UBS has released a report adjusting its forecast for China Mobile (00941) following the earnings announcement. The bank maintains its revenue estimates for 2025 to 2027 unchanged, but slightly lowers net profit estimates by 0% to 1% to reflect a minor decline in profitability amid macroeconomic headwinds. UBS has also brought its DCF model forward by three months, reducing the target price from HKD 102 to HKD 100. This implies a projected dividend yield of 5.7% for 2026, compared to the current trading yield of 6.7%.

In the third quarter, China Mobile's service revenue reached RMB 216.2 billion, representing a year-on-year increase of 0.8%, which aligns with market expectations. However, EBITDA declined by 1.7% year-on-year to RMB 79.4 billion, falling short of market forecasts by 3%. Net profit for the period experienced a slight increase of 1.4%, primarily due to reduced depreciation and amortization expenses following peak capital expenditures, which partially offset increased operating expenses.

According to UBS's calculations, China Mobile's mobile ARPU for the third quarter of 2025 decreased by 2.5% year-on-year, which contributed to a 2% decline in mobile service revenue. Conversely, total service revenue experienced a 0.8% growth due to a 6.1% year-on-year increase in fixed-line revenue. China Mobile's operating cash flow for the third quarter was RMB 77.2 billion, a quarterly increase of 47%, accounting for 36% of total service revenue, a recovery from 18% in the first half of 2025.

Although accounts receivable remained stable, accounts payable fell by RMB 15.9 billion over the first nine months, indicating that, despite macroeconomic challenges, China Mobile is supporting its upstream suppliers. UBS is confident that, as guided by management, China Mobile's cash flow should remain well-controlled.