Life Term Strategies

1. Huge Gains in Long Term
- Receive significant capital gains
- by investing in corporations
- (with wide economic moat & average peers’ net margin)
- In very very long term

2. Strong Periodic Cash Flow
- Maintain self-sufficient monthly cash flow
- Through dividend, gains on derivative & short term trading
- For re-investment to item # 1 mentioned above

3. Mind for Risk Management
- Ensure strong cash position
- Maintain low risk by continue monitor, analyze & feel:
economic trend & environment,
market condition & investors emotion
corporate performance & outlook
asset allocation & direction

4. Be a holy Christian investor:
- Invest in wisdom & varies ways, but consistent & not over nor under of what the Holy Bible expects a Jesus follower should be
- Keep regular & long term spiritual growth
Continue experience God @ finance market
Aim for life transform opportunities
- Even though it may not teach Billy & Bilibala what stocks to invest nor how to make more, more & more $

2.25.2009

China Mobile 2008 results analysis

Overview:
China Mobile provides a full range of wireless telecom and value added services in China. It has 70% market share and about 457 million subsribers, which makes it the largest wireless operator in the world.

Mega-trend
Telecom industry in China is growing, because:
  • Population: 1.3B in China vs 0.3B in USA
  • Forecast GDP growth in the future 20 years: 8% vs 2.5%;
  • Total # of wireless subsribers over popution:50% vs 95%;
  • Trend from rural (low income) to urbanization (high income);
  • Increase population of middle class, which demand not just basic wireless service but value added service

Industry:

Telecom industry have the following special:

  • Require huge initial capital investment;
  • Require continue capital spending on technology improvement;
  • After the initial set up, service delivery cost will go down over time;
  • Trend of decline in ARPU (Average revenue per user) in China;
  • Growth is require to have continue improve in efficiency;
  • China's ARPU is among the lowest compare to developed countries;

Financial Data Actual 2008:

  • Total # of subscribers up 23.8% or 457M (12/08) vs 369M (12/07)
  • ARPU down 6.7% or RMB$83 (9M08) vs $89 (9M07)
  • EBITDA margin down 2.0% or 52.8% vs 53.9%
  • Revenue up16.6% or RMB$301.4B vs $258.4B
  • EPS up 37.7% or RMB$4.13 vs $3.00

Financial Forecast 2008, 2009, 2010:

  • # of new subscribers: 88M in 08 (actual), 80M in 09 and 74M in 10
  • ARPU: RMB$83, $80 and $78
  • EBITDA margin: 52.5% for all years
  • Reveune growth: +25%, +20.7%, +15.6%
  • EPS: RMB$5.89, $7.11, $8.22

Risk:

  • Face increase competition in 3G;
  • Unsymmetry act against CHL's molopoly position in wireless industry;
  • CHL's 3G wireless standard TD-SCDMA is not as mature as China Telecom's CDMA & China Unicom's WCDMA;
  • Rise on Capital expenditure on 3G;
  • ARPU may further reduce since most of the new subscriber are lower income users from rural market
  • Slow down in general economic growth

I've increased my discount rate from 11.5% to 12.5% to reflect the additional uncertainty about the future.


Comments:

BUY, Fair Value HK$147.48 (reduced from HK$168.48 previously @ Oct 08)

No comments:

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