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Worries about “China Bubble” sent Shanghai down 6.5% but… let’s compare China Mobile (CHL) with Vodafone (VOD) to see who is overvalued. May 30, 2007

Posted by deminvest in China Mobile, China stock, CHL, growth stock, investment, Petrochina, PTR, Single stocks, stock I own, stocks, stocks that pay high dividends, VOD, Vodafone.
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  1. Greenspan, who started out like a guru, after quitting his previous profession, talks about a supposed “China Bubble”.
  2. Chinese government imposed a tax of 0.4% on every trade on Shanghai stock exchange, to calm it from growing too much.

Grennspan Guru warning about China

Those warnings succeeded in sending Shanghai stock markets down 6.5% today… That of course sent European markets down 1% and probably will send Wall Street down at opening too… Good Job!

 

But… Every-time I look at Chinese company figures, I see they are fairly priced. Often their current growth makes them cheap bargains.

Last week I bought Petrochina, because it was the best buy Oil Company. Now I am looking with great interest at World largest Cell Phone company: China Mobile.

I talked too much! Let’s let numbers sing now:

CHL Market Cap: 181.63B

VOD Market Cap: 182.32B

—> China Mobile is priced exactly like Vodafone, which I own already.

CHL Trailing P/E: 21.20 CHL. Forward P/E: 14.20

VOD Trailing P/E: JUST LOSSES. Forward P/E: 13.10

—> China Mobile: profitable and profits will grow. Vodafone losses now, profits later

CHL Revenue : 38.58B

VOD Revenue: 60.32B

—> Vodafone is larger than China Mobile now…

CHL Qtrly Revenue Growth (yoy):23.30%

VOD Qtrly Revenue Growth (yoy):7.20%

—> … but CHL grows much faster.

CHL Qtrly Earnings Growth (yoy):21.50%

VOD: Not available due to losses

—> CHL seems healthier and more stable

CHL: Total Cash (mrq): 20B, Debt:0

VOD: Total Debt (mrq): 40B

—> China Mobile floats on Billions of $, Vodafone has serious debts

CHL: Forward Annual Dividend Yield: 3.40%

VOD: Forward Annual Dividend Yield: 3.00%

—> China Mobile is paying better dividends, using its cash. Vodafone pays less using its borrowed money.

China Mobile is World leader with more than 300 Million customers, adding more than 4 million new customers every month. 500 Million of Chinese will  own a cell phone by the end of July and there is another 500 million Chinese who want it too. Chinese are getting mobile phone contracts without even bothering to have a land-line first.

Vodafone, on the other hand, has a hard time gaining new customers in its mature markets and is forced to do very expensive acquisitions in developing countries to show some growth. Also price-based competition to retain existing customers in Europe is fierce.

I would like to have “Greenspan guru” here now to ask him:

“Which do you think is overpriced??”

Comments»

1. deminvest - May 30, 2007

I could’t resist my own reasoning. I just bought 25 CHL shares at $45.86 each, spending a total $1,146.25.

Let’s hope Greenspan was really wrong to worry after all!

2. veronicaflowers - October 13, 2007

hi,

i thought i’d say hello to everyone. i’m new here.

veronica

3. moiliiliquarry - October 13, 2007

DEM you are a genius.

CHL 87.15

forward P/E 23
quarterly revenue growth 21%
quarterly earnings growth 25%

Not your ordinary dividend stock!

4. deminvest - October 14, 2007

Hi Veronica, welcome to Deminvest!

Moilii, before really believing that I’m a genius, please read how I threw $1700 on New Century, a sub-prime mortgage company which went broke a few months ago!

https://deminvest.wordpress.com/category/new-new-century-financial-corp/

5. moiliiliquarry - October 16, 2007

$1700 is not too much to learn a life-long lesson, I say. I’ve done much worse before!

Dem, would you ever consider holding CHL shares entirely for the long term? I don’t see a slowdown in growth for CHL for quite some time.

6. deminvest - October 17, 2007

Well Moili, I prefer to sell enough of them to get my invested money back, so I can be possible that I may keep remaining CHL shares forever. Also… if I had kept my money invested in a previous investment, may I would not even have searched for CHL.

I have to divest, research, invest…. Most of my stocks are free, so I have very little risks.

It is my destiny… sell, earn and cry for not having kept good stocks longer…🙂

7. moiliiliquarry - October 17, 2007

hahaaa! CHL exploding again today. Crude oil at $89 + … nice.

8. deminvest - October 18, 2007

Well, regarding Oil, you may have read the post about Petrochina…

https://deminvest.wordpress.com/2007/05/14/i-am-buying-10-petrochina-ptr

bought at $130 in May when Greenspan was talking about China’s bursting bubble, now worth $263.

9. moiliiliquarry - October 18, 2007

Yep, I saw that, and that’s why your buy of PTR was genius. China + Oil = $$$. I liked CNOOC back in the spring, but never bought a share. Auuggh. Crude price may dip now and then, but demand for oil in China will not waver for a long, long, long time. I’m watching PTR, CNOOC (CEO), STP and YGE closely. Oil and alternative energy in China will win with the least risk, imho.

10. deminvest - October 18, 2007

I also have some dull BP on portfolio… They have been lagging for years, but may eventually benefit of such high oil prices… also their 3.4% dividend looks juicy.

Last time I calculated, they had very cheap estimated Oil and Oil equivalent reserves. It is the most important number for Oil Companies. In my opinion, at such high oil price, when you buy an oil stock, you buy its oil reserves.

Last time I calculated, BP was not far from a $15 price tag on oil and oil equivalent barrels… Half of the price calculated for some of its competitors. If you look around my old posts, you can maybe find out how to calculate it.
If you want I can calculate it again for you.

11. joaedmonds - December 18, 2007

Hello,
Can you help me to find
The best soft to PC-where to buy, join site & other tipe to do a home online business.
Thanks.

12. sndrsndvz - May 1, 2010

hi im new to deminvest.wordpress.com , looking to learn new things😀

deminvest - May 4, 2010

Welcome sndrsndvz! Not too much to learn, except learning to use your own brain for investment ideas🙂


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