Davenport Downgrades China Mobile Limited (CHL) to Sell; Raises Risk Rating to Above Average
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Davenport downgrades China Mobile Limited (NYSE: CHL) from Buy to Sell.
Davenport analyst says, "Lowered China Mobile’s rating to Reduce/Sell on concern that the company may capture only one-third of China’s 3G wireless market. Last week, China’s Minister of Industry and Information Technology raised his forecast for China’s 3G subscribers from 150 to 240 million over the next few years. He expects China Mobile to sign up 50-80 million 3G subscribers, representing one-third of the total market. If this forecast is on the mark, then China Mobile’s share of China’s wireless market could decline significantly from its present share of 70%+ (493 million subscribers). Given increased competition from China Telecom and China Unicom, particularly for high value 3G customers, we reduced China Mobile’s 2010 revenue, operating cash flow, and GAAP EPS estimates from 453 billion yuan/$67.3 billion, 239.6 billion yuan/$35.6 billion, and $4.58 per share, to 440 billion yuan/$65.4 billion 1% growth), 231.7 billion yuan/$34.4 billion (2% growth), and $4.36 per share. Given the potential risk that China Mobile’s market share could decline substantially over the next few years, we believe there remains downside risk to our revised estimates, and therefore, lowered China Mobile’s rating from Buy to Reduce/Sell and suspended our former target of $64 per share. In addition, we raised China Mobile’s risk rating from Average to Above Average. We consider China Mobile fully valued, trading at 12.7 times our fiscal 2009 GAAP EPS estimate."
To see more analyst ratings on CHL Click Here.
China Mobile Limited, together with its subsidiaries, provides mobile telecommunications and related services primarily in China, Hong Kong, and internationally.
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