Surging dividend expected amid payout ratio raise and solid earnings 

Earnings uplifted: development of cloud computing and 5G technology is driving the expansion of China's telecom industry. Net incomes of Big 3 Telecom players, namely China Mobile, China Telecom and China Unicom, have reported 7%-10% y/y growth in net income based on 9-month FY2023 results. 

Double-digit dividend growth: based on the management guidance, we expect China Mobile's and China Telecommunications' payout ratios to reach 70%, translating to double-digit increases in the upcoming final dividend riding on the solid performance. 

Updated shareholder reward plan with flat Q3 results  

Forecast: We revised up our forecast for the company's FY2023 final dividend to CNY 0.2 per share with medium confidence rank based on company's latest shareholder reward plan. 

Payout ratio no less than 50%: Company announced the shareholder reward plan for 2024 to 2026 on Feb 27th. With no major investment plan and asset liability ratio not exceeding 75%, the cash dividends distributed by the company in a year shall be no less than 50% of the net profit attributable to equity shareholders. Compared to the previous dividend policy, there is no significant change. According to the Q3 FY23 report, net profit increased 5.21% y/y and EPS came in at CNY 0.35 per share (Q3 FY22: CNY 0.33). The slight increase in net profit mainly due to the total power generated volume climb.

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