China Securities Regulatory Commission (CSRC) Approves China Mobile's IPO The three major telecom operators will soon "meet" the A-share market

Reporter Li Qiaoyu

On December 13, the CSRC approved China Mobile Co., Ltd.'s initial public offering application in accordance with statutory procedures. China Mobile is about to launch the release.

According to the prospectus previously released by China Mobile, the company intends to publicly issue no more than 965 million A-share shares, and the funds raised will focus on "new infrastructure, new elements and new kinetic energy", promote the transformation of digital intelligence, and build a new digital intelligence ecology for 5G boutique network construction, cloud resource new infrastructure construction, gigabit wisdom home construction, smart middle office construction, new generation information technology research and development and digital intelligence ecological construction, with a total investment of 156.9 billion yuan, and the amount of funds to be invested is 56 billion yuan.

If China Mobile is successfully listed this time, it will refresh the record of the largest IPO raised in the A-share market in the past 10 years, and together with China Telecom and China Unicom, the three major telecom giants will gather in the A-share market. In addition, China Mobile's return to A listing also has special significance in China's capital market.

"China Mobile's return to A-shares carries great significance." Yang Delong, chief economist of Qianhai Open Source Fund, told the Securities Daily reporter that as the first red-chip stock on the main board, China Mobile's return to A-shares will help enhance the overall strength of blue-chip stocks in the A-share market.

In fact, as early as 2006, it was reported that China Mobile's return to A-shares would be fully launched in the first half of 2007. Prior to this, at the annual financial conference held at the end of 2005, Wang Jianzhou, then chairman of China Mobile, publicly stated that China Mobile very much hoped to be listed on the A-share market at the right time.

"China Mobile's return to A-shares means that the three major telecom operators will gather in the A-share market to form a fairly weighted telecom operator sector." Pan Helin, executive dean and professor of the Digital Economy Research Institute of Zhongnan University of Economics and Law, told the Securities Daily reporter that the financing environment of the A-share market is better and the liquidity is more sufficient. The investment value of the three major telecom operators is very good, and with the continuous advancement of 5G applications, the follow-up performance is expected to show more new increments, and the investment value can be expected.

According to the third quarter report of 2021 disclosed by China Mobile a few days ago, in the first three quarters of this year, the company achieved operating income of 648.6 billion yuan, an increase of 12.9% year-on-year; achieved a net profit of 87.2 billion yuan, an increase of 6.9% year-on-year. According to a research report released by First Shanghai, China Mobile's free cash flow is strong, with an average net operating cash flow of 250 billion yuan and an average free cash flow of 80 billion yuan in the past five years. As of the end of June 2021, the company had cash and cash equivalents of $270 billion on its books, making it the world's best cash flow performer.

With the transformation of the three major telecom operators, the proportion of China Mobile's traditional communication revenue has gradually declined. In the first three quarters of this year, China Mobile's communication service revenue was 572.9 billion yuan, up 9.0% over the same period last year, accounting for 88.32% of total revenue, down 3 percentage points from the same period last year. During the reporting period, the company's value-added service revenue grew rapidly, with sales of product revenue and other revenue of 75.8 billion yuan, an increase of 55.4% year-on-year.

"In fact, the investment value of the three major telecom operators is very good, the stock price is relatively stable, and the main factor restricting the stock price is that the volume is too large." In the view of Pan and Lin, although there is a precedent for breaking the precedent, the stock price of China Mobile is expected to be more optimistic after the listing. "First of all, from the perspective of PB (average price-to-book ratio), China Mobile's PB is 0.7, the stock price has been above net assets for a long time, and the current PB covers the risk discount from the US stock delisting. China Mobile's A-share issuance is relatively better, and it is expected that the corresponding PB of the stock price will remain around 1 after the listing. ”

Pan and Lin also said that after China Mobile returns to A-shares, it will be closer to market users, and domestic investors know more about China Mobile than foreign investors, and are expected to obtain a higher equity premium.