中国移动(00941) 　　Discounted valuations and improving prospects 　　A strong FCF story, and more shareholder friendly policy is emerging at ChinaMobile that should boost sentiment and valuation multiples ahead fromunusually low levels. We expect: 1) A return to growth, after 2015 and '16kitchen sinking, under the industry's new Chairmen, 2) Declining capex post its4G build, 3) Less regulatory pressure, now that data is highly affordable, 4) Apush into value-added services generate some excitement, and 5) A higherpayout ratio. We expect sentiment to turn favourably in 2017 as growth returnsand investor friendliness picks up. We lift to BUY, and forecast a potential 34%12M total return. 　　80%-90% of market cap potentially realizable through 2020China Mobile is reaching a period of high FCF, that should see it generate 44%of its market cap through 2020. Add to that cash on hand, and the value of itsstakes in TowerCo and Shanghai Pudong Bank, and we estimate investorscould theoretically realize HK$88/share by 2022. This highly unusual situationreflects a market deeply suspicious about management and governmentintentions. We believe CM has a high chance of surprising to the upside oninvesting discipline as: 1) Shang Bing, chairman since August 2015, appears avery sensible figure and has mentioned a shift to “value maximization” fromsub maximization in broadband, 2) The company is discussing lifting its payout ratio, and higher SOE payout appears to be government policy 3) TowerCoIPO proceeds may be partially dividended out, 4) Mixed ownership, and SOEreform in general suggests a greater focus on investing wisely.Valuation and Risks 　　We derive our TP by a DCF model assuming a 7.5% WACC (risk free of 3.9%,risk premium of 5.5%, beta of 0.9x) and a 0% perpetual growth rate. Note weapply a 40% discount on CM's cash. Downside risks: more intensive pricecompetition, CNY depreciation, and national service.