CHINA TELECOM(00728) 国泰君安证券·2024-04-26 05:32Investment Rating - The report maintains a "Buy" rating for China Telecom (00728 HK) with a target price of HKD 5.00, corresponding to a price-to-earnings ratio of 12.7x/11.7x/10.8x for the years 2024-2026 [1]. Core Insights - China Telecom's service revenue and net profit for Q1 2024 were RMB 124.347 billion (up 5.0% year-on-year) and RMB 8.597 billion (up 7.7% year-on-year), respectively, aligning with market expectations [1]. - The company added 3.88 million mobile users and 2.06 million broadband users in Q1 2024, with mobile ARPU and broadband mixed ARPU increasing by 0.9% and 2.1% year-on-year, respectively [1]. - The report highlights a 10.6% year-on-year growth in industrial digitalization revenue due to ongoing investments in digitalization [1]. - Future dividends are expected to grow steadily, with a proposed increase in the payout ratio to over 75% over the next three years, leading to projected dividend yields of 6.5%, 7.2%, and 8.0% for 2024, 2025, and 2026, respectively [1]. Summary by Sections Financial Performance - Q1 2024 service revenue: RMB 124.347 billion (5.0% YoY growth) [1] - Q1 2024 net profit: RMB 8.597 billion (7.7% YoY growth) [1] - New mobile users: 3.88 million; new broadband users: 2.06 million [1] - Mobile ARPU growth: 0.9% YoY; broadband mixed ARPU growth: 2.1% YoY [1] Dividend Outlook - Proposed increase in payout ratio to over 75% starting in 2024 [1] - Projected dividend yields: 6.5% (2024), 7.2% (2025), 8.0% (2026) [1]