China Mobile Reports Strong Third-Quarter Result; Fine-Tuning FVE to HKD 90

China Mobile reported strong third-quarter revenue growth but slowing EBITDA growth. Services revenue grew 7.8% year on year, with EBITDA growing 2.7%. China Mobile continues to generate very strong growth from DICT, or data, information and communications technology, which grew 31% year on year to CNY 20.3 billion (representing 10.5% of China Mobile’s total services revenue). We note this growth rate has progressively slowed from 50.7% in the first quarter and 38.4% in the second quarter. China Mobile grew services revenue faster than China Telecom for the first time since the first quarter of 2020. The growth in lower-margin DICT revenue may have contributed to the lower EBITDA growth. We reduce our fair value estimate for China Mobile to HKD 90 per share from HKD 91 per share mainly on currency movements and retain our narrow moat rating. We continue to see the company as undervalued at these levels.