First Analysis on China Mobile (941)

I try to apply the three methods mentioned in Buffettology again:

1) yield

• current stock price is $96.6, historical P/E is 29.1
  
• the current 10 year treasury yield is around 5.x%; 941 earning yield is around 3.44%, 5-year average EPS growth rate = 18.2%

2) EPS

• assume EPS growth rate = 20%, diviend payout ratio = 45%

3) ROE

• assume ROE = 19%, diviend payout ratio = 45%, current price = $96.6

In short, if the expected P/E is 12-17 in 5 years time, the expected annual return is from -6.75% to 10.08%.

Note:
As of end 2006, the 5-year average EPS growth = 18.2%, 5-year dividend payout ratio = 32.22%, 5-year average ROE = 18.99%.

In 2006, the dividend payout ratio is 47.19%

As of 1H2007, EPS growth rate = 25.65%, ROE = 21.15%.