China Mobile Earnings: Strong Growth Broadly In Line With Industry

China Mobile’s first quarter showed a continuation of the strong growth reported over the past two years, with DICT, or data, information and communications technology, driving revenue growth, but the traditional mobile revenue stream also holding up well. Services revenue grew 8.3% with EBITDA up 4.9% and net profit up 9.5%, all year over year. In terms of growth the result was broadly in line with its peers, with industry average year-on-year services revenue up 7.6%, EBITDA up 4.5% and net profit up 9.9%. China Mobile’s DICT revenue increased 24%, compared with China Unicom’s 15% and China Telecom’s 19%. We retain our fair value estimate for China Mobile at HKD 96.30 per share and reiterate our narrow moat rating based on efficient scale and scale-based cost advantage, which allowed the company to earn return on invested capital in 2022 of 20.4%, compared with China Telecom’s 3.6% and China Unicom’s 3.3% over the same period. We continue to see the company as undervalued at these levels.