[ET Net News Agency, 29 October 2018] Credit Suisse lowered its target price for China
Mobile (00941) to HK$82.5 from HK$92.1, and downgraded its rating to "neutral" from
"outperform" after a period of strong share-price outperformance.
The research house said China government's 'higher speed lower tariff' policies have
been a boon for consumers and internet companies, but have resulted in sub-optimal
monetisation of data growth by China's cellular operators.
China Mobile's aggressive entry into the fixed broadband segment has clearly been
value-destroying. At circa Rmb34.3/month for fibre access, its ROIC in this segment is
negative; yet management has accelerated rollouts and has failed to drive up price points.
With China Mobile's 4G penetration rate having reached 75.9% in September 2018, a
disappointing 4G "harvesting" phase is coming to an end. With 5G deployment starting in 4Q
2019, the FY2018 operating cash flow of Rmb116.6bn is likely to prove to be the near-term
peak.
Credit Suisse trimmed its FY2018 revenue, EBITDA and net profit by 1.9%, 2.8% and 3.9%,
respectively. (KL)