OVERVIEW:
Established in 1997, the counter is 2nd licensed telecommunication service provider in Singapore. Besides mobile and iDD services, it also provides fibre broadband and fixed voice services. Its major shareholders, Axiata Group (from Malaysia), Keppel Co, SPH are holding 28%, 19% and 13% of shares separately.
HIGHLIGHTS:
[1] M1 saw its 3Q2015 revenue climbing 11% year on year. Net profit inched up 0.8% to $44.9m. 9M2015 revenue and net profit rose 16% and 2.8% year on year.
[2] While mobile service revenue was flat, fixed service revenue has been growing steadily with fibre customers up by 5% quarter on quarter. For enterprise customers, it has launched an extensive range of XGPON services (high speed optical network) and also introduced M2M (machine to machine) Connect. M2M also known as Internet of Things, connects million of devices such as vending machines, trucks, appliances and buildings. This allows M1's corporate customers to access, track and manage all their connected devices through M2M Connect.
[3] Amid the concern of rate hike from US (which has been announced) and potential entry of 4th-telco, the counter has been suffering from heavy selling pressure (down > 30%) over past 8 months.
INVESTMENT THEMES:
[1] The management guided at least 80% of payout ratio. Based on estimation, it translates to >7% of dividend yield for current trading price.
[2] Domestic market is well saturated. Further rate hike could post higher financial barrier to new player into local telecom sector as well. Shall entry of 4th Telco being ceased, M1 could be back to investor's favor again.
[3] The below table compares financial ratios among domestic telcos. M1 price valuation is not expensive yet with highest dividend yield.
PRICE TREND:
Current price is hitting support at 2.6 which was formed on 2012/13.
*** Note: Same counter has been mentioned in June[4] ***
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