OCBC lowers M1 sales forecast by 8%

Given sliding revenues to-date.

M1 Ltd reported its 3Q13 revenue of S$241.7m, down 5% YoY and 1.1% QoQ, mainly due to lower handset sales; but net profit rose 19% YoY and 1% QoQ to S$39.5m, aided by higher service EBITDA margin, according to OCBC's Carey Wong.

Meanwhile, 9M13 revenue was down 2.7% at S$729.3m, meeting around 64% of our FY13 forecast, while net profit rose 10% to S$119.7m, or 77% of OCBC's full-year estimate.

"Going forward, management has kept its 2013 guidance intact i.e. still expects to see moderate earnings growth; also keeps capex spending at S$130m. In light of the 9M13 results, we opt to pare our FY13 sales estimate by 8%; but we keep our earnings estimate unchanged," said Wong.

"Our DCF-based fair value inches up to S$3.17 from S$3.10 on slightly risk-free assumptions," she added.