M1

M1: Recently saw a sharp sell-down in its share price, dropping nearly 20% from its 52-week high of $3.99 to its current price around $3.21. Threat of a 4th telco on M1 may be the highest and M1 may be most at risk of losing market share to new entrant. Firstly, M1 has the smallest market share among the 3 incumbents. Secondly, M1 tends to target the younger consumers who are likely to be more price-sensitive and also probably more attracted to talks of MyRepublic’s plan to offer unlimited data packages should it become the 4th telco here.

However, the outlook for 2015 still happens to be the most optimistic among its peers. M1 is positive on its fixed services segment, where it expects to grow share in the government and corporate sectors, citing the launch of new services like ultra-high speed broadband plans, data centre and cloud-based applications.

With the recent sell-off, M1’s forecast dividend yield is back up to ~5.7% (highest among its peers, Starhub ~5%). Also while rising I/R are probably a given, the extent of rate hikes remains uncertain, given the still splotchy pace of economic recovery in US.

OCBC upgrades their call to BUY with TP: $3.66 given the current share price offers a decent 14% capital appreciation to the fair value.
On the other hand, Nomura remains NEUTRAL with a TP: $3.90