The return on investment for shareholders comes from two aspects, the increase in the value of the company’s shares and the regular profit distribution. In the words of bond thinking, it is the appreciation of the principal and the two parts of the yield.
In terms of returns, the difference between bond investment and stock investment is not very big. At least, this condition holds true for companies with inherent stability.
At present, the interest rate of corporate bonds with good operation and a guarantee multiple of more than 10 times will not exceed 3.5%. From this point of view, the lower limit of the reasonable price of a stock with an annual dividend of 35 yuan is about 100 yuan. The premise is that the company has a clear dividend policy and stable profits in the time span, that is, it has the characteristics of inherent stability.
China Mobile is a public utility, with a stable annual net profit of between 110 billion and 120 billion, and a stable dividend payment of between 50 billion and 56 billion. In the case of offsetting depreciation and investment scale, the retained profit is relatively large. On the other hand, the fact that the net profit is 2 times of the dividend all year round can be understood as a guarantee for the current dividend level, and the possibility of the dividend amount changing in the future is relatively small.
At present, the market value of China Mobile’s Hong Kong stock market is 1.06 trillion, with a dividend yield of 4.7%, which is 1.2% higher than the 3.5% yield of bonds. However, after all, equity shares lack priority repayment clauses, and theoretically bear greater risks than debt, and must also require higher yields. Therefore, the current price is still in a high position within a reasonable valuation range.
As for the market value of A-shares of 1.6 trillion… Investment is the same as bond yield, unless you are looking for a low-buying, high-selling yield with fluctuating principal.
$China Mobile(SH600941)$ $China Mobile(00941)$
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