M1 – Lim & Tan

  • M1 Ltd reported 2Q13 net income of S$39.2 million, which was in line with market expectations. Operating revenue of S$244.5 million for 2Q13 rose 5.3% y-o-y, mainly driven by higher service revenue, as its cellular customer base (+307K 4G new customers) and market share edged higher.
  • Cost of sales increase 1.5% y-o-y in 2Q13, as higher traffic expenses was partially offset by lower handset costs. Operating expense also grew 4.8% in 2Q13, due to higher staff costs, as well as higher advertising and promotion expenses.
  • The firm was allocated 40 MHz of paired spectrum rights (in the 1800 MHz and 2.5 GHz bands) at a reserve price of S$104 million, bringing the total capital commitment as at 30 Jun 2013 to S$194.8 million.
  • The company’s balance sheet remains sound, with net gearing ratio at 52.7%, compared to 74.8% as of 4Q12.
  • The company declared an interim dividend of 6.8 cents per share, up from 6.6 cents per share in the same period last year.
  • Consensus FY14E dividend yield stand at 5.0%.
  • Going forward, management expects a sustained shift towards 4G smartphones, higher data usage per smartphone user, as well as better traction in gaining customers in its fiber services offerings. In addition, they guided for “moderate growth” in net profit after tax for FY2013.
  • We believe that M1 would continue to exhibit resilience in its operating performance over the long term, and would continue to remain as a safer alternative compared to the REIT sector.

M1 – Lim & Tan

  • M1 Ltd reported 2Q13 net income of S$39.2 million, which was in line with market expectations. Operating revenue of S$244.5 million for 2Q13 rose 5.3% y-o-y, mainly driven by higher service revenue, as its cellular customer base (+307K 4G new customers) and market share edged higher.
  • Cost of sales increase 1.5% y-o-y in 2Q13, as higher traffic expenses was partially offset by lower handset costs. Operating expense also grew 4.8% in 2Q13, due to higher staff costs, as well as higher advertising and promotion expenses.
  • The firm was allocated 40 MHz of paired spectrum rights (in the 1800 MHz and 2.5 GHz bands) at a reserve price of S$104 million, bringing the total capital commitment as at 30 Jun 2013 to S$194.8 million.
  • The company’s balance sheet remains sound, with net gearing ratio at 52.7%, compared to 74.8% as of 4Q12.
  • The company declared an interim dividend of 6.8 cents per share, up from 6.6 cents per share in the same period last year.
  • Consensus FY14E dividend yield stand at 5.0%.
  • Going forward, management expects a sustained shift towards 4G smartphones, higher data usage per smartphone user, as well as better traction in gaining customers in its fiber services offerings. In addition, they guided for “moderate growth” in net profit after tax for FY2013.
  • We believe that M1 would continue to exhibit resilience in its operating performance over the long term, and would continue to remain as a safer alternative compared to the REIT sector.

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