Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

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Equity Bottom-Up

<ul><li>M1's third-quarter 2015 result was broadly in line with our expectations with services revenue down 1.1% year on year and both operating profit and earnings per share broadly flat.</li><li>There was significant questioning on the conference call about the introduction of the mySIM postpaid plans which offer higher data allowances than existing postpaid plans. There was also some questioning about the official dividend policy of at least 80% payout ratio, given that historically, the company has paid closer to 100%.&nbsp;</li><li>The prospect of a fourth entrant into the mobile market is dominating prospects for the company now that the regulator has indicated that it would set aside some of spectrum in the early-2016 spectrum auction for a new entrant. Given M1's inability to bundle pay-TV with its mobile service, we continue to expect it to be more impacted by any aggressive new entrant than either StarHub or SingTel.</li><li>However, our base case remains that a new entrant will not join the market as we are yet to see evidence that any new entrants have lined up enough funding to buy spectrum, build a national mobile network and fund initial operating losses while the business builds enough scale to start generating cash. We see this as a very high hurdle.</li><li>Our fair value of SGD 2.90 per share fair value remains unchanged, as does our narrow moat rating driven by cost advantages and intangible assets.</li></ul>Analyst:&nbsp;Dan BakerFull report below the fold...

M1's third-quarter 2015 result was broadly in line with our expectations with services revenue down 1.1% year on year and both operating profit and earnings per share broadly flat.There was significant questioning on the conference call about the introduction of the mySIM postpaid plans which offer higher data allowances than existing postpaid plans. There was also some questioning about the official dividend policy of at least 80% payout ratio, given that historically, the company has paid closer to 100%.&nbsp;The prospect of a fourth entrant into the mobile market is dominating prospects for the company now that the regulator has indicated that it would set aside some of spectrum in the early-2016 spectrum auction for a new entrant. Given M1's inability to bundle pay-TV with its mobile service, we continue to expect it to be more impacted by any aggressive new entrant than either StarHub or SingTel.However, our base case remains that a new entrant will not join the market as we are yet to see evidence that any new entrants have lined up enough funding to buy spectrum, build a national mobile network and fund initial operating losses while the business builds enough scale to start generating cash. We see this as a very high hurdle.Our fair value of SGD 2.90 per share fair value remains unchanged, as does our narrow moat rating driven by cost advantages and intangible assets.Analyst:&nbsp;Dan BakerFull report below the fold...

Narrow Moat M1 Reports in Line Third-Quarter 2015 Result, New Entrant Prospect Dominates Outlook

M1 Ltd

Narrow Moat M1 Reports in Line Third-Quarter 2015 Result, New Entrant Prospect Dominates Outlook