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M1 Dials Up Higher Profits

M1M1 Limited (SGX: B2F), one of the three main telecom companies in Singapore, posted a 5.1% drop in operating revenue to S$242m for the third quarter.

The total service revenue, comprising of mobile telecommunication services, internet call services and fixed services, was $206m, up 5.3% from a year ago. Headset sales, on the other hand, were down around 40% to S$35.9 million. The drag in headset sales contributed to the dip in revenue.

The gross profit margin for the quarter was 61% compared to 54% last year. The improvement in the gross margin was mainly due to lower handset costs. Net profit was up 19% to almost S$40m. The net profit margin was 16.3%. Last year it was 13%.

The company had cash and cash equivalents of S$48.7 million. The total borrowing stood at S$250 million. The gearing ratio was 57%.

M1 generated net cash flow from operations of S$103m in the quarter compared to S$100m the previous year – an improvement of 2.5%. No dividends were declared for the quarter. The company estimates moderate growth in net profit after tax for the current year.

Shares in M1 closed at $3.46, which values the company at 21 times historic earnings. The dividend yield is 3.7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.