CHINA TELECOM(601728) Tianfeng Securities·2024-04-24 01:30Investment Rating - The report maintains a "Buy" rating for China Telecom with a target price indicating a potential upside of 10%-20% over the next six months [6]. Core Insights - China Telecom's Q1 2024 revenue reached CNY 134.495 billion, a year-on-year increase of 3.7%, with a net profit attributable to shareholders of CNY 8.597 billion, up 7.7% year-on-year [1][4]. - The company is focusing on a dual-driven strategy of basic services and digital transformation, achieving significant growth in both mobile communication and digital services [2][4]. - The company emphasizes shareholder returns, with a dividend payout of CNY 0.2332 per share for 2023, representing a 19% increase year-on-year, and plans to increase cash distributions to over 75% of net profit in the next three years [3][4]. Financial Performance Summary - For Q1 2024, mobile communication service revenue was CNY 52.226 billion, a 3.2% increase year-on-year, with a net addition of 3.88 million mobile users, bringing the total to 412 million [2]. - Fixed-line and smart home services generated CNY 31.824 billion in revenue, up 2.2% year-on-year, with broadband ARPU increasing to CNY 48.6, a 2.1% rise [2]. - The digital industry segment reported revenue of CNY 38.679 billion, reflecting a robust growth of 10.6% year-on-year [2]. Financial Projections - The forecast for net profit attributable to shareholders is CNY 33.211 billion for 2024, CNY 36.048 billion for 2025, and CNY 38.817 billion for 2026, indicating a steady growth trajectory [4][5]. - Revenue projections for the next few years are CNY 546.616 billion in 2024, CNY 585.084 billion in 2025, and CNY 625.693 billion in 2026, with growth rates expected to stabilize around 6.94% to 7.64% [5][10]. Valuation Metrics - The report provides a P/E ratio forecast decreasing from 18.33 in 2023 to 14.38 by 2026, indicating an improving valuation outlook [5][10]. - The projected P/B ratio remains stable, with estimates around 1.26 to 1.18 over the same period [5][10]. Shareholder Returns - The company is committed to enhancing shareholder value, with a dividend payout ratio exceeding 70% of net profit for 2023 and plans to increase this to over 75% in the coming years [3][4].