The Kennox Strategic Value Fund’s 1Q 2018 report included some commentary on HK-listed China Mobile (see the excerpt below). Kennox is an Edinburgh-based wholly independent asset manager. Their team runs the Kennox Strategic Value Fund, a long only global equities portfolio.

As per their latest quarterly report:

“[China Mobile] has the largest subscriber base of any mobile company in the world with the best network in the world’s most populous country, an exceptional franchise which produces prodigious cash flows and provides resilient exposure to the growth of the Chinese economy. As well, the substantial net cash on the balance sheet helps to insulate it from short-term disruptions. In the face of concerns over the government’s actions over pricing and negative sentiment towards China due to the recent tariff spat with the US, China Mobile is now trading at exceptionally attractive valuations – under 10x our view of its long term Sustainable Earnings, with net cash of c. 40% of the market cap, and a dividend yield of over 4%. Management has shown an increased interest in paying dividends (paying out a 20th anniversary special last year) – further moves here, or any trimming of their generous capex program,  could see the share price move significantly higher. Until then, we are paid to wait in the form of dividends and in retained earnings. Make no mistake that a trade war is a major risk for the global economy and stock markets, but a domestically-focussed, defensive company with bullet-proof positioning in the world’s second biggest economy is an extremely attractive investment at these valuations.”