UBS Raises CHINA MOBILE TP to HKD83, AI Investment Drives Higher Capex

UBS published a report stating that CHINA MOBILE (00941.HK) +0.900 (+1.108%) Short selling $96.30M; Ratio 11.131% 's 2Q service revenue fell 4.8% YoY to RMB233 billion, while EBITDA declined 7.9% YoY to RMB97 billion and net profit dropped 7.5% YoY to RMB50 billion, missing UBS and market expectations by 1% to 9%, mainly due to VAT adjustments and macroeconomic headwinds.

However, cloud and AI-related businesses delivered strong performance. Data center revenue increased 13.2% YoY, while cloud computing service revenue rose 18% YoY. Cumulative AIDC contracted capacity reached 7GW, of which 5GW was newly added in 1H26. Management noted that traditional data center services have lower margins, and the company is therefore expanding into higher-value products such as DCI connectivity, computing services and advanced operations and maintenance services to broaden the market and improve profitability. AI-related projects are required to meet internal rate of return (IRR) requirements and can support synchronized growth in revenue and profit alongside demand growth.

Regarding capital expenditure, 1H capex increased 4.5% YoY, mainly driven by AI network investment, although management emphasized that full-year capex remains under control. Traditional telecom capex is expected to decline 20% for the full year, compared with only a 9.8% decrease in 1H. Operating cash flow in 1H rose 37% YoY to RMB144.9 billion, supported by strong cash collection. Interim dividend was RMB2.51 per share, flat YoY. UBS believes this signals stable full-year dividends.

UBS slightly adjusted its forecasts and extended its valuation model by six months. It raised the TP from HKD81 to HKD83 and maintained a Neutral rating, believing the current share price implies a forecast 2026 dividend yield of about 6% to 7%, which should support the stock price. (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-14 12:25.)