Earnings First Take: 1Q22 net profit increased by 12.1% y-o-y, higher than market expectations
- Net profit increased by 12.1% y-o-y to Rmb7.2bn in 1Q22, higher than market expectations on stronger growth in Industrial Digitalisation business
- Operating revenue increased by 11.9% y-o-y to Rmb119.6bn in 1Q22, with service revenue up by 9.9% y-o-y to Rmb110bn
- EBITDA grew by 4.2% y-o-y to Rmb32.4bn in 1Q22, with EBITDA as a percentage of service revenue contracting 1.6ppts to 29.4%
- We currently rate BUY on the counter with TP of HK$4.28
What’s New
– China Telecom (728 HK) announced its 1Q22 results on 20 Apr 2022 after market close.
– Operating revenue grew by 11.9% y-o-y to Rmb119.6bn in 1Q22, with service revenue up by 9.9% y-o-y to Rmb110bn.
– Revenue for Industrial Digitalisation increased by 23% to Rmb29.4bn in 1Q22, accounting for 26.7% of total service revenue (up by 2ppts from 1Q21).
– Total mobile sub and 5G package sub net-add were 7.1m and 22.95m in 1Q22 respectively, with 5G penetration reaching 55.5%. 5G monthly run-rate of 7.7m exceeded management’s target of 6.7m.
– EBITDA increased by 4.2% y-o-y to Rmb32.4bn in 1Q22, with EBITDA as a percentage of service revenue contracting 1.6ppts to 29.4%.
– Net profit increased by 12.1% y-o-y to Rmb7.2bn in 1Q22, higher than market expectations due to faster Industrial Digitalisation business growth.
Our View:
– We expect share price to react positively as 1Q22 earnings beat market expectations.
– We currently rate BUY on the counter; TP of HK$4.28.