What Happened to China Mobile on March 20?



China Mobile rises 3.9%

China Mobile (CHL) stock rose 3.9% on March 20, 2017, to close at $58.52. It had risen 5.3% one day previously, on March 19. Notably, the stock has returned 6.4% over the trailing-12-month period and 4.3% in the past month, after falling more than 4% in calendar 2016.

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Long-term prospects

Analysts are optimistic about the long-term prospects of China Mobile. CHL is China’s (FXI) largest telecom firm with over 840 million customers. In calendar 2016, China Mobile’s customer base rose 2.5% YoY (year-over-year). While CHL’s 3G subscribers fell 37% YoY to over 100 million, its 4G subscribers grew significantly (over 55%) to more than 530 million.

Analysts expect CHL’s revenue to rise 2% YoY in calendar 2017 and 5% YoY in calendar 2018, as more customers will likely transition from 3G to 4G. Although this revenue growth is not significant for CHL, it’s higher than peer companies in China. CHL is also a mature company, which suggests stable revenue and net income growth.

Analysts also expect CHL’s EPS (earnings per share) to rise 18% YoY to $3.81 in fiscal 2017—then to rise an additional 9% YoY to $4.16 in fiscal 2018. There are currently three analysts covering CHL. One has a “buy” recommendation on the stock, while two have recommended a “hold.” CHL has a median target estimate of $66.87, which indicates that the stock is trading at a 14.3% discount to its median target.


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