Earnings First Take: FY21 results in line; dividend payout ratio reached 60%
- Net profit increased by 24.5% y-o-y to Rmb25.9 billion in FY21, in line with preliminary results
- Operating revenue increased by 11.7% y-o-y to Rmb439.6 billion in FY21, with service revenue up by 7.8% y-o-y to Rmb402.8 billion
- Dividend payout ratio reached 60% in FY21, in line with market expectations
- Expect neutral share price reaction
What’s New
– China Telecom (CT, 728 HK) announced its FY21 results on 17 Mar 2022 after market close.
– Operating revenue grew by 11.7% y-o-y to Rmb439.6 billion in FY21, with service revenue up by 7.8% y-o-y to Rmb402.8 billion.
– Mobile communications service revenue increased by 4.9% y-o-y to Rmb184.2 billion. Wireline and Smart Family service revenue fixed-line revenue increased by 4.1% y-o-y to Rmb113.5 billion.
– Revenue from Industrial Digitalisation increased by 17.8% to Rmb98.9 billion, contributing to 24.6% of total service revenue, up by 2.1ppts.
– Mobile ARPU increased by 2% y-o-y to Rmb45 in FY21, thanks to 25.8ppts increased in 5G penetration rate to 50.4%.
– EBITDA increased by 4.2% y-o-y to Rmb123.9 billion in FY21, with EBITDA as a percentage of service revenue contracting 1ppt to 30.8%.
– Net profit increased by 24.5% y-o-y to Rmb25.9 billion in FY21 and adjusted net profit increased by 17.7% to Rmb24.5 billion, excluding a one-off after-tax gain from the disposals of subsidiaries.
– The company proposed a final dividend of Rmb0.17 per share (pre-tax), representing a payout ratio of 60% in FY21 (vs. c.40% in FY20), in line with market expectations.
– An interim dividend will be declared starting from year FY22.
Our View:
– We expect neutral share price reaction as both FY21 results and dividend payout ratio are in line with market expectations.
– We expect dividend payout ratio to be further increased to 65% and 70% for FY22 and FY23 respectively.
– We currently rate BUY on the counter; TP of HK$4.2.
– Analyst conference call and will be held at 7:30pm HK Time on 17 Mar 2021.