M1 FY09 Results

M1's FY09 results was released today. Here is the rundown on the KPI of M1's results. All figures given are in SGD '000

KPIs

Revenue decreased by 2.4%, with a 6% drop YOY for Mobile Telecommunications and International Call services sector. Handset Sales YOY increased by 30%, from 62,122 to 80,900. Mobile Telecommunications services accounted for 72% of total revenue, with handset sales accounting for 10% of total sales.

Operating Expenses accounted for 77% of total sales, up 1% from 2008. Operating Profit decreased 6% from 2008, while Net Profit remained constant at 150,300. EBITDA experienced a 2% YOY decrease.

Leverage decreased to 2.27, however debt increased by approximately 1,000 to 581,300. ROE was 0.59, a decrease from 0.67. P/B ratio increased to 6.60 from 5.69.

Final dividend of 7.2cents were declared, giving a dividend yield of 7%. Dividend EPS ratio dropped to 80% from 86% in 2008

Total customer base increased by 40,000, aided by a 19,000 increase of postpaid customers.

Valuation of the Company

P/E of the company was 11. Based on the the projected EPS of Singtel and Starhub, M1 is fairly valued at approximately SGD1.87 to SGD1.92 per share. I believe that M1 is currently overvalued at its trading price as of today. My target price would be SGD1.92/share

However, as M1 expands further into the broadband market, we have to be wary of extra startup costs incurred. As such, my current 12 month outlook on M1 is a HOLD.