Zacks Analyst Blog Highlights: China Mobile, China Unicom, Brasil Telecom and Telemar

Business Wire, Feb 6, 2008

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: China Mobile (NYSE: CHL), China Unicom (NYSE: CHU), Brasil Telecom Participacoes S.A. (NYSE: BRP) and Tele Norte (Telemar) (NYSE: TNE).

See the latest posts to the Analyst Blog here:

http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Monday's Analyst Blog:

Target $110 on China Mobile

Expansion initiatives by China Mobile (NYSE: CHL) into rural regions of China, effective network optimization strategies and the introduction of customized mobile value-added services to suit the needs of different market segments enabled the company to deliver encouraging financial results. China Mobile currently services over 66% of total wireless subscribers in China, far ahead of its closet rival China Unicom (NYSE: CHU).

Given the low level of mobile penetration in this market, there still remains significant growth potential for the company. Furthermore, the Chinese market is expected to see the launch of 3G mobile services (TDSCDMA) before the 2008 Olympics in Beijing. This may open up new sources of revenue.

We therefore reiterate our Buy rating and the same valuation target for China Mobile in line with expectations of continued subscriber retention and launches of new revenue-generating services. We therefore maintain our Buy rating and raised our six-month target price to $110, which is based on a reasonable 35x P/E multiple to our fiscal 2008 earnings estimates, as growth rates in China continue to remain well above the worldwide averages.

Buyout Favorable for Brasil Telecom

We are keeping our current Buy recommendation on Brasil Telecom Participacoes S.A. (NYSE: BRP). The company posted better-than-expected results in each quarter of 2007, and the short-term outlook remains positive.

The company also has solid cash flow, decent operating margins in the wireline business, and an attractive valuation. Additionally, the growth in the wireless and the broadband segments are encouraging and should continue in future quarters.

The news on the merger with Telemar (NYSE: TNE) was not well received by the market, but we still believe it will be positive for both companies. We think the stock is trading at a highly attractive valuation.

In fact, we believe the Telemar deal is great news for Brasil Telecom. All considered, we are keeping our current Buy recommendation. Our target price is US$96.75, which is based on an EV/2008 estimated EBITDA of 3.5x, close to the industry mean.

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