CHA China Telecom

I’ve written about CHA before and readers may remember that I invested in CHA at around 33. Now that the price is up to around 38, it is time to consider selling. Reading the Morning Star report on the stock, I see that they call the business risk “above average”.

CHA does have a narrow moat, but is seeing increasing competition. More importantly, the Chinese Government is the majority shareholder. China Telcom may do things that are seen as good for China even if they may not be good for the company. One example is if China Telecom uses a new Chinese developed technology for 3g mobile services.

Finally, CHA has a history of relying on debt for funding. So far operating cash flow is covering interest and capital needs. Considering these risks, it seems like time for me to take my profits and run back to the safe index funds and dividend paying (CHA does pay a dividend) stocks I prefer.

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