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HSBC upgraded China Mobile (941:HK) (NYSE:CHL) from Hold to Buy on Wednesday, raising its price target to HK$107.00 from HK$75.00, citing the company’s attractive dividend yield and strong cash position.
The telecommunications company offers a dividend yield of 6.4% for fiscal year 2025, which HSBC notes is the highest among the three major Chinese telecommunications providers. China Mobile also maintains net cash per share of HK$7.20, representing approximately 9% of its market capitalization, also leading its domestic competitors.
HSBC highlighted China Mobile’s ongoing market share gains in the home broadband segment as a key factor in the upgrade. The company’s strategy of bundling services and leveraging its extensive mobile market channels has proven effective in expanding its broadband customer base.
The research firm expects China Mobile’s EBITDA margin to potentially improve in fiscal year 2025 as the company’s cloud business segment achieves better profitability. This anticipated margin turnaround contributed to HSBC’s more positive outlook on the stock.
The new price target of HK$107.00 represents a significant increase from the previous target of HK$75.00, reflecting HSBC’s more optimistic assessment of China Mobile’s growth prospects and financial position in the competitive Chinese telecommunications market.
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