Huachuang Securities·2024-04-06 16:00Investment Rating - The report maintains a "Recommended" rating for China Telecom (601728) with a target price of RMB 6.96, compared to the current price of RMB 6.00 [4][12]. Core Views - China Telecom's net profit has achieved double-digit growth for three consecutive years, with a proposed increase in the dividend payout ratio [2]. - The company's operating revenue for 2023 reached RMB 507.84 billion, a year-on-year increase of 6.92%, while the net profit attributable to shareholders was RMB 30.45 billion, up 10.34% year-on-year [2]. - The report highlights the robust growth in both basic business volume and quality, driven by an increase in user scale and value [2]. Financial Performance Summary - Revenue and Profit Growth: In 2023, the company reported operating revenue of RMB 507.84 billion, a 6.92% increase year-on-year, and a net profit of RMB 30.45 billion, reflecting a 10.34% growth [2][8]. - Mobile and Fixed-line Services: Mobile communication service revenue reached RMB 195.7 billion, growing 2.4% year-on-year, while fixed-line and smart home service revenue was RMB 123.1 billion, up 3.8% [2]. - User Growth: The mobile user base increased by 16.59 million, reaching 408 million, while broadband users grew by 9.26 million to 190 million [2]. Digital Transformation and Cloud Services - Digital Business Growth: The company's digital business revenue reached RMB 138.9 billion, a 17.9% increase, contributing 29.9% to service revenue [2]. - Cloud Services Upgrade: Tianyi Cloud has upgraded to an intelligent cloud platform, maintaining a leading position in the public cloud infrastructure market [2]. Investment and Dividend Policy - Capital Expenditure: In 2023, the company completed capital expenditures of RMB 98.8 billion, with a focus on mobile networks and digital industry investments [2]. - Dividend Payout: The total dividend distributed in 2023 was RMB 0.2332 per share, a 19% increase year-on-year, with plans to raise the payout ratio to over 75% within three years [2]. Financial Projections - Future Earnings Estimates: The report projects net profits of RMB 32.75 billion, RMB 34.83 billion, and RMB 37.03 billion for 2024, 2025, and 2026, respectively, with corresponding EPS of RMB 0.36, RMB 0.38, and RMB 0.40 [8][9].