• Maintain NEUTRAL on a revised DCF-derived Target Price of SGD1.68 (WACC: 8.5%, TG: 1.5%), from SGD1.95, 5% upside and backed by 6% dividend yield in 2018F.
• M1’s 1H18 results were broadly in line, with the continuing strong momentum from Circles.Life and fixed network services. Management has, however, guided for weaker 2H earnings from the entry of TPG.
• We trim FY19F-20F core earnings by 5-7% on housekeeping and after reviewing our longer-term capex assumptions.
• We prefer Singtel (SGX:Z74; Rating: BUY, Target Price: SGD3.90) for exposure to Singapore telcos.

Broadly in Line

M1’s 1H18 core earnings (+3.8% y-o-y) formed 60%/57% of our/consensus estimates. We deem this to be broadly in line, on expectations of a weaker 2H with the impending rollout by TPG Telecom. Core EBITDA and core earnings were up 4.1% and 3% q-o-q on stronger mobile and fixed services revenue. An expected SGD0.052 DPS has been declared, which translates into a payout of 66%.

Source: RHB Invest Research - 30 Jul 2018