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| Following the announcement of China Mobile 2016 full year result, SJ members are advised not to follow the existing data of this thread becos it will not be updated with the latest interim statistic. This thread will be closed with immediate effect and once again investors are advised not to follow the past stipulated entry price and fair value indicated by myself. Thank you. CLOSED.... |
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | ||
| OPERATING PROFIT | $159,574 | $194,003 | $216,267 | $229,023 | $239,382 | $251,025 | $253,646 | $240,426 | $241,831 | $240,028 | IN MILLION |
| OPERATING PROFIT MARGIN | 54.03% | 54.35% | 52.52% | 50.66% | 49.33% | 47.54% | 43.59% | 38.15% | 37.12% | 35.91% | |
| RETURN ON ASSETS | 32.26% | 34.43% | 32.85% | 30.48% | 27.77% | 26.35% | 24.11% | 20.60% | 17.94% | 16.81% | |
| OPERATING PROFIT/INTEREST COST | 106 | 106 | 140 | 184 | 265 | 444 | 650 | 726 | 497 | 528 | |
| DEBT RATIO | 11.49% | 9.00% | 7.64% | 6.63% | 5.84% | 4.42% | 3.97% | 0.64% | 0.68% | 0.54% | |
| CASH/TOTAL DEBT | 4.19 | 5.60 | 6.49 | 7.87 | 8.68 | 11.61 | 14.04 | 83.04 | 70.51 | 80.72 | |
| CASH/SHORT TERM DEBT | 50 | 2,773 | 3,210 | 3,890 | 58 | 4,896 | 5,925 | 6,175 | 400 | N.A | |
| SHARE BASE | 19,968 | 20,032 | 20,054 | 20,061 | 20,065 | 20,072 | 20,100 | 20,103 | 20,438 | 20,475 | IN MILLION |
| DIVIDEND PAID | $26,162 | $34,088 | $44,274 | $48,614 | $50,201 | $52,575 | $55,425 | $55,491 | $50,924 | $47,912 | IN MILLION |
| DIVIDEND PER SHARE | $1.31 | $1.70 | $2.21 | $2.42 | $2.50 | $2.62 | $2.76 | $2.76 | $2.49 | $2.34 | |
| PE RATIO | 8.41 | 13.94 | 7.21 | 6.38 | 6.47 | 6.07 | 7.15 | 6.72 | 7.65 | 7.46 |
Im pleased to present the largest PRC telco, China Mobile Ltd. From the above data, we can see that its OPM was on a declining trend and this was contributed by a few factors.
1) Change of consumption behavior. Voice call and text messaging account for about 70% of total revenue in 2006 and currently its proportion fell to about 45% and replaced by app messaging which consume on data services of lower profit margin to the company.
2) Low take up rate of 4G services. PRC telcos are in the process of converting its customers base into 4G services but the process of doing so is slow. Monthly conversion is about 6 million users as a whole industry and about 72 million users per year. While the revenue from 4G is slow, its operating cost per 4G users is high due to low conversion base, hence it will take sometime for the company to stabilise its OPM.
Although currently China mobile is faced with declining OPM, it maintained a very strong balancesheet. Effectively it is a debt free company and flooded with cash. This is a very strong attribute for the company and it is also very rare to find a PRC company with zero debt and cash rich balance sheet. Given time, once its OPM stabilise, it will return to growth again.
My assessment of it fair value at HKD83.87 and ideal entry price at HKD68.78 or below. A gentle reminder to all investors, the ideal entry price is derived based on a historical safety margin off its fair value and it is not a price prediction. Investors are advised to buy in batches to further safeguard your capital against volatility. The estimated fair value is derived based on a long term horizon and i have no timeline to realise its value. Investors with short term investment horizon are advised not to follow.
PLEASE DO NOT REPLY OR COMMENT IN THIS THREAD, THIS IS STRICTLY MEANT FOR VIEWING ONLY. Readers are welcome to direct your comments or queries to my discussion thread " Feel free to share anything about investment" , thank you :)