CHINA MOBILE(941.HK)：EARNINGS IN LINE RISING DEMAND FOR AI/CLOUD IAAS TO FUEL THE GROWTH IN 2H

Core Viewpoint - The company reported a 1.4% year-on-year increase in 3Q earnings, reaching RMB31.1 billion, despite challenges in EBITDA and margin due to rising operating expenses related to AI Cloud product development and talent recruitment [1][2] Financial Performance - 3Q earnings increased by 1.4% YoY to RMB31.1 billion, with negative EBITDA and margin growth attributed to a 7.9% YoY rise in other operating expenses [1] - Service revenue rose by 0.8% YoY to RMB216.2 billion, with expectations that business-related revenues will surpass traditional consumer telecom services [2] - EBIT declined by 1% YoY to RMB32.1 billion, influenced by a 2.1% YoY decrease in depreciation and amortization, which partially offset a 4.6% YoY increase in operating expenses [2] Future Outlook - Anticipated booming demand for AI computing power in cloud services, supported by full domestic IP and hardware/software, is expected to drive telecom earnings through 2025 and beyond [1] - The company maintains a pecking order of CT/CM/CU in the telecom sector [1] Valuation - The company reiterates a BUY rating with an unchanged target price of HK$103.2, expecting rising demand for AI cloud services to positively influence the business outlook in the second half of the year [2]