Credit Suisse Downgrading China Mobile (CHL)

Credit Suisse is downgrading shares of China Mobile CHL. In a note to clients, Credit Suisse writes, "Downgrade China Mobile and China Telecom. Given the 'tipping point' towards data and away from voice, we revise down our FY11 and FY12 net profit forecasts for China Mobile 2.0% and 3.2%, respectively. Also, we reduce our DCF-based target price for China Mobile by 7.5% to HK$86, and with the upside dropping below 20%, we downgrade the stock from Outperform to NEUTRAL. While we revise up our FY11 and FY12 earnings estimates for China Telecom by 2.1% and 4.2%, respectively, we believe the stock is expensive. We expect purchase of the CDMA network to be earnings accretive but believe that it destroys value; we revise down our DCF-based target price by 2.7% to HK$4.28 and downgrade China Telecom to UNDERPERFORM." Shares of CHL are down 10 cents to $46.85, a loss of 0.2%.