M1

UOBKayhian on 15 June 2015

FY15F PE (x): 17.2
FY16F PE (x): 16.7

Keeping abreast with the latest technology. M1 has completed the upgrade of its 4G network to Long Term Evolution-Advance (LTE-A) in Dec 14, doubling download speed to 300Mbps using carrier aggregation. The network supports voice-over-LTE (VoLTE), which provides faster connection and better quality of voice calls. M1 has also deployed 4G small cells to improve data throughput within buildings to the same level as outdoor. Out of the quagmire but not out of the woods. M1 remains susceptible to regulatory risks in Singapore, with mobile accounting for 81.5% of its service revenue in 1Q15. Nevertheless, we are on longer bearish on M1 after share price corrected 18% post announcement of its 1Q15 results. Upgrade to HOLD. Our target price is S$3.60, based on DCF (required rate of return: 7.2%, terminal growth: 1.0%).