UBS released a research report stating that it will maintain China Mobile's (00941) “buy” rating, fine-tune the 2024-2026 revenue and net profit forecast by 1% to 3%, forecast a compound annual growth rate of 5%, and lower the target price from HK$89 to HK$85.
The bank pointed out that China Mobile's service revenue for the fourth quarter of last year was 198.96 billion yuan, an increase of 3.7% over the previous year, in line with the bank's expectations. Due to increased staff and sales expenses, EBITDA for the quarter fell 6% year on year to 72.98 billion yuan, 10% lower than the bank and market expectations. Net profit fell 2.5% year over year, 3% lower than the bank's forecast, partly due to SPD Bank's lower return on investment. The annual dividend payout was $4.83 per share, with a payout ratio of 71%, which was roughly in line with expectations, meaning that the dividend rate reached 7.2%.
The company's management expects good revenue and net profit growth this year and the next two to three years (the bank estimates an increase of more than 5%). Starting this year, the company will adjust the depreciation period for 5G assets from 7 to 10 years. It is estimated that the company can reduce depreciation by about 18 billion yuan this year, which is believed to provide a buffer for net profit growth under adverse macroeconomic factors this year. Management also expects the dividend payout rate to gradually increase to over 75% within three years starting this year. The bank thought there was a surprise, and the company's dividend payout prospects are resilient.