Why did China Mobile, which was almost breaking the issue price, suddenly hit the daily limit?

On January 5, China Mobile officially landed on the A-share market, and whether the stock price would fall below the issue price on the day of listing became a focus of debate. Thanks to the green shoe mechanism, China Mobile has been hovering around the issue price of 57.58 yuan for a month, but has never fallen below the issue price.

However, in the past two days, China Mobile, which lost its green shoe, suddenly exploded. It rose twice in a row yesterday and today, and even hit the daily limit today, closing at 67.43 yuan per share, the highest since its listing.

Why did China Mobile go against the trend and hit the daily limit when the A-share market was generally in a downward trend?

Hu Jinghui, chief economist of Jinghui Think Tank, gave five reasons in an interview with the Science and Technology Innovation Board Daily:

First, since its listing, China Mobile has bottomed out at the issue price of 57.58 yuan in less than two months, showing obvious signs of bottoming out. The current trend should be an upward breakthrough after confirming the bottom.

Secondly, the company involves many popular concepts such as digital economy + digital currency + digital infrastructure + Winter Olympics + Huawei Hongmeng + smart government affairs + Metaverse, etc. For example, Migu Video, a subsidiary of China Mobile, has reached a cooperation with CCTV and became the official broadcaster of the 2022 Beijing Winter Olympics.

Again, China Mobile's 2021 performance forecast released in its prospectus showed a year-on-year revenue growth of about 10%-11%, and a year-on-year profit attributable to the parent of about 6%-8%, which is a gratifying performance;

In addition, China Mobile's current circulating market value is less than 1.3 billion (Editor's note: the current circulating market value is 31.7 billion), so it is not difficult to push it up;

Finally, with the accelerated popularization of 5G this year, there is great potential for development.

Previously, CITIC Securities believed that China Mobile is a high-quality core asset with both technological and consumer attributes, and its growth logic has been reconstructed in the 5G era, which is of great configuration value. It gave China Mobile A shares a PB of 1.3 times, corresponding to a target price of 75 yuan, and maintained a "buy" rating.

Of course, there are many reasons for stock price increases and decreases, which you can refer to but don't believe in blindly.