Phillip Capital report on M1, rating "Accumulate", TP $3.55
M1 is the 3rd largest Telecommunications company in
Singapore. The introduction of NGNBN in Singapore
lowered entry barriers to the Fixed Line business, which
would allow M1 to venture into the corporate and retail
broadband market.
Stable earnings and Free cash flow
Positive on Data monetizing
Strong demand for Dividend yielding stocks
Investors’ minimum yield requirement likely lowered
Share price to remain stable even if Fed rates increase
Upgrade to “Accumulate”, with new TP of S$3.55.
http://internetfileserver.phillip.com.sg...130429.pdf
(29-04-2013, 04:37 PM)CityFarmer Wrote: [ -> ]Phillip Capital report on M1, rating "Accumulate", TP $3.55
M1 is the 3rd largest Telecommunications company in
Singapore. The introduction of NGNBN in Singapore
lowered entry barriers to the Fixed Line business, which
would allow M1 to venture into the corporate and retail
broadband market.
Stable earnings and Free cash flow
Positive on Data monetizing
Strong demand for Dividend yielding stocks
Investors’ minimum yield requirement likely lowered
Share price to remain stable even if Fed rates increase
Upgrade to “Accumulate”, with new TP of S$3.55.
http://internetfileserver.phillip.com.sg...130429.pdf
The target price might be reached soon.....
the runup in the telcos is just incredible.
how low can equity risk premium go??
(30-04-2013, 02:56 PM)AlphaQuant Wrote: [ -> ]the runup in the telcos is just incredible.
how low can equity risk premium go??
Pretty low.......judging by the run-up....
Risk has obviously increased if the rise in price is not accompanied by a corresponding rise in value.
Probably i am a lucky investor who has significant stakes on M1 and Singtel, two of the telcos here.
There are stories behind for the rise in value and the price IMO
11% of M1's re-contracting clients upgraded postpaid plans
Stable earnings are predicted.
According to Phillip Securities, M1 is expected to register stable earnings and generate adequate Free Cash Flow. Rational competition in Singapore ensures this.
"We are encouraged by management’s guidance this quarter that 11% of re-contracting customers upgraded to higher tiered postpaid plans," Phillip Securities said.
Here's more from Phillip Securities:
9% of customers also continue to exceed their data allowance. While M1 has not indicated interest in following SingTel’s expected increase in excess data charge to S$10.70, we think it likely for M1 to do so.
The Telco counters, including M1, continue to offer attractive yields of 4.6%. Weak global economic data in recent months, which were below market’s already-lowered expectations, have also reduced possibility of an earlier spike in Fed rates before CY2015.
Equities are also likely to be a better inflation hedge as compared to bonds.
While investors previously demanded higher dividend yields, recent share price performances of the Telcos suggest that investors are increasingly accepting lower dividend yields.
Furthermore, the stable earnings and FCF decreases risk of a reduction of dividend payouts.
While an increase in US Fed rates continues to be a potential downside catalyst, as investors demand higher returns, we expect share price to be stable.
This is because investors may face inertial to switch portfolio, thus resulting in a lower sell-down rate and lesser downward pressure. The increase in earnings visibility also reduces its equity risk premium, thus justifying a higher share price
To add-on...
Phone operators rally on outlook for dividends
Singapore’s phone companies rallied, with M1 and StarHub rising to all-time highs, as investors turn to these stocks on their outlook for cash flows and dividend yields.
M1, the smallest of the three mobile-phone carriers in the city-state, jumped 3.7% to $3.33 as of 3:02 p.m. in Singapore, and StarHub, the second-biggest, climbed 1.9% to $4.73. Singapore Telecommunications, Southeast Asia’s biggest phone company, added 2.1% to $3.92, poised for the highest close since April 2008.
“We like the telecommunications companies because they offer attractive dividend yields of above 4%,” said Ken Ang, an analyst at Singapore-based brokerage Phillip Securities Pte. “That’s higher compared to the average dividend yield of the Straits Times Index. The stable cashflows of the telcos should support higher dividends.”
M1 offers the highest dividend yield of 4.3% for the next 12 months, followed by StarHub at 4.2% and SingTel at 4%, according to data compiled by Bloomberg. Shares on the Straits Times Index offer a dividend yield of 2.9%, the data show.
StarHub and SingTel may post declines in quarterly earnings next week, according to analyst estimates compiled by Bloomberg. M1 reported a 1.7% increase in first-quarter profit on April 16.
http://www.theedgesingapore.com/the-dail...dends.html
Are we looking at the Golden Era of telcos???
(30-04-2013, 03:49 PM)CityFarmer Wrote: [ -> ]Probably i am a lucky investor who has significant stakes on M1 and Singtel, two of the telcos here.
There are stories behind for the rise in value and the price IMO
Same same two. But they only 10% of my portfolio. Why don't you hold Starhub?