CHINA TELECOM(601728) 光大证券·2025-04-29 02:12Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of the company [3][5] Core Views - The company's core business is developing steadily, with a slight increase in user numbers and a focus on technological innovation and R&D investment [1][2] - The company is expected to see improvements in free cash flow and a continuous increase in cash dividends, aligning with long-term trends in the telecommunications sector [3][2] - The report forecasts a slight adjustment in net profit estimates for 2025 and 2026, with projected net profits of 359 billion and 376 billion RMB respectively [3] Summary by Sections Financial Performance - In Q1 2025, the company achieved operating revenue of 134.5 billion RMB, a year-on-year increase of 0.01%, with service revenue at 124.7 billion RMB, up 0.3% [1] - The net profit attributable to shareholders was 8.9 billion RMB, reflecting a 3.1% year-on-year growth [1] - The weighted average return on equity (ROE) was 1.94%, an increase of 0.02 percentage points year-on-year [1] User Growth and Business Segments - The mobile communication business showed steady growth, with mobile users reaching 430 million, a net increase of 4.95 million [1] - The number of 5G network users reached 270 million, with a net increase of 15.48 million, resulting in a penetration rate of 62.0% [1] - Fixed-line and smart home services also maintained good growth, with broadband users at 200 million, a net increase of 670,000 [1] R&D and Innovation - The company reported IDC revenue of 9.5 billion RMB in Q1 2025, a year-on-year increase of 10.4% [2] - Smart revenue grew by 151.6%, while satellite communication revenue increased by 37.2% [2] - R&D expenses were 1.8 billion RMB, up 11.5% year-on-year, reflecting a commitment to technological innovation [2] Capital Expenditure and Dividends - Capital expenditure guidance for 2024 is set at 93.5 billion RMB, a decrease of 5.4% year-on-year, with expectations for 2025 to be 83.6 billion RMB [2] - The company plans to increase cash dividends, aiming for a distribution of over 75% of the profit attributable to shareholders within three years [2] Profit Forecast and Valuation - The report provides a profit forecast with operating revenue expected to grow from 507.84 billion RMB in 2023 to 579.9 billion RMB in 2027 [4] - The projected net profit for 2025 is 35.93 billion RMB, with a corresponding A-share PE ratio of 20X [4][3]