M1

M1: 2Q14 results in-line. Net profit was 12.1% y/y higher at $43.9m while operating revenue fell 2% to $239.7m, as mobile telco revenue, which increased 3.4% to $167.9m was offset by a 19.9% decline in international call services and 17.5% fall in handset sales. Bottom line was buoyed by a 13.4% reduction in cost of sales. Net postpaid ARPU increased 3.5% to $55.5 but data plan ARPU fell 7.5% to $19.7. Broadly, Nomura likes M1 for slow and steady catalysts, simple business model, and fair valuations. M1 is currently in the process of rolling out LTE-A, which can provide stability/ upside. It also already has 94k fibre subscribers, which is about a 17% share. Maybank-KE cites underlying trends still positive as tiered data migration continues to spur growth. Lower handset cost also brings down subscriber acquisition cost. Interim DPS of 7¢ recommended. M1 is trading at 19.3x annualized 2Q14 P/E. Latest broker ratings: Maybank-KE maintains Buy with TP of $4.24 Nomura maintains Buy with TP of $3.75 UOB-KH maintains Buy with TP of $4.05