Is M1's 19 cent dividend sustainable?

Great M1 Bear?
M1 has been on huge selling pressure lately due to the anticipation of the 4th telco entering the Singapore market once IDA announces so.

Price has declined from a high of $3.90 to $3.20 (18% drop). At a closing price of $3.20 (trough), this translates to a yummylicious dividend yield of 5.9%.

Is 19 cents per share of dividends sustainable? Let me attempt to analyse below (I may be incorrect).

(S$m)	FY2010	FY2011	FY2012	FY2013	FY2014
EPS (cents)	17.5	18.1	16.1	17.4	18.8
Growth		3%	-11%	8%	8%
Regular payout/share(cents)	14	14.5	12.9	13.9	18.9
Payout ratio	80%	80%	80%	80%	101%
Total dividend (include special Dividends)	17.5	14.5	14.6	21	18.9
Payout ratio	100%	80%	90%	120%	101%

M1's dividend policy is to pay out at least 80% of its earnings. We can see this from its regular dividend payout for the past five years.

Note also that during FY2010, 2012 and 2013 there were special dividends being paid, bringing the total payout ratio higher than the 80% guidance.

Moving forward?

Q1 FY2015, M1's earnings rose 6.6% YOY. Management has guided that the full year results to be "moderate"; suggesting in a mid to high single digit growth.

	FY2014	FY2015	FY2015
	Actual	Just my guess
EPS (cents)	18.8	19.9	20.3
Growth	8%	6%	8%
Scenario 1 (80% payout)
Regular payout/share(cents)	18.9	15.9	16.2
Payout ratio	101%	80%
Dividend Yield (@ $3.20)		4.97%	5.07%
Scenario 2 (85% payout)
Regular payout/share(cents)	18.9	16.9	17.3
Payout ratio	101%	85%
Dividend Yield (@ $3.20)		5.28%	5.39%
Scenario 3 (90% payout)
Regular payout/share(cents)	18.9	17.9	18.3
Payout ratio	101%	90%
Dividend Yield (@ $3.20)		5.60%	5.71%
Scenario 4 (95% payout)
Regular payout/share(cents)	18.9	18.9	19.3
Payout ratio	101%	95%
Dividend Yield (@ $3.20)		5.90%	6.03%

I'm assuming no special dividends in FY2015. Is the yield yummy enough for you? 

Some may be afraid of its future earnings. Note that M1's earnings up until FY 2017 will not be impacted by the 4th telco, and I expect it to grow at least 5% YOY. This means dividends will grow as well.

What do you think?