Group 1 - The "Huacai Cup" computing power competition concluded with the Suzhou Industrial Park Public Computing Power Service Platform winning the first prize among 150 projects [1] - The competition, organized by multiple associations, attracted over 10,000 projects from various industries, highlighting its significance in the computing power sector in China [1] - The event emphasizes the growing importance of computing power as a key driver of new productive forces amid rapid technological and industrial changes [1] Group 2 - The "Xirang" platform, part of China Telecom's Tianyi Cloud 4.0, will support the new computing power scheduling center in Wujiang, set to launch in June 2024 [2] - The infrastructure aims to create a collaborative network system that integrates cloud, edge, and terminal computing, facilitating access to various computing resources [2] - A comprehensive AI security protection system is being developed to ensure the safe and stable operation of AI applications [2] Group 3 - The "Xirang" platform has successfully integrated computing resources from nine diverse manufacturers, achieving a resource utilization rate improvement of over 17% [3] - The platform has established a sustainable mechanism benefiting government, enterprises, and users, serving over 40 industry users with more than 600 online demands [3] - The successful resource scheduling rate remains stable at 99.99%, demonstrating the platform's effectiveness in addressing computing power interconnectivity challenges [3]

Investment Rating - The investment rating for the company is "Buy" [6][11]. Core Insights - The company has demonstrated steady profit growth, with a 0.6% year-on-year increase in revenue to RMB 394.3 billion and a 5.0% increase in net profit to RMB 30.8 billion for the first nine months of 2025 [1]. - The company is focusing on enhancing its AI capabilities through its "Xiangrang" platform, which integrates cloud and network services to provide comprehensive intelligent cloud services [1]. - The company is expected to continue leveraging its digital business potential in the AI era, maintaining a positive outlook on its growth prospects [1]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved a revenue of RMB 394.3 billion, a 0.6% increase year-on-year, and a net profit of RMB 30.8 billion, up 5.0% year-on-year [1]. - In Q3 2025, revenue decreased by 0.91% to RMB 124.85 billion, while net profit increased by 3.6% to RMB 7.76 billion [1]. Business Segments - The company has seen robust growth in its core business, with 5G users reaching 290 million and a penetration rate of 66.9% [2]. - The data center business generated RMB 27.5 billion in revenue, a 9.1% increase year-on-year, while intelligent business revenue surged by 62.3% [3]. Profitability and Efficiency - The company's return on equity (ROE) improved by 0.19 percentage points to 6.72%, and the net profit margin increased by 0.31 percentage points to 7.8% [4]. - Cost management has been enhanced through AI capabilities, leading to a 3% reduction in network operation and support costs [4]. Future Outlook - The company is projected to maintain its profit growth, with expected net profits of RMB 34.8 billion, RMB 36.6 billion, and RMB 38.3 billion for 2025, 2026, and 2027, respectively [5]. - The target price for A-shares is set at RMB 9.11, reflecting a 1.8 times price-to-book (PB) ratio for 2025 [5][11].

Core Insights - The article discusses the significance of computing power as a new form of productivity, likening it to "digital electricity" that integrates computing, networking, and storage [2][3] - The "Computing Power Interconnection Action Plan" aims to create a national computing network, enhancing resource integration and standardization, which is a competitive advantage for China compared to the U.S. [5][6] Group 1: Market Overview - The software revenue is projected to increase by 80% from 2020 to 2024, with over 10,000 smart factories covering 80% of major manufacturing categories, indicating that computing power is becoming a new engine for economic growth [5] - The Chinese computing power market is expected to reach 307.5 billion yuan by 2027, with every 1 yuan invested generating 3-4 yuan in economic growth [6] Group 2: Infrastructure Development - China Mobile is a key player with over 1 million computing servers and a computing scale exceeding 43 EFLOPS, accounting for one-sixth of the national resources [9] - The Sichuan computing center is a critical node in the "East Data West Computing" strategy, providing significant resources for large model training and intelligent services [11][12] Group 3: Competitive Landscape - China Unicom operates four smart computing centers with a total computing scale of 30 EFLOPS and has implemented a fully domestic platform supporting various local chips and models [14][15] - China Telecom has developed a cloud-intelligent layout with a computing scale of 21 EFLOPS and has integrated multiple partners into its platform [17][19] Group 4: Strategic Implications - The national computing network led by the three major telecom operators addresses the issue of resource dispersion and reduces computing costs for businesses, enhancing the overall efficiency of resource utilization [21] - The total computing power in China is currently at 280 EFLOPS, narrowing the gap with the U.S., and the competition in computing power is seen as a contest of ecosystems and layouts [21]

Investment Rating - The report maintains a "Strong Buy" rating for the company [4][18]. Core Views - The company achieved a revenue of 523.6 billion yuan in 2024, representing a year-over-year growth of 3.1%, with a net profit of 33 billion yuan, up 8.4% year-over-year [8][18]. - The mobile communication service revenue reached 202.5 billion yuan, growing by 3.5% year-over-year, with a mobile user base of 425 million [2][8]. - The company is advancing its AI initiatives and has completed its AI layout, enhancing its service capabilities through the "Xirang" platform [9][18]. Summary by Sections Financial Performance - In 2024, the company reported total revenue of 523.6 billion yuan, with a net profit of 33 billion yuan and EBITDA of 140.8 billion yuan [8][18]. - The fourth quarter of 2024 saw a revenue of 131.6 billion yuan, marking a year-over-year increase of 3.8% [8]. Business Segments - Mobile Communication Services: Revenue of 202.5 billion yuan, with a net addition of 17 million mobile users and 351 million 5G package users, achieving a penetration rate of 82.8% [2][8]. - Fixed-line and Smart Home Services: Revenue of 125.7 billion yuan, with a stable ARPU of 47.6 yuan [2][8]. - Industrial Digitalization: Revenue of 146.6 billion yuan, with a significant growth in Tianyi Cloud revenue, which reached 113.9 billion yuan, up 17.1% year-over-year [3][8]. Capital Expenditure and Future Outlook - The company plans to reduce capital expenditure by 10.6% in 2025, with a focus on flexible adjustments based on market demand [9][10]. - The projected net profit for 2025 is 35.4 billion yuan, with a corresponding PE ratio of 19.8 [11][18]. Cash Flow and Dividends - Free cash flow reached 22.2 billion yuan, showing a year-over-year increase of 70.7% [18]. - The company plans to maintain a dividend payout ratio of over 75% in the next three years, with a dividend per share of 0.26 yuan in 2024 [18].