S&P on China Mobile (CHL)

Wireless operator China Mobile (ticker: CHL) reported results for the first three quarters of 2005 last week. Net profit was reportedly in-line with analyst estimates. You can access the details here. The following is a short extract from a research note published by Hong Kong based S&P Analyst David So:

China Mobile remains our preferred Chinese wireless play given the potential upside from: a) data revenue growth driven by replacement demand of data-capable handsets and what we view as increasingly more compelling data-related applications; b) higher dividend payout (39% proposed for 2005 still leaves significant room for higher payout) from strong free cash flow generation on top of its net cash position of HK$51.8 bln at end of 1H05; c) delay in 3G capex due to the glitches relating to TD-SCMDA (China’s home grown 3G standard as opposed to CDMA2000 in the US and WCDMA in Europe) interoperability issues among the handsets and network equipment produced by different vendors and; d) narrower pricing between the fixed-line player’s PAS (Personal Access System) and prepaid mobile services. As such, migration to mobile services from PAS customers underpins robust subscriber growth in addition to capturing customers from under-penetrated rural areas of the Mainland.

CHL chart.

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Comments

[WHarmill:]

CHL did come into my sight, especially after I read the CHL stock analysis on chinavestor. They took a detailed look at the fundamentals and techniques of CHL, and recommended a “Strong Buy

2005 Nov 28 05:42 AM