Real demand backbone! Is China Mobile the true stock king?

China Mobile (600941.SH/00941.HK) released its Q1 2025 earnings report (as of March 2025) after the Hong Kong market close on April 22, 2025, Beijing time. Key highlights:

1. Operational Data: Flat Revenue, Steady Profit Growth.$CHINA MOBILE(00941.HK) Q1 2025 total revenue was RMB 263.8 billion, essentially flat YoY. Growth in the company's communication services offset declines in product sales. Net profit rose 3.4% YoY to RMB 30.6 billion, driven by improved gross margins and reduced expenses despite stagnant revenue.

2. Core Business Performance: Personal Communication Services Dip.$China Mobile(600941.SH) This quarter's communication service growth was mainly fueled by household and enterprise segments, while the largest personal communication segment saw slight declines. Mobile subscribers grew 0.8% YoY, but ARPU fell 2.1% to RMB 46.9/month.

3. Capex: Q1 Increase Contrasts Full-Year Reduction Target. Q1 2025 capex reached ~RMB 36.4 billion (+5.5% YoY). However, full-year 2025 guidance projects RMB 151.2 billion (-7.8% YoY), indicating further cuts in subsequent quarters.

Dolphin Research's Take: Meets Expectations, Steady Performance.

Flat YoY revenue reflected offsetting trends between communication growth and product sales declines. Profit growth stemmed from margin expansion and cost controls.

Segment breakdown: 1) Personal communication dipped 1% YoY due to ARPU pressure; 2) Household/enterprise services drove incremental growth.

Subsidy cuts (e.g., reduced number portability incentives) impacted personal communication performance. Overall, stable profits amid flat revenue met expectations.

Market focus remains on capex and shareholder returns. While Q1 capex rose 5.5%, full-year guidance implies contraction. This should ease cost pressures and boost future profits. Dividends/buybacks typically occur in Q2/Q3—we expect maintained high payout ratios.

Minor flaws aside, China Mobile remains resilient. Capex discipline supports profit growth. In volatile markets, its "steady-Eddie" profits and dividends cement its status as a premium "cash cow."

I. Key Focus: Capex & Dividends

1.1 Capex

As a capital-intensive business, annual capex of RMB 100-200 billion for infrastructure directly impacts profitability.

Q1 2025 capex: ~RMB 36.4 billion (+5.5% YoY). Full-year guidance of RMB 151.2 billion (-7.8% YoY) signals further reductions ahead.

Post-5G investment peak, lower capex boosts cash profits. Current depreciation exceeds capex, making true earnings power stronger than reported.

We calculate cash operating profit by adding back depreciation and subtracting capex. Q1 adjusted cash profit reached RMB 31.7 billion (+3% YoY), exceeding reported profits. TTM ROE held at 9.1%.

1.2 Dividends

Dividends typically occur in Q2/Q3. We expect ~RMB 50 billion in payouts, maintaining ~79% payout ratio.

Domestic-focused operations minimize policy risks. High payouts offer stability in uncertain markets.

II. Operations: Flat Revenue, Steady Profits

2.1 Revenue

Q1 revenue: RMB 263.8 billion (flat YoY). Communication services (+1.4% YoY) offset product sales (-6.8%).

Personal communication dipped 1% YoY; household/enterprise drove growth.

For the >50% revenue personal segment:

1) Subscribers: +0.8% YoY to >1 billion (sequential dip);

2) ARPU: RMB 46.9/month (-2.1% YoY), continuing downtrend.

2.2 Gross Margin

Q1 gross margin: 55.8% (+0.7pp YoY), lifted by favorable service mix.

2.3 Operating Expenses

Q1 opex: RMB 114.5 billion (-0.9% YoY). Breakdown:

1) Sales: RMB 14.4 billion (-3.6% YoY, 5.5% of revenue)—subsidy cuts impacted user growth;

2) Staff: RMB 37.2 billion (+3%, 14.1% of revenue)—rigid cost;

3) Depreciation: RMB 47.9 billion (-0.5%, 18.2% of revenue)—post-5G relief.

2.4 Net Profit

Q1 net profit: RMB 30.6 billion (+3.4% YoY)—margin/opex gains offset flat sales.

As noted, cash profits (RMB 31.7 billion) exceeded reported figures due to accounting treatment.

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Dolphin Research's China Mobile archive:

Earnings:

2024/10/21 China Mobile: Zero-Growth "Trapped Beast"? Overblown Fears!

2024/8/8 1B Users Dancing, RMB1T Revenue Sailing

2024/3/21 Payout Ratio to Exceed 75% in 3 Years (23Q4 Call)

2024/3/21 Capex Drop: Will It Become a Money Tree?

Deep Dives

2024/1/4 China Mobile: The Internet's Utility Play

2023/12/19 The Iron Telecom, The Fleeting Internet

Disclosures: Dolphin Research Disclaimer