M1 announces their set of results 2 days ago. The summary of my take on the results is as follows:
- Revenue was lower, net profit slightly higher
- Overall operating cash flow position much better than corresponding year
- Capital Expenditure was much higher due to spending $20 mil on spectrum purchase
- Short term debts higher as well
- ARPU per quarter for post-paid and pre-paid are all down
- International Call, a big revenue contributor was down as well
M1 for me is the biggest loser among the local telecom for this move to data messaging.
Just to share an experience, we recently got some staff temporary deployed overseas and a purchase of pre-paid cut that have unlimited data access for the finite number of days was a boon for discussion across data messaging applications like Whatsapp. Gone are the days where we will be at the mercy of IDD rates and worrying about the cost of overseas communication.
With this move to data messaging and VOIP, M1 I think is a big loser here.
Share price have climbed a fair bit. This provides a base 6-7% yield. Would I buy it at this price? The price tends to be stable and if dividend season arrives I may choose to do that.
However, I will look to see any catalyst for profit growth and in a competitive telecom industry I just don’t see it currently.
This is a low volatile stock. This provides a recurring cash flow.
This is a dividend season buy. This stock have run up abit and still remains fair value to pricey.
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