Goldman Sachs: China Mobile Limited (00941) dividends continue to achieve steady growth, maintaining a buy rating.

Goldman Sachs recently released a new research report stating that given China Mobile Limited's weak revenue growth and year-on-year decline in cash flow in the second quarter, the market may react negatively to this. However, positive factors include: 1) Although revenue performance is weak, net profit in 2025 still achieved a year-on-year growth of 6%; 2) The company's dividend per share (DPS) maintained stable growth (5.8% year-on-year growth in the first half of 2025). Net profit growth was mainly driven by lower operating costs, but the sustainability of profit growth through reducing operating costs remains questionable; management reiterated the guidance of stable revenue trends and healthy profit growth in 2025. Goldman Sachs believes that as China Mobile Limited's stock is mainly considered a dividend yield target, the company's long-term ability and willingness to achieve dividend growth should alleviate market concerns about recent growth pressures. Maintain a buy rating, but lower the evaluation and 12-month target price to HK$93 (previously HK$98). Guidelines and key points are as follows: Weak revenue: Management admits there is pressure for growth: 1) Saturation of traditional telecom services, including stagnant per capita data usage and high smartphone penetration rates; 2) Population decline; 3) Fierce competition brought by number portability. These factors have led to weak user growth and a decline in average revenue per user (ARPU) (mobile ARPU in the first half of 2025 fell by 3% year-on-year). In this context, the company will focus on more profitable and cash flow-orientated revenue/projects. Artificial Intelligence: Management points out that revenue related to artificial intelligence in the first half of 2025 reached tens of billions of RMB (10 billion RMB in 2024). Revenue from AI-related activities has surged; the utilization rate of graphics processing units (GPUs) has increased from 20% at the beginning of 2025 to 55% currently; although growing rapidly, the revenue base of AI remains low compared to total revenues, and it will take time to make a significant contribution to overall revenue and profit. Cash flow: Operating cash flow decreased by 47.6 billion RMB in the first half of 2025, falling to 83.8 billion RMB (a 36% year-on-year decline), leading to a decrease in free cash flow (FCF) by 42 billion RMB, falling to 25.4 billion RMB. This decline was mainly driven by a decrease in payables. Cash flow related to accounts receivable in the first half of 2025 remained stable compared to the same period last year, at around 40 billion RMB (cash used). The continuous increase in accounts receivable remains a challenge; as of the end of the first half of 2025, accounts receivable over 60 days overdue accounted for 68% of the total, compared to 58% at the end of 2024, with an increase of 30 billion RMB in the first half of 2025.