Apple Inc. (AAPL), China Mobile Ltd. (ADR) (CHL): How to Invest in China’s Explosive Mobile Growth

China Mobile is trading cheaply in relation to earnings, carrying a P/E ratio of only around 11. The company also has more than $64 billion in cash with only around $4.5 billion in debt. A debt-to-equity ratio of only 0.0396, accompanied by a strong current ratio of 1.5, indicates a robust, healthy balance sheet.

Shares also pay out a generous dividend, yielding a tad under 4%. A low payout ratio of 39% also indicates that the payout is sustainable, and the dividend should be pretty safe.

The company is also discounted to peers, with China Telecom Corporation Limited (ADR) (NYSE:CHA) trading at about 16.5 times earnings and China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) trading at over 27 times earnings. China Mobile’s dividend also trumps its competitors in yield, with China Telecom and China Unicom yielding only 2% and 1.20% respectively.

The bottom line

Accounting for China Mobile Ltd. (ADR) (NYSE:CHL)’s massive size and dominance in the Chinese mobile market, shares look cheap. The company will continue to generate earnings from smartphone makers such as Samsung. A deal with Apple Inc. (NASDAQ:AAPL) could provide a catalyst for even more growth– which would make shares theoretically even cheaper at today’s level if earnings suddenly increased from an influx of new customers and sales. The company also pays out a relatively safe, income-generating dividend.

While investing in Samsung or Apple will add exposure to Chinese smartphone and mobile growth to your portfolio, China Mobile is the pure play, and is best positioned to capitalize from this growth directly.

China Mobile is a compelling value play and a buy at current levels.

Joseph Harry has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and China Mobile. Joseph is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How to Invest in China’s Explosive Mobile Growth originally appeared on Fool.com and is written by Joseph Harry.

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