China Mobile shares plunge despite good financial results

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 5, 2020
  • China Mobile has signed a cooperative agreement with Scienjoy Holdings
  • As long as China Mobile price is below $33 there is no signal of the bearish trend reversal
  • China Mobile's profitability is better than that of its competitors

China Mobile (NYSE: CHL) shares have weakened from $34.6 to $29.7 since the beginning of November, and the current price stands around $29.9. China Mobile can still not stabilize above the $30 resistance level, and this stock remains in the bear market.

Fundamental analysis: China Mobile is a healthy and stable company

China Mobile has declared stable dividends and has the intention to sustain payouts, but the price of this stock is trading near 5-years lows. China Mobile’s profitability is better than that of its competitors, and according to the latest news, China Mobile has signed a cooperative agreement with Scienjoy Holdings.

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This agreement will provide benefits for both companies, and it will provide high-quality video for more than 100M users in China Mobile’s network. “Leveraging China Mobile’s high market-share of mobile phone users in China, we believe that high-quality and high-viscosity users will be attracted to our live streaming platforms,” said Victor He, Chairman and CEO of Scienjoy.

China Mobile is handling the coronavirus threat very well, and the company has increased revenues by 1.4% Y/Y in Q3. Despite this, net income was down 0.3% in the same period, but this is still very good, especially in these times of uncertainty.

China Mobile stock has weakened below the $30 level, and the technical picture implies that the price may fall even more this December. Fundamentally looking, this company is not overvalued, and maybe now could be a good time to invest in China Mobile shares.

This stock can bounce back in 2021 year, and shares of China Mobile could be a good investment option at the current price levels. China Mobile has reached 950 million mobile customers, and most financial analysts are also expecting its price to rise considerably in the upcoming period.

There are also some risks when it comes to trading China Mobile shares in December, but the current 6.3% dividend yield makes it one of the region’s steadier players. China has recovered from the pandemic with its GDP rising nearly 5% in the third quarter, and my opinion is that better times are coming for China Mobile shares.

Technical analysis: China Mobile shares remain in a bear market

This stock has been moving in a downtrend last several months, but the current risk/reward ratio is very good for long-term investors.

Data source: tradingview.com

The critical support levels are $29 and $28, $33 and $35 represent the resistance levels. If the price jumps above $33, it would be a signal to buy China Mobile shares, but if the price falls below the $29 support level, it would be a strong “sell” signal.

Summary

China Mobile is a healthy and stable company, and with a $124B market capitalization, this stock is not overvalued. China Mobile’s profitability is better than its competitors, and the current risk/reward ratio is very good for long-term investors. Technically looking, shares of this company continue to trade in a bear market, and as long as China Mobile’s price is below $33 resistance, there is no signal of the trend reversal.

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