Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

The Chinese Sector That’s a Hotbed for Growth

Tuesday, October 30th, 2012
By for Profit Confidential

Chinese Sector That’s a Hotbed for GrowthChina has been growing exponentially in many areas, but while there is some stalling, an area that continues to expand at a staggering pace is the mobile phone sector. The growth in this market sector is enormous, with the number of subscribers surpassing one billion. Let me put it another way: there are more mobile phone users in China than the populations of the United States, the European Union, Mexico, and Canada combined!

These are exciting times for the Chinese mobile market, where three major carriers dominate the market.

The adoption of 3G and 4G networks will help to drive additional growth in the country’s mobile phone market, as manufacturers need to develop new phones to be used with these networks, based on my stock analysis. At the end of September, there were 203 million mobile 3G users in China, up from 167 million users at the end of May, according to the Ministry of Industry and Information Technology in China. The growth in 3G networks will continue to provide a catalyst for more opportunities.

Apple Inc. (NASDAQ/AAPL) is a major player in greater China with sales in the country accounting for about 15% of total sales in the fiscal fourth quarter, according to the company. Tim Cook, CEO of Apple, said “iPad” and “iPhone” sales in China surged 45% and 38%, respectively, in the fiscal fourth quarter. The potential is significant for Apple in the Chinese smartphone market. (Read why I don’t like Research In Motion in “Don’t Get Fooled by Research In Motion.”)

The income demographics in the country support the spending. In a recent research finding, Credit Suisse predicted that the household wealth in China could double to $35.0 trillion by around 2015, based on achieving sustainable gross domestic product (GDP) growth at or near the current levels; albeit, the current slowing will impact wealth but will still allow consumers to spend on more non-essential goods and services, such as mobile phones.

The top mobile phone company in the country is China Mobile Limited (NYSE/CHL). With a market-cap of around $224 billion, the company is massive. By comparison, AT&T Inc. (NYSE/T) is the largest mobile provider in the U.S. with a market-cap of $197 billion and Verizon Communications Inc. (NYSE/VZ) has a market-cap of $127 billion.

  • Double Your Money Twice a Month?

    Hottest stock-picker on the planet could make you richer 92 times! Over the past five year period, 86% of the stocks we picked made money—92 winners out of 107 picks! Average straight profit per pick: an amazing 54.1%!

    Click here now!

The price chart of China Mobile continues to look bullish, well above its 50- and 200-day moving averages (MAs), based on technical analysis.

China Mobile Ltd Chart

Chart courtesy of www.StockCharts.com

China Mobile is one of the largest companies in China and can be considered a “widow” stock for long-term buy-and-hold investors. The company is ranked the top brand in BusinessWeek’s “20 Best China Brands.” The stock pays an annual dividend of $1.90 for a dividend yield of 3.4%, based on the stock price of $55.67.

The company had 698 million subscribers, or over 69% of all mobile phone users in China, at the end of September. (Source: “Operation Data: Customer Numbers,” China Mobile Limited, last accessed October 29, 2012.)

China Mobile is the world’s largest provider of cellular services, based on subscribers, and has set its sights on expansion outside of the Great Wall via its ownership of Luxembourg-based Millicom International Cellular S.A. (OTCBB/MICCF), a telecom operator with mobile operations in 13 countries and a potential market of about 270 million people. (Source: “Global Operations,” Millicom International Cellular S.A., last accessed October 29, 2012.)

Going forward, my stock analysis is that China Mobile should benefit from the massive mobile market and growth in the 3G and 4G telecommunications areas in China.

The bottom line is that the Chinese mobile market is massive and worth a look.

VN:F [1.9.22_1171]
Rating: 1.0/10 (1 vote cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)
The Chinese Sector That’s a Hotbed for Growth, 1.0 out of 10 based on 1 rating

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

George Leong - Financial Planner, ConsultantGeorge Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. Add George Leong to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.