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3 Things Investors Should Know About M1 Ltd Now

M1 Ltd  (SGX: B2F)  is the smallest player within Singapore’s telecommunications industry, sitting behind Starhub Ltd  (SGX: CC3) and leader Singapore Telecommunications Limited  (SGX: Z74).

The company has four business segments, namely, Mobile services, Fixed services, International Call services, and Handset sales. Here are three things about M1 investors should know:

1. Latest quarterly earnings out

M1 had released its latest quarterly earnings two weeks ago. It was for the first-quarter of 2016.

The telco reported lower revenue and profit for the quarter compared to the same period a year ago. Revenue was down by 12.6% to S$257.6 million while profit slipped by 7% to S$42.5 million. Despite the poor revenue and profit performance, M1 managed to nearly double its cash flow from operations from $58.7 million in the first-quarter of 2015 to $102 million.

Unfortunately, the company’s balance sheet had worsened from a year ago with its net debt position increasing from S$236 million to S$300 million.

2. Dividend history

M1 has consistently a paid dividend over the last 10 years and it has managed to maintain its pay-outs within a tight range. You can see how the telco’s annual dividend has evolved over the past decade in the table below:

M1 dividend table (2005 to 2015)
Source: S&P Global Market Intelligence

At the latest price of $2.45, M1 has a dividend yield of 6.2% thanks to its dividend of S$0.153 in 2015.

3. Historically low valuation

Over the last 12 months, M1’s shares have been miserable, falling by nearly a third from S$3.58 to S$2.45. But as a result of the fall, the company’s valuation metrics are now near multi-year lows.

For instance, M1’s latest trailing price-to-earnings ratio of 13 is at the lower end of its historical ranges over the past five years, as the following chart illustrates:

M1's price-to-earnings (PE) ratio from 29 April 2011 to 29 April 2016
Source: S&P Global Market Intelligence

It’s also worth noting that M1’s current PE ratio is not too far off from the 11.7 PE sported by the SPDR STI ETF  (SGX: ES3), an exchange-traded fund that tracks the fundamentals of Singapore’s stock market barometer, the Straits Times Index  (SGX: ^STI).

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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 Lawrence Nga doesn’t own shares in any companies mentioned.