Auriga Maintains Hold On China Mobile After 2010 Earnings Release (CHL)

Auriga has published a research report on China Mobile Limited CHL after the company released 2010 earnings that came in slightly below analyst estimates.

In the report, Auriga writes "We continue to view CHL's stock as lacking near-term catalysts but being supported by the company's strong FCF and high dividend yield (4.1%). Our analysis indicates that investors had been willing to pay for the acceleration of CHL's net sub add, but a reacceleration of CHL's net sub add is unlikely in the foreseeable future due to current market conditions in China. Given the company's capex needs, CHL is unlikely to increase its dividend payout ratio significantly beyond the 43% level in the next several years, thus dwindling the hope that the CHL stock can be a dividend expansion story. For investors looking for exposure to China's telecom carrier space, we recommend CHL's competitor, China Telecom (CHA, Buy), which we expect to generate attractive EBITDA expansion and healthy FCF in the coming years."

Auriga maintains its Hold rating and $50 price target.

China Mobile closed yesterday at $44.98.