M1 - UBS ups M1 target to $2.48, keeps at Neutral

Stock Name: M1
Company Name: M1 LIMITED
Research House: UBS

UBS raises M1’s (B2F.SG) target to $2.48 from $2.17, and keeps its Neutral rating. It says 4Q10 results were in line with expectations, with operating profit at $47 million, and net profit at $38 million.



“While revenue was higher than expected due to higher handset sales, this was offset by matching handset cost.” The house tips a 6.0% net profit growth in 2011 versus 2010. 

It notes, M1 declared a 2010 special DPS of 3.5 cents, and estimates a 2011 regular DPS of 14.9 cents, and a special DPS of 3.5 cents. “This implies 7.4% yield on the current share price. However, if no special DPS is declared in 2011, the yield would fall to 6.0%. As M1 shares have historically traded in the range of 6.0%-10% yield, we think the special dividends are needed to continue to provide support to the current share price.” 

It adjusts 2011/2012 EPS forecast to $0.186/$0.198 from $0.189/$0.197.

The shares are off 0.4% at $2.45.