China Mobile Inches Closer to Becoming Highest Valued A-Share Company
Telecommunications provider China Mobile is on track to surpass the most highly valued A-share listed company in terms of market capitalization following a steady six-month rise in its stock price. On March 13, the company’s stock reached an all-time high of 98.34 yuan ($14.31) per share, pushing its total market value above 2.1 trillion yuan ($305 billion), second only to Kweichow Moutai, a partially state-owned Chinese company that specializes in producing spirits.
On March 12, China Mobile announced its plan to release its financial results for the full year of 2022 on March 23. The company expects to distribute more than 70% of the profits attributable to shareholders as cash profits in 2023. During the initial three quarters of 2022, China Mobile achieved an operating income of 723.549 billion yuan ($105 billion), up 11.5% from the previous year, and recorded a net profit of 98.532 billion yuan ($14 billion), up 13% year-over-year.
While the previous year’s financial results have not yet been released, many brokers have taken an objective stance regarding China Mobile. CICC analysts have predicted that the net profit of China Mobile will increase by 8.6% year-over-year. Meanwhile, analysts at China Great Wall have predicted that China Mobile’s net profit for the years 2022 to 2024 will reach 125.6 billion yuan, 136.4 billion yuan, and 148.5 billion yuan, respectively.
On March 13, the communication services sector in China experienced a significant surge in stock prices, largely driven by China Mobile’s performance. China Telecom’s share price rose by over 9%, closing at 7.26 yuan ($1.05), while China Unicom’s share price increased by over 5%, closing at 6.05 yuan ($0.88).
China Telecom has pledged to gradually raise the proportion of its annual profits distributed in cash to over 70% of the profits attributed to shareholders within three years of issuing and listing its A shares. Meanwhile, China Unicom has released its 2022 financial report. The company achieved an operating income of 354.944 billion yuan ($51 billion) last year, representing an 8.3% year-over-year increase, while its net profit for the same period was 7.299 billion yuan ($1.06 billion), an increase of 15.8% year-over-year.
The rising popularity of ChatGPT and AIGC (AI-generated content) has triggered a surge in stock prices of Chinese telecommunications operators. Sources from within China Telecom have attributed the company’s valuation recovery to the strong performance of its digital business. Similarly, the securities department of China Unicom has made a similar statement regarding the positive impact of digital operations on its valuation.
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According to Guosen Securities, the advent of the digital economy has resulted in a flourishing market for businesses that specialize in cloud computing and big data. As a result, telecom operators have shifted their focus to digital transformation, leading to significant growth in new digital ventures.
According to an independent telecom analyst cited by media outlet Yicai, the three major telecom operators in China have inherent advantages in artificial intelligence and computing power. This enables them to offer computing power support to companies developing products similar to ChatGPT, while also conducting their own research into comparable technologies.