Lacklustre M1 Q3 results

M1 released its Q3 result after trading hours today. I wasn't too pleased.

Q3 Y-O-Y
Net Profit up 0.8%
Diluted EPS up 0.7%

Q2 Y-O-Y
Net Profit up 1.0%
Diluted EPS up 0.5%

Q1 Y-O-Y
Net Profit up 6.6%
Diluted EPS up 5.0%

9M Y-O-Y
Net Profit up 2.8%
Diluted EPS up 2.3%

Q2 and Q3 results were disappointing, showing a clear trend of declining QoQ slow down in increment. Contrast Q1's profit of 6.6% increment with 1H of 3.8% and now 9M of 2.8%.

Service revenue (what I deemed as core, recurring revenue) dipped slightly from $207m to $205m QoQ. Although Handset sale surged, the cost of sales increased accordingly. It seems that sale of handset doesn't do much to the bottomline of telcos. Its good that the telcos are slowing moving away from handset subsidies (bad for consumers like us though).

While management guided moderate growth during Q1 and Q2, they've changed their tune and now forecast a low single digit growth for the financial year.

Dividend forecast
I remember attempting to forecast the dividend payout earlier this year.

Let's try that again:

	FY2014 actual	FY2015 forecast
EPS Cents	18.8	19.4
Growth	8%	3%
Scenario 1 (80% payout)
Regular payout/share(cents)	18.9	15.5
Dividend yield @$2.90		5.35%
Scenario 2 (85% payout)
Regular payout/share(cents)	18.9	16.49
Dividend yield @$2.90		5.69%
Scenario 3 (90% payout)
Regular payout/share(cents)	18.9	17.5
Dividend yield @$2.90		6.02%
Scenario 4 (95% payout)
Regular payout/share(cents)	18.9	18.43
Dividend yield @$2.90		6.36%

More intriguing 
What's more intriguing is how M1 managed to grow from 8% last year and fall to 2-3% this year.

While EBITDA margins is one of the highest at Q3 2015 (42.3%), profits have been sluggish.

Both postpaid and prepaid marketshared declined YOY. Other interesting statistics are that talktime minutes are on a 10% fall for postpaid and 3% fall in prepaid.

This fall in both international roaming and talktime doesn't seemed to be sufficiently negated by the growth of the data contribution (for all telcos).

I find it pertinent that the telcos maintain their mobile revenue by stimulating demand (more data usage) or adjusting tariffs.

Still holding on 
But life goes on. Dividends still get paid. Profits are still chugging along. I'll hold on for now :)

Just wished for a turnaround during their Q4 though. The iPhone 6s and 6s Plus should hopefully give a push :P