M1 - The First Trial On A Blue-Chip
I will be using M1 as the first company to test my Triple S Scorecard.
Profile In Short
If you do not know what M1 does or is, you do not know Singapore enough.
In simple terms, M1 is still one of the only 3 telecommunication companies in Singapore.
Based On Triple S Scorecard:
Why So Good?
Defensive Stock - Telecom Companies are deem as defensive stocks, due to their business model. It will always have business and its customer are locked up with them for at least 2 years (due to signing up a 2 year mobile plan with M1).
1 of the only 3 Established Telecommunications Company in Singapore - Despite announcement of a 4th Teleco coming along the way, it has been stated widely that M1 may AT MOST LOSS 20% of the revenue. This is due to the fact that Teleco industry has a high barrier to entry. Having established in Singapore for such a LONG TIME, M1 already an established infrastructure.
High Dividend Yield, Dividend Payout Company - M1 is a company that promises high dividend payout (at least 80%) and as per Triple S Scorecard, based on the current price, it is also provides a high dividend yield of at least 8%.
Strong and Consistent Earning Power - M1 has been able to achieve a high profit margin over the last 5 years. Over the next 2 years, its earning maybe impacted. But I believe it will still be in the range of 10%.
Why So Bad?
Singapore Mobile Population Penetration Rate - In June 2014, the penetration rate is 153.9% - Which meant each person has about 1.5 mobile line. How many mobile does 1 person need? Thus, the market seem saturated at this moment. Rather than getting more customers, M1 has to protect its current customers from changing mobile providers.
Low iPhone Subsidies - This is just an observation. It seems that IPhone subsidies for 2 year mobile plans seem to be at a low. Their handset price for a minimum amount (below $50 per month) is higher than Singtel or Starhub.
Weak Balance Sheet - From the Triple S Scorecard, the company has a weak balance sheet. This should not be different from Singtel or Starhub. How the company will perform in the stock market will be determine by its earning power.
In Short
I did not go into detail of the earning when I was inputting the details. Thus, this analysis was done very quickly. Nevertheless, the analysis allowed me to understand that M1 stock price should be based solely from its earning power/business model and not its asset value. This should be the same for other blue chips as well.
Looking at the analysis of the earning power, a price of 1.75 should be a great price to enter (Average 5 year PE will be below 10 & PS will be below 1.5).
Current Price: 2.240 as of 26 Jan 2016
Please do your own due diligence before you invest in this stock.
Profile In Short
If you do not know what M1 does or is, you do not know Singapore enough.
In simple terms, M1 is still one of the only 3 telecommunication companies in Singapore.
Defensive Stock - Telecom Companies are deem as defensive stocks, due to their business model. It will always have business and its customer are locked up with them for at least 2 years (due to signing up a 2 year mobile plan with M1).
1 of the only 3 Established Telecommunications Company in Singapore - Despite announcement of a 4th Teleco coming along the way, it has been stated widely that M1 may AT MOST LOSS 20% of the revenue. This is due to the fact that Teleco industry has a high barrier to entry. Having established in Singapore for such a LONG TIME, M1 already an established infrastructure.
High Dividend Yield, Dividend Payout Company - M1 is a company that promises high dividend payout (at least 80%) and as per Triple S Scorecard, based on the current price, it is also provides a high dividend yield of at least 8%.
Strong and Consistent Earning Power - M1 has been able to achieve a high profit margin over the last 5 years. Over the next 2 years, its earning maybe impacted. But I believe it will still be in the range of 10%.
Why So Bad?
Singapore Mobile Population Penetration Rate - In June 2014, the penetration rate is 153.9% - Which meant each person has about 1.5 mobile line. How many mobile does 1 person need? Thus, the market seem saturated at this moment. Rather than getting more customers, M1 has to protect its current customers from changing mobile providers.
Low iPhone Subsidies - This is just an observation. It seems that IPhone subsidies for 2 year mobile plans seem to be at a low. Their handset price for a minimum amount (below $50 per month) is higher than Singtel or Starhub.
Weak Balance Sheet - From the Triple S Scorecard, the company has a weak balance sheet. This should not be different from Singtel or Starhub. How the company will perform in the stock market will be determine by its earning power.
In Short
I did not go into detail of the earning when I was inputting the details. Thus, this analysis was done very quickly. Nevertheless, the analysis allowed me to understand that M1 stock price should be based solely from its earning power/business model and not its asset value. This should be the same for other blue chips as well.
Looking at the analysis of the earning power, a price of 1.75 should be a great price to enter (Average 5 year PE will be below 10 & PS will be below 1.5).
Current Price: 2.240 as of 26 Jan 2016
Please do your own due diligence before you invest in this stock.
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