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2026-10-22 12:26:53 JPMorgan released a research report stating that CHINA MOBILE (00941.HK)'s 3Q earnings fell 12% YoY, 5% below market consensus expectations, which the broker believes was the main reason for the stock's roughly 4% decline yesterday (vs HSI down 0.9%). However, it emphasized that the earnings decline mainly stemmed from non-operating items such as investment losses. Excluding non-operating items, 3Q net profit was flat YoY, improving from YoY declines of 4% and 15% in 1Q and 2Q respectively, reflecting the effectiveness of operating expense optimization. The broker reiterated that CHINA MOBILE (00941.HK) remains its top pick among Chinese telecom operators listed in Hong Kong, expecting the company to be least affected by the 2026 VAT adjustment due to its significantly higher margin compared with peers. Based on the broker's forecast, the company is expected to deliver a 2026 dividend yield of 6.9%, the highest among the three major telecom operators. The broker forecast CHINA MOBILE (00941.HK)'s 2026 earnings to decline 7% YoY, milder than the respective 14% and 13% declines forecast for CHINA TELECOM (00728.HK) and CHINA UNICOM (00762.HK). It also expected earnings to rebound 3% and 4% YoY in 2027 and 2028 respectively, benefiting from lower depreciation costs driven by reduced capital expenditure and earnings contributions from artificial intelligence services, which would offset weakness in traditional telecom services. The broker noted that CHINA MOBILE (00941.HK)'s 3Q service revenue fell 5% YoY to RMB205.1 billion, similar to the 5% YoY decline in 2Q, while net profit fell 12.3% YoY to RMB27.3 billion. However, excluding non-recurring items, mainly fair value/disposal losses on financial assets and liabilities, recurring net profit reached RMB28.7 billion, broadly flat YoY with a decline of 0.2%. Operating cash flow for the first nine months rose 15.1% YoY to RMB185.3 billion, which the broker believes remains sufficient to support the company's commitment of a "flat to positive growth" full-year payout ratio. Payments for property, plant and equipment, other intangible assets and non-current assets in 3Q fell 11% YoY to RMB37 billion, reflecting capital expenditure discipline. The broker maintained an Overweight rating on CHINA MOBILE (00941.HK) with a TP of HKD100. (ad/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |