source:DMG
Below expectations. In the year to 31 Dec 08, M1 saw net profit fall 12.6% to S$150.1m on the back of a 0.3% dip in revenue to S$800.6m. The telco was hit with higher acquisition and retention costs as competition intensified in response to mobile number portability (MNP). FY07 also benefited from tax adjustments and excluding which, net profit fell a slimmer 4.5%. The results were below our expectations.
Pressures lifting. EBITDA marginimproved to 44.0% in 4Q08, up from 40.9% in 4Q07 and 41.6% in 3Q08, as competitive pressures tailed off. However, due to compressed margins over the first three quarters, EBITDA margin came in at 42.9% for FY08 - 1.2ppt lower YoY. Other signs that competition is easing –lower churn rate as well as falling acquisition and retention costs per customer.
Balance sheet strengthens. Gearing has been reduced from 130% in FY07 to 104% in FY08. It has a net debt/EBITDA of 0.7x, with a healthy EBITDA/Interestof 41.8x. This ensures that that pay outs will continue to be healthy. In FY08, it dished out dividends of 13.4 S¢ per share, equivalent to an 80% payout.
Little key updates. Management kept plans very close to their chests. Theyindicated that the market is going to be a lot more rational this year, a point which has already been factored by the market. What investors were more interested in was the hunt for the new CEO, but little was said about that.
Earnings and target price lowered. We have lowered our earnings estimates for FY09 by 5% to S$141.6m (-5.6% YoY). In FY10, we expect earnings to grow 4.6% to S$148.1m. Payout, assuming that it is maintained at 80%, works out to a prospective yield of 8.3%. Based on DDM, we attain a target price of S$1.52, down from S$1.58 previously. We believe that the prospects have already been priced in. Downgrade to NEUTRAL.
source:DMG
The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned
To my beloved friend CW8888
1 year ago
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