - The revenue from fixed-line and smart home services was 95.624 billion yuan, with a year-on-year increase of 2.9% [4]. Future Projections - The report forecasts revenues of 529.1 billion yuan, 556.3 billion yuan, and 584.2 billion yuan for 2024, 2025, and 2026 respectively, with net profits projected at 32.8 billion yuan, 35.2 billion yuan, and 37.5 billion yuan for the same years [5][8]. - The report suggests a reasonable value range for the stock between 6.91 yuan and 8.39 yuan based on a price-to-book ratio of 1.4 to 1.7 for 2024 [4][5].