China Mobile Earnings: Signs of Slowdown but Stock Still Looks Decent Value

China Mobile’s second-quarter 2024 result was slightly below our expectations, with services revenue growth slowing to 0.8%, EBITDA up 0.6%, and net profit up 5.2%. Revenue growth seems to have slowed across its mobile and nonmobile revenue streams. We estimate mobile services revenue, which accounts for two-thirds of China Mobile’s total service revenue, declined by 0.9% in the first half after growing at 2.5% in 2023. Likewise, nonmobile service revenue grew by 9.6% in the first half after growing 15.6% in 2023. We will need to wait for the results from its key competitors, China Telecom and China Unicom, over the next few weeks to see if any of the revenue slowdowns can be attributed to market share loss. Still, we suspect at least some if not most, can be attributed to economic weakness. The net profit growth was negatively affected by lower contributions from the additional reduction in VAT, which finished at the end of 2023. China Mobile reported CNY 4.4 billion from this source in 2023 and we estimate its elimination probably impacted China Mobile’s second-quarter profit before tax by around CNY 1 billion or 2%.