I decided to buy some China Mobile shares, after did some reading in the weekend. Today’s news is China Mobile walked away from Apple regarding iPhone, cool. Since I placed a limited order ($85.25) last night, I got it at $84.22 shortly after it started trading.
Two things: China Mobile (NYSE:CHL; HK:0941) is not cheap, at PE 33 and a market cap of about $340 b (Yahoo and Google Finance), it is the biggest mobile operator in the world. It has around 362 m subscribers (end of Nov 2007, according to its web site). Note the stock price has gone up 100% in 2007, and about 80% in 2006.
On the other hand, China Mobile is growing at around 20% top and bottom line. For a company of that size, it’s not easy. And one nice thing about it, it does not carry as much risk as other Chinese ADRs (say LFC, or PTR). This is important in current uncertain economy and market environment; and relevant for me after I suffered the paper loss from CROX and LFT. I believe people (especially young people) in China will use their mobile phone talk to their friends, text messaging, get to Internet…even if Chinese economy slows down after Olympics, as many people expected (which I don’t agree).
The biggest uncertainty is the potential re-org of Chinese mobile industries amid 3G deployment. Because China Mobile has done so well, and distant No. 2 player China Unicom and others wanted to get a piece of the pie, with 3G rollout in next few years. Many people believe China Unicom will benefit more from this, and it may create more competition for China Mobile (a.k.a. bad for China Mobile).
Regarding iPhone, China Mobile walked away because they don’t want to accept the revenue sharing like Apple did with AT&T in the US.
Other noise in the news, the regulatory are holding a hearing about the mobile roaming fees in China. It looks the fee will drop in the future.
Separately I sold the 16.05 shares of Pizer in my ShareBuilder account last Monday, at market price of $23.17. Yes it did go up after I sold it.