Saturday, September 13, 2014

"Well the big Alibaba roadshow and public offering is underway. I say if you want to buy a Chinese stock for $60.00 + a share, you would be better served purchasing China Mobile LTD (Symbol CHL)"

Dow Jones Industrial Average 17,017.00 (UP) Week ending 09-03-2014
Dow Jones Industrial Average 16,987.51 (Down) Week ending 09-12-2014

Well the big Alibaba public offering is coming this week. What you should know is that Alibaba is already 34% owned by the Japanese telecom company Softbank and also another 24% is owned by Yahoo. (Yahoo is selling off 5% of their shares in the public offering).  So there is no chance that any other company will try to buy them out. It is looking like the public offering is going to price out at $60- $65 dollars per share. I would not be a buyer of it on the public offering.

A much better idea, (if you want to buy shares in a Chinese company stock), would be to purchase shares in China Mobile LTD ADR (Symbol CHL, $63.86). 

CHL is the largest cellular phone service provider in the world. Start out with a dividend of 3.06% (the People's republic will tax part of that on the way in), but still not bad.

Zach's has the stock rated as a Strong buy. Analysts have the stock rated 11 Buy, 4 overweight and 4 neutral. The stock trades at a PE ratio of a very fair 13.94.

The company is holding $73.31 Billion dollars in cash and short term securities, so they can buy stuff. The ROE on the company is 16.15% and I cannot find the PEG ratio anywhere. 

Revenues for the company are $105.97 billion dollars and Net Income is 18.91 Billion dollars. 3 year sales growth has been 12%

Earnings for 2014 are projected at $4.44 per share, (down from last year a bit, and for 2015 are projected at $4.43 per share. 3 year earnings growth has only been 1%. IDB earnings growth rating is 48 , but remember the size and scale of this company.

The best numbers on this stock is that the YTD, (year to date), return on the stock has been 24.13%. the one year return has been 17.53%. The three year return has been 28.89%.

China Mobile is the Number One cellular carrier in the largest population cellular market. Seems simple enough to me. It is a much better idea to purchase rather then speculating on a high priced Alibaba stock. It is by the numbers a more conservative investment with lots of upside especially on the data service side. 

So keep on talking on your cell phone and surfing the web with it, and have a great week.


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