CHINA_MOBILE(00941.HK):THE_PEAK_IS_BEHIND-2013-01-17.ppt
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1、11/12,1/12,3/12,5/12,7/12,9/12,TelecommunicationsSector,4,000,1,000,20,NA,15.9,2.0,NC,1M,(5),0,China Mobile(00941.HK)The Peak is Behind,16 Jan 2013Investment HighlightsSlowing revenue growth amid declining user market share.As thelargest mobile service provider in Mainland China,China Mobile mainlyp
2、rovides mobile communications and related services.Its revenue growthrate slowed in recent years,with falling market share of its mobile users ratefrom 74%in early 2009 to 64.6%as of end-3Q12.Chinas telecom industry is being pressured dually from bottleneck in,SELL(Initiation)Share Price:HK$88.90Tar
3、get Price:HK$77.20CSI Research DepartmentJian ChenTel:(8610)60838585Email:Juntao GongTel:(8610)60838159Email:,user growth and being channelized.Declining mobile user growth rateand high mobile phone penetration rate suggest mobile user growth toencounter a bottleneck.We forecast penetration rate of
4、3G users in China,Price ChartTurnover(HK$mn),(HK$),will reach 23%by end-2012E,while sharp growth in 3G users willsignificantly boost data expenditure.Internet companies are gradually eating,6,0005,000,China Mobile LtdMSCI-China,100.090.0,market share from mobile carriers,thus preventing carriers fro
5、m boosting,turnover amid fast 3G user growth and leading to the risk of beingchannelized.,3,0002,000,80.0,70.0TD-LTE is unable to help China Mobile regain competitive advantage.,The Companys strategy of creating synergies from“2G,3G,4G and WLAN”will make impact on user experience.Prior to 2015E,Chin
6、a Mobile is notexpected to gain a competitive advantage from the TD-LTE network.Weforecast that revenue contribution from the LTE business will not exceed 1%during 2012-15E.Even if the LTE network is constructed by its parentcompany,China Mobile will still stand to incur a loss of Rmb58.8bn during20
7、12-15E.Sliding market share of mobile users puts China Mobiles earningsunder challenge.We project that before 2015E,China Mobiles 2G marketshare will remain stable,while its 3G market share will continue to decline.Its total market share is projected to fall to 50%,and the ARPU toRmb62/user.China Mo
8、biles overall earnings are predicted to decline slowly.We forecast CAGR for the Companys revenue and net profit to be a mere0.5%and-3.7%respectively,during 2012-15E.Potential risks:Defensiveness in the context of uncertain domestic andglobal economies;breakthrough growth in Internet business;and fas
9、ter-than-expected development of the TD-LTE industrial chain.,0Source:Bloomberg,CSILatest Key DataMSCI ChinaFF no of shares(mn)FF(%)FF market cap(HK$mn)52-week high/low(HK$)12M daily turnover(HK$mn)12M volatility(%)PEG 2012-14E(x)RoE avg 2012-14E(%)P/B 2012E(x)Net debt/equity 2012E(%)Performance(%)A
10、bsoluteRel to MSCI-ChinaMajor Shareholder(%),60.06,6505,21425.94463,52791.8/71.61,462YTD 12M22 23(1)4,China Mobile Hong Kong(BVI)Ltd.AuditorKPMGIMPORTANT DISCLOSURE AT THE END OF THIS REPORT,74.06,2,China Mobile(00941.HK)Earnings forecast,valuation,and rating:Taking into consideration ofshrinking ma
11、rket share and sliding profits,we forecast the Companys2012-14E revenue to be Rmb562.5bn/573.1bn/565.3bn,corresponding to YoYgrowth rates of 6.5%/1.9%/-1.4%respectively.The Companys 2012-14EEBITDA is projected to be Rmb 259.6bn/263.5bn/257.9bn,with EBITDA growthrates of 3.4%/1.5%/-2.1%respectively.W
12、e derive a target price of HK$77.20for the Company based on 4.3x 2012E EV/EBITDA.Initiate with a SELL rating.Investment Summary,FY-end DecTurnover(Rmb mn)Chg(%)Net profit(Rmb mn)Chg(%)EPS(Rmb)Chg(%)PER(x)OCF/Share(Rmb)PCF(x)EV/EBITDA(x)DPS(Rmb)Yield(%),20104852317.31196403.95.95(4.9)1211.516.25.72.5
13、03.5,20115279998.81258705.26.265.21111.286.35.52.623.7,2012E5624666.51275341.36.351.31111.626.15.02.653.7,2013E5731381.91278260.26.360.21111.276.34.72.673.8,2014E565313(1.4)121340(5.1)6.04(5.1)1210.876.54.62.533.6,Source:Company announcement,CSINote:Closing price as of 15 Jan 2013;expressed in RMB u
14、nless otherwise specified,HK$1=Rmb0.80IMPORTANT DISCLOSURE AT THE END OF THIS REPORT,2005,2006,2007,2008,2009,2010,2011,2005,2006,2007,2008,2009,2010,1H2012,2011,Jul-09,Jul-10,Jul-11,Sep-09,Sep-10,Sep-11,Jul-12,Nov-09,Nov-10,Nov-11,Mar-09,Mar-10,Mar-11,May-09,May-10,May-11,Mar-12,May-12,Sep-12,Jan-0
15、9,Jan-10,Jan-11,Jan-12,1H2012,Revenue(Rmb100mn),Growth,YoY,Net profit(Rmb100,Growth,YoY,电信用户占比,users,China,users,China,3,China Mobile(00941.HK)Mobile Giant with Slowing Earnings GrowthChina Mobile Limited(together with its subsidiaries)is the largest mobile serviceprovider in Mainland China,boasting
16、 the largest number of mobile users and thelargest mobile communications network in the world.Its major shareholder isChina Mobile Hong Kong Company Limited,holds a 74.06%stake in the listedCompany through a wholly owned subsidiary China Mobile Hong Kong(BVI)Limited.The remaining 25.94%stake is held
17、 by public investors.The Companys revenue grew by 6.6%YoY to Rmb 266.5bn in 1H12,signalinga slowdown in growth.It recorded net profit of Rmb 62.2bn(+1.5%YoY)for thesame period.Its net profit growth rates declined significantly since 2009.TheCompanys EBITDA margin and net margin have been declining i
18、n recent years,to 46.2%and 23.3%respectively in 1H12.,Fig.1:Slowing growth of the Companys core business revenue,Fig.2:Net profit growth fell to 1.5%in 1H12,主营业务收入(亿元),同比增速,净利润(亿元)mn),同比增速,600050004000300020001000,26%,22%21%,15%,10%,7%9%7%,30%25%20%15%10%5%,140012001000800600400200,28%,23%,32%,29%,2
19、%4%,5%,1%,35%30%25%20%15%10%5%,0Source:Company announcements,CSI,0%,0Source:Company announcements,CSI,0%,Declining user market share is attributable to a lack of competitive edges in the3G network and end-user markets.The Companys mobile user market sharefell from 74%in early-2009 to 64.6%in Sep 201
20、2,while its share of new mobileusers also fell to 45.1%.Fig.3:China Mobiles user market share declined constantly to 64.6%,100%4.6%90%21.4%80%70%60%50%,Percentage of移动用户占比Mobile,Percentage of联通用户占比Unicom,Percentage of users,China Telecom,14.1%21.2%,40%30%,74%,64.6%,20%10%0%Source:Company announcemen
21、ts and operating figures,CSIHowever,the Company has strong cash flow and solvency capability.In 2011,the Companys asset-liability ratio was 31.7%,while respective current ratio anddividend yield stood at 1.40 and 3.56%,which were all above industry average.The Company has top industry management and
22、 strong execution capability,which will provide more flexible options for its operations and futuredevelopmentIMPORTANT DISCLOSURE AT THE END OF THIS REPORT,Sep-12,2000,2001,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011,2001,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011,1H2012,中国移动,中国联通,中国电信
23、,中国移动,中国联通,中国电信,Telecom,Net profit,1,同比增长,Growth,4,China Mobile(00941.HK),Fig.4:The Companys asset-liability ratio is higher thanindustry average,Fig.5:The Companys dividend yield is higher than industryaverage,China Mobile,China Unicom,China Telecom,China Mobile,China Unicom,China Telecom,60.0%50.0
24、%40.0%30.0%,4.00%3.00%2.00%,20.0%10.0%,33.1%,32.4%,33.0%,31.7%,1.00%,0.0%,0.00%,2008,2009,2010,2011,2008,2009,2010,2011,Source:Company announcements,CSI,Source:Company announcements,CSI,Note:Closing price as of 3 Jan,2013Carriers are under dual pressureRevenue growth suppressed by user growth bottle
25、neckGrowth of revenue from core business of telecommunication industry has beenslowing in the past decade,thus leading to a slowing net profit growth forcarriers.China Unicom and China Telecom are forecast to increase their shareof profit in the future,while that for China Mobile is predicted to dec
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