Bullish on China Mobile (CHL)

Disclaimers are usually put at the end of an article but I'm just going to go ahead and say it...

I Own Shares in China Mobile

Why am I a huge bull on this company? Is there one thing I know that the market doesn't?
No.

The reason I'm so confident is because of the overwhelming number of reasons to own these shares. Mainly:

1. Amazing Valuation
2. It's in China
3. Check the chart


Valuation
P/Earnings= 12.2 (five year average = 17.5)
P/Book= 2.6
P/Free Cash Flow= 6.3

That's cheap for a $212 billion company with

Profit margin: 25%
Debt/Equity: 2%
Cash: $11.6/share
ROE: 23% this year

China
It's in China! That means I don't have to participate in QE2 debate, I don't have to pay attention to foreclosures, I don't care about the republican party. Regardless of your opinions on China's future, at present it is the most competitive country in the world. I'm not an advocate of only investing in China (nor am I a bear on the US) but now is the appropriate time to think about global diversification. The reality is that some countries are now positioned to outperform in the next 10 to 20 years, and by the numbers, one of those countries is definitely China.

Chart

I look at a chart at the beginning of my analysis and at the end. The majority of the research should be based on the books; the quantitative scorecard of any business. But right here we can visually see the upside potential. Before the crash it wasn't volatile, it just consistently surged upward. It also looks like it's resumed that trend in the past year. We are effectively getting a 50% discount IF we believe that the underlying fundamentals of the business have not changed.

They haven't changed.

We would have heard about 'disappointing figures' or a 'bleak future' from analysts. Or we would recognize superior value in a smaller competitor threatening to take market share. So far neither of these have happened. Even if China Mobile has squeezed all the potential out of its market, it's still the market leader, it still provides a necessary and valuable services and products; is it really justified to cut it's value in half?

I have a price target of $80, but considering they have a 3.5% dividend yield, I'm happy to hold.


Disclaimer: The analysis made is not to encourage speculation or investment in the companies mentioned. I am currently long shares of China Mobile (CHL).