SINGAPORE (April 18): DBS expects an offer price range of between $2.23-2.74 per share if M1’s possible takeover scenario is realised.
This is based on data of previous buyouts and privatisations for SGX-listed companies which saw a takeover premium of between 10-35% over last close before announcement.
M1’s major shareholders, Keppel T&T, Axiata Group and Singapore Press Holdings, are currently in the midst of conducting a strategic review of their respective shareholdings, which may or may not result in a transaction.
In a Tuesday report, analyst Suvro Sarkar also highlights the possibility of a partial or block sale of these shares.
“In the event of a block sale, such a move will also lead to a General Offer (GO) for minority shareholders,” says Sarkar.
Sarkar expects M1’s total revenues to contract by as much as 17% from 2016 to 2022 levels in his base-case scenario analysis with the entry of TPG.
In 1Q, M1 posted a net profit of $36.3 million, up 14% from last quarter but down 15% against last year.
(See also: M1 1Q net profit down 14.6% to $36.3 mil on higher expenses)
Sarkar says this is in line with his expectations, as service revenues hold up, driven by continued growth in fixed services revenue but offset by expected declines in mobile revenue and international call services revenue.
See also: RHB keeps 'buy' call and $3.30 price target on Singtel
“Both postpaid and prepaid ARPU declined in 1Q17. Higher wholesale cost of fixed services, staff costs and depreciation continue to drive cost increases,” he adds.
DBS is maintaining its “hold” with unchanged target price of $1.97.
Shares of M1 are down 2 cents at $2.12.
