China Mobile Ltd. (ADR) (CHL): Value Beyond the Ocean

China Unicom profit jumped

Due to the 3G and fixed line growth, China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) profit jumped 89% in the first quarter from a year earlier to $308 million. China Telecom Corporation Limited (ADR) (NYSE:CHA) invested 100 million ($16.3 billion) in 3G technology, with which it plans to expand its 3G consumer market. To cover its invested amount, the company should consider offering 4G to remain competitive. China Telecom is the leading fixed line service provider; in the first quarter, net profit surged to 4.70 billion Yuan ($755.5 million) from 4.27 billion Yuan a year earlier.

Over the years, China Mobile Ltd. (ADR) (NYSE:CHL)’s dividend and payout ratio have been growing. In 2012, the company’s annual payout ratio was 43% and the company plans to maintain this ratio for 2013. The company has a dividend yield and EPS of 4.37% and 5.19%, respectively. The stock is trading at $51.03 and has fallen 13% in 2013.

Final words

China Mobile Ltd. (ADR) (NYSE:CHL) could face increasing competition from China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU), as China Unicom wants to become the largest 3G operator. China Mobile is putting in a heavy investment in its 4G technology and network infrastructure, which may shrink profits in the short term, but it is a positive sign for the company’s long-term future. I believe China Mobile is a smart investment choice and is poised to benefit from 4G growth.

The article Value Beyond the Ocean originally appeared on Fool.com and is written by Red Chip.

Red Chip has no position in any stocks mentioned. The Motley Fool owns shares of China Mobile. Red is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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