M1

M1: 1Q12 results, largely in line with consensus.
Net profit came in at $40.3m, -5% yoy, but +7.5% qoq, indicating recent improvements.
Data revenue continued to outpace voice, with 36.9% of 1Q12 service revenue coming from data, up from 36.2% in 4Q11 and 34.7% in 1Q11. As a result, data ARPU ticked up for the 4th straight quarter, while revenue per gb data consumption improved, positioning M1 for more effective data monetization in future.

M1 added 7k fibre subscribers in 1Q12 to 29k, still below the optimal level of 80-100k. The govt has finally stepped in to force higher installation capacity for OpenNet, hence M1 could see much faster NGNBN take up in the coming quarters as bottlenecks are worked out. The segment contributes just 6% of revenues to date.

As expected, handset sales retreated from 4Q11’s high, which saw EBITDA margin sequentially improved to 40.1% (4Q11: 39.1%, 1Q11: 42.2%), as subscriber acquisition costs (SAC) start to normalize from the iPhone 4’s dilutive release in 4Q11.

Maybank Kim Eng Research maintains Buy with TP $2.85. Believes M1’s outlook is clearing up as greater visibility is gained on its margin and topline drivers.
Citi maintains Buy but lowers TP to $2.80 from $2.88. Says M1 remains its sole Buy within the Spore telcos, given its valuation proposition, fwd growth outlook on fixed broad band and yield.
UOBK keeps at Buy but lowers TP to $2.75 from $2.87.
Deutsche keeps at Sell with TP $2. says at 13.6x p/e, M1 is currently trading at 18% premium to its 5 yr historical avg valuation.