Intrinsic value of China Mobile ADR - CHL

Previous Close

$43.95

  Intrinsic Value

$9.74

stock screener

  Rating & Target

str. sell

-78%

Previous close

$43.95

 
Intrinsic value

$9.74

 
Up/down potential

-78%

 
Rating

str. sell

We calculate the intrinsic value of CHL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.00
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  102,489
  104,044
  106,437
  109,173
  112,244
  115,646
  119,380
  123,446
  127,847
  132,588
  137,677
  143,120
  148,929
  155,113
  161,686
  168,661
  176,052
  183,876
  192,150
  200,892
  210,123
  219,862
  230,134
  240,961
  252,368
  264,382
  277,032
  290,347
  304,358
  319,098
  334,602
Variable operating expenses, $m
 
  88,011
  90,023
  92,322
  94,904
  97,766
  100,905
  104,323
  108,023
  112,010
  116,288
  120,331
  125,215
  130,415
  135,941
  141,805
  148,019
  154,597
  161,554
  168,904
  176,665
  184,854
  193,490
  202,592
  212,183
  222,285
  232,920
  244,115
  255,895
  268,288
  281,323
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  85,405
  88,011
  90,023
  92,322
  94,904
  97,766
  100,905
  104,323
  108,023
  112,010
  116,288
  120,331
  125,215
  130,415
  135,941
  141,805
  148,019
  154,597
  161,554
  168,904
  176,665
  184,854
  193,490
  202,592
  212,183
  222,285
  232,920
  244,115
  255,895
  268,288
  281,323
Operating income, $m
  17,084
  16,033
  16,414
  16,850
  17,339
  17,881
  18,475
  19,123
  19,824
  20,579
  21,389
  22,789
  23,714
  24,699
  25,745
  26,856
  28,033
  29,279
  30,596
  31,988
  33,458
  35,009
  36,644
  38,368
  40,185
  42,098
  44,112
  46,232
  48,463
  50,810
  53,279
EBITDA, $m
  37,134
  27,648
  28,284
  29,010
  29,826
  30,731
  31,723
  32,803
  33,973
  35,233
  36,585
  38,031
  39,575
  41,218
  42,965
  44,818
  46,782
  48,861
  51,060
  53,383
  55,836
  58,424
  61,154
  64,031
  67,062
  70,254
  73,616
  77,154
  80,877
  84,794
  88,914
Interest expense (income), $m
  34
  0
  -5
  237
  514
  825
  1,170
  1,548
  1,959
  2,405
  2,885
  3,400
  3,951
  4,540
  5,166
  5,831
  6,537
  7,286
  8,078
  8,916
  9,801
  10,735
  11,722
  12,762
  13,858
  15,013
  16,229
  17,510
  18,858
  20,277
  21,769
Earnings before tax, $m
  20,900
  16,033
  16,420
  16,613
  16,825
  17,056
  17,306
  17,575
  17,864
  18,174
  18,504
  19,389
  19,763
  20,159
  20,580
  21,025
  21,495
  21,993
  22,518
  23,072
  23,657
  24,273
  24,923
  25,607
  26,327
  27,085
  27,883
  28,722
  29,605
  30,533
  31,510
Tax expense, $m
  5,154
  4,329
  4,433
  4,485
  4,543
  4,605
  4,673
  4,745
  4,823
  4,907
  4,996
  5,235
  5,336
  5,443
  5,556
  5,677
  5,804
  5,938
  6,080
  6,230
  6,387
  6,554
  6,729
  6,914
  7,108
  7,313
  7,528
  7,755
  7,993
  8,244
  8,508
Net income, $m
  15,732
  11,704
  11,986
  12,127
  12,282
  12,451
  12,633
  12,830
  13,041
  13,267
  13,508
  14,154
  14,427
  14,716
  15,023
  15,348
  15,692
  16,055
  16,438
  16,843
  17,270
  17,720
  18,194
  18,693
  19,219
  19,772
  20,354
  20,967
  21,612
  22,289
  23,002

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  66,203
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  220,045
  216,759
  221,744
  227,443
  233,841
  240,930
  248,709
  257,179
  266,347
  276,225
  286,826
  298,167
  310,268
  323,153
  336,846
  351,377
  366,775
  383,075
  400,312
  418,525
  437,756
  458,047
  479,446
  502,001
  525,767
  550,797
  577,150
  604,889
  634,079
  664,787
  697,087
Adjusted assets (=assets-cash), $m
  153,842
  216,759
  221,744
  227,443
  233,841
  240,930
  248,709
  257,179
  266,347
  276,225
  286,826
  298,167
  310,268
  323,153
  336,846
  351,377
  366,775
  383,075
  400,312
  418,525
  437,756
  458,047
  479,446
  502,001
  525,767
  550,797
  577,150
  604,889
  634,079
  664,787
  697,087
Revenue / Adjusted assets
  0.666
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
Average production assets, $m
  100,426
  110,807
  113,356
  116,269
  119,539
  123,163
  127,140
  131,470
  136,157
  141,206
  146,625
  152,423
  158,609
  165,196
  172,196
  179,624
  187,496
  195,828
  204,640
  213,950
  223,781
  234,154
  245,093
  256,623
  268,772
  281,567
  295,039
  309,219
  324,141
  339,839
  356,351
Working capital, $m
  7,270
  -36,519
  -37,359
  -38,320
  -39,397
  -40,592
  -41,902
  -43,329
  -44,874
  -46,538
  -48,324
  -50,235
  -52,274
  -54,445
  -56,752
  -59,200
  -61,794
  -64,541
  -67,445
  -70,513
  -73,753
  -77,172
  -80,777
  -84,577
  -88,581
  -92,798
  -97,238
  -101,912
  -106,830
  -112,003
  -117,445
Total debt, $m
  723
  -93
  4,394
  9,523
  15,281
  21,661
  28,662
  36,285
  44,537
  53,427
  62,967
  73,174
  84,066
  95,662
  107,986
  121,063
  134,922
  149,592
  165,105
  181,497
  198,804
  217,066
  236,325
  256,625
  278,014
  300,541
  324,259
  349,224
  375,495
  403,132
  432,202
Total liabilities, $m
  78,408
  195,083
  199,570
  204,698
  210,457
  216,837
  223,838
  231,461
  239,713
  248,603
  258,143
  268,350
  279,242
  290,838
  303,162
  316,239
  330,098
  344,768
  360,281
  376,673
  393,980
  412,242
  431,501
  451,801
  473,190
  495,717
  519,435
  544,400
  570,671
  598,308
  627,378
Total equity, $m
  141,637
  21,676
  22,174
  22,744
  23,384
  24,093
  24,871
  25,718
  26,635
  27,623
  28,683
  29,817
  31,027
  32,315
  33,685
  35,138
  36,678
  38,308
  40,031
  41,853
  43,776
  45,805
  47,945
  50,200
  52,577
  55,080
  57,715
  60,489
  63,408
  66,479
  69,709
Total liabilities and equity, $m
  220,045
  216,759
  221,744
  227,442
  233,841
  240,930
  248,709
  257,179
  266,348
  276,226
  286,826
  298,167
  310,269
  323,153
  336,847
  351,377
  366,776
  383,076
  400,312
  418,526
  437,756
  458,047
  479,446
  502,001
  525,767
  550,797
  577,150
  604,889
  634,079
  664,787
  697,087
Debt-to-equity ratio
  0.005
  0.000
  0.200
  0.420
  0.650
  0.900
  1.150
  1.410
  1.670
  1.930
  2.200
  2.450
  2.710
  2.960
  3.210
  3.450
  3.680
  3.910
  4.120
  4.340
  4.540
  4.740
  4.930
  5.110
  5.290
  5.460
  5.620
  5.770
  5.920
  6.060
  6.200
Adjusted equity ratio
  0.490
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15,732
  11,704
  11,986
  12,127
  12,282
  12,451
  12,633
  12,830
  13,041
  13,267
  13,508
  14,154
  14,427
  14,716
  15,023
  15,348
  15,692
  16,055
  16,438
  16,843
  17,270
  17,720
  18,194
  18,693
  19,219
  19,772
  20,354
  20,967
  21,612
  22,289
  23,002
Depreciation, amort., depletion, $m
  20,050
  11,614
  11,869
  12,160
  12,487
  12,850
  13,247
  13,680
  14,149
  14,654
  15,196
  15,242
  15,861
  16,520
  17,220
  17,962
  18,750
  19,583
  20,464
  21,395
  22,378
  23,415
  24,509
  25,662
  26,877
  28,157
  29,504
  30,922
  32,414
  33,984
  35,635
Funds from operations, $m
  34,308
  23,319
  23,855
  24,288
  24,770
  25,301
  25,881
  26,510
  27,190
  27,921
  28,704
  29,396
  30,288
  31,236
  32,243
  33,310
  34,441
  35,638
  36,902
  38,238
  39,648
  41,135
  42,703
  44,355
  46,096
  47,929
  49,858
  51,889
  54,026
  56,273
  58,637
Change in working capital, $m
  -2,395
  -716
  -840
  -960
  -1,078
  -1,194
  -1,311
  -1,427
  -1,545
  -1,664
  -1,786
  -1,911
  -2,039
  -2,171
  -2,307
  -2,448
  -2,594
  -2,746
  -2,904
  -3,069
  -3,240
  -3,419
  -3,605
  -3,800
  -4,004
  -4,217
  -4,440
  -4,673
  -4,918
  -5,174
  -5,442
Cash from operations, $m
  36,703
  24,035
  24,695
  25,248
  25,848
  26,495
  27,191
  27,937
  28,735
  29,585
  30,490
  31,307
  32,326
  33,407
  34,550
  35,759
  37,036
  38,384
  39,806
  41,306
  42,888
  44,554
  46,308
  48,155
  50,100
  52,146
  54,298
  56,562
  58,943
  61,447
  64,079
Maintenance CAPEX, $m
  0
  -10,861
  -11,081
  -11,336
  -11,627
  -11,954
  -12,316
  -12,714
  -13,147
  -13,616
  -14,121
  -14,663
  -15,242
  -15,861
  -16,520
  -17,220
  -17,962
  -18,750
  -19,583
  -20,464
  -21,395
  -22,378
  -23,415
  -24,509
  -25,662
  -26,877
  -28,157
  -29,504
  -30,922
  -32,414
  -33,984
New CAPEX, $m
  -27,598
  -2,192
  -2,549
  -2,913
  -3,271
  -3,624
  -3,976
  -4,330
  -4,687
  -5,050
  -5,419
  -5,798
  -6,186
  -6,587
  -7,000
  -7,428
  -7,872
  -8,332
  -8,812
  -9,311
  -9,830
  -10,373
  -10,939
  -11,531
  -12,149
  -12,795
  -13,472
  -14,180
  -14,922
  -15,698
  -16,512
Cash from investing activities, $m
  -28,142
  -13,053
  -13,630
  -14,249
  -14,898
  -15,578
  -16,292
  -17,044
  -17,834
  -18,666
  -19,540
  -20,461
  -21,428
  -22,448
  -23,520
  -24,648
  -25,834
  -27,082
  -28,395
  -29,775
  -31,225
  -32,751
  -34,354
  -36,040
  -37,811
  -39,672
  -41,629
  -43,684
  -45,844
  -48,112
  -50,496
Free cash flow, $m
  8,561
  10,981
  11,066
  10,999
  10,950
  10,917
  10,898
  10,893
  10,901
  10,920
  10,950
  10,847
  10,898
  10,959
  11,030
  11,111
  11,201
  11,302
  11,412
  11,532
  11,662
  11,803
  11,954
  12,116
  12,289
  12,473
  12,670
  12,878
  13,100
  13,335
  13,583
Issuance/(repayment) of debt, $m
  -249
  -93
  4,487
  5,129
  5,758
  6,380
  7,001
  7,623
  8,252
  8,890
  9,541
  10,207
  10,891
  11,596
  12,324
  13,077
  13,859
  14,670
  15,513
  16,392
  17,307
  18,262
  19,259
  20,300
  21,389
  22,527
  23,718
  24,965
  26,270
  27,638
  29,070
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -285
  -93
  4,487
  5,129
  5,758
  6,380
  7,001
  7,623
  8,252
  8,890
  9,541
  10,207
  10,891
  11,596
  12,324
  13,077
  13,859
  14,670
  15,513
  16,392
  17,307
  18,262
  19,259
  20,300
  21,389
  22,527
  23,718
  24,965
  26,270
  27,638
  29,070
Total cash flow (excl. dividends), $m
  8,327
  10,888
  15,553
  16,128
  16,708
  17,297
  17,899
  18,517
  19,153
  19,810
  20,491
  21,054
  21,789
  22,555
  23,354
  24,188
  25,060
  25,972
  26,925
  27,924
  28,969
  30,065
  31,213
  32,416
  33,677
  35,000
  36,388
  37,843
  39,370
  40,972
  42,653
Retained Cash Flow (-), $m
  -8,924
  -4,396
  -499
  -570
  -640
  -709
  -778
  -847
  -917
  -988
  -1,060
  -1,134
  -1,210
  -1,288
  -1,369
  -1,453
  -1,540
  -1,630
  -1,724
  -1,821
  -1,923
  -2,029
  -2,140
  -2,256
  -2,377
  -2,503
  -2,635
  -2,774
  -2,919
  -3,071
  -3,230
Prev. year cash balance distribution, $m
 
  5,830
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  12,322
  15,054
  15,558
  16,068
  16,588
  17,121
  17,670
  18,236
  18,822
  19,431
  19,920
  20,579
  21,267
  21,985
  22,735
  23,520
  24,342
  25,202
  26,102
  27,046
  28,036
  29,073
  30,160
  31,301
  32,497
  33,753
  35,069
  36,451
  37,901
  39,423
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  11,814
  13,782
  13,540
  13,231
  12,858
  12,426
  11,937
  11,398
  10,812
  10,187
  9,460
  8,782
  8,086
  7,381
  6,675
  5,977
  5,296
  4,641
  4,019
  3,437
  2,900
  2,412
  1,977
  1,594
  1,264
  985
  753
  564
  414
  297
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

China Mobile Limited is an investment holding company principally engaged in telecommunication and related businesses. Its main businesses include Mobile businesses, Wireline Broadband businesses and Internet of Things (IoT) businesses. Mobile businesses include two categories of services. Voice services include local calls, domestic and international long distance calls, roaming services and voice value-added services. Data services include short message services and multimedia message services, wireless data traffic services and application and information services, such as Mobile Music, Mobile Reading and Mobile Video, among others. Wireline Broadband businesses include the provision of wireline broadband and related services. The Company also provides customer services, including phone bill enquiry, among others. The Company mainly operates businesses in Mainland China.

FINANCIAL RATIOS  of  China Mobile ADR (CHL)

Valuation Ratios
P/E Ratio 57.2
Price to Sales 8.8
Price to Book 6.4
Price to Tangible Book
Price to Cash Flow 24.5
Price to Free Cash Flow 98.8
Growth Rates
Sales Growth Rate 6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.7%
Cap. Spend. - 3 Yr. Gr. Rate 6.3%
Financial Strength
Quick Ratio 92
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0.5%
Interest Coverage 616
Management Effectiveness
Return On Assets 7.4%
Ret/ On Assets - 3 Yr. Avg. 8%
Return On Total Capital 11.4%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 11.5%
Return On Equity - 3 Yr. Avg. 12.2%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 79.1%
Gross Margin - 3 Yr. Avg. 80.6%
EBITDA Margin 40%
EBITDA Margin - 3 Yr. Avg. 41%
Operating Margin 16.7%
Oper. Margin - 3 Yr. Avg. 16.7%
Pre-Tax Margin 20.4%
Pre-Tax Margin - 3 Yr. Avg. 21.3%
Net Profit Margin 15.3%
Net Profit Margin - 3 Yr. Avg. 16.1%
Effective Tax Rate 24.7%
Eff/ Tax Rate - 3 Yr. Avg. 24.1%
Payout Ratio 43.2%

CHL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CHL stock intrinsic value calculation we used $102004 million for the last fiscal year's total revenue generated by China Mobile ADR. The default revenue input number comes from 2016 income statement of China Mobile ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CHL stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CHL is calculated based on our internal credit rating of China Mobile ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of China Mobile ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CHL stock the variable cost ratio is equal to 84.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CHL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for China Mobile ADR.

Corporate tax rate of 27% is the nominal tax rate for China Mobile ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CHL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CHL are equal to 106.5%.

Life of production assets of 10 years is the average useful life of capital assets used in China Mobile ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CHL is equal to -35.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $23110 million for China Mobile ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 20475 million for China Mobile ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of China Mobile ADR at the current share price and the inputted number of shares is $899.9 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

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▶ [$$] Hacking accusations fly over China Mobile   [08:50AM  Financial Times]
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▶ U.S. Moves To Block China Mobile From Entering Market   [Jul-02-18 10:53PM  Bloomberg]
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▶ Why Fundamental Investors Love China Mobile Limited (HKG:941)   [Jun-21-18 11:07PM  Simply Wall St.]
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▶ BRIEF-China Tower Files IPO Prospectus   [May-14-18 08:08AM  Reuters]
▶ China Mobile posts 4.1 pct rise in Q1 profit   [Apr-20-18 06:30AM  Reuters]
▶ Put China Mobile in Your Pocket   [Mar-26-18 07:00AM  Morningstar]
▶ Is China Outpacing the U.S. in AI and 5G?   [Mar-15-18 08:26PM  Motley Fool]
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▶ Top SEHK Dividend Payers   [Feb-24-18 07:02PM  Simply Wall St.]
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▶ Richard Pzena's Top 5 New Buys of the 4th Quarter   [Feb-12-18 12:40PM  GuruFocus.com]
▶ Risk-Reward With China Mobile   [Jan-29-18 10:27AM  GuruFocus.com]
▶ January Best Dividend Payers   [Jan-24-18 07:02PM  Simply Wall St.]
▶ Yahoo Finance Live: Midday Movers - Jan 16th, 2018   [Jan-16-18 09:40AM  Yahoo Finance Video]
Financial statements of CHL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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