CHINA MOBILE(00941) 国泰君安证券·2024-04-24 09:02Investment Rating - Maintains a "Buy" rating with a target price of HKD 78.00, corresponding to 10.4x/9.9x/9.6x P/E for 2024-2026 and dividend yields of 7.0%/7.5%/8.0% [1] Core Views - China Mobile's Q1 2024 performance exceeded expectations, driven by cost control and efficiency improvements, which are expected to enhance profitability and support higher-than-expected dividend payouts [1] - The company's high-growth and high-dividend characteristics are expected to persist, supported by sustained industry growth [1] - Despite slightly lower-than-expected Q1 2024 profit growth, full-year profit and dividend growth remain optimistic, with service revenue and net profit reaching RMB 219.3 billion (+4.5% YoY) and RMB 29.6 billion (+5.5% YoY), respectively [2] - Mobile and home broadband users increased by 4.63 million and 6.83 million, respectively, with stable ARPU expected to continue in 2024 [2] - The company plans to increase its dividend payout ratio to over 75% starting from 2024, with dividend growth expected to outpace profit growth [2] Cost Efficiency and Capital Expenditure - 5G network construction has reached a moderate scale, with future capital expenditure expected to slow down as 5G demand becomes more fragmented [3] - China Mobile's 5G network capital expenditure is projected to decrease by 21.6% YoY in 2024, with total capital expenditure down 4% YoY, leading to healthier cash flow and reduced depreciation pressure [3] - The company adjusted the depreciation period for 5G wireless and related transmission equipment from 7 to 10 years, reducing annual depreciation by approximately RMB 18 billion [3] Dividend and Shareholder Returns - Based on the closing price as of April 22, 2024, China Mobile's estimated dividend yields for 2024/2025/2026 are 7.8%, 8.3%, and 8.9%, respectively, supported by stable profit growth [3] - The company's high and stable dividend growth is expected to provide a strong margin of safety for its stock price [3] Industry Comparison - China Mobile's valuation metrics (P/E and dividend yield) are competitive compared to peers in Hong Kong, the US, Japan, South Korea, and Europe, with a 2024F P/E of 9.8x and a dividend yield of 7.4% [7][10] - The company's capital expenditure is shifting towards computing power, with a focus on reducing costs and improving efficiency [7]