MobileOne Ltd- Steady State in 2008

Summary: Although MobileOne's (M1) 4Q07 revenue of S$206.9m (+2.9% YoY, +3.3% QoQ) came in 16.5% ahead of our forecast of S$177.6m, net profit of S$37.9m (- 4.8% YoY, -13.1% QoQ) fell about 9.4% from our S$41.9m estimate, damped by higher cost of sales. For the full year, M1 posted a 3.9% YoY rise in revenue to S$803.3m and a 4.4% increase in net profit to S$171.8m. M1 also declared a final dividend of S$0.083, bringing the total dividend to S$0.108. Going forward, M1 believes its operations should enter a "steady state", where it should be able to maintain its EBITDA margin at 45-46% as well as a payout ratio of at least 80%. Thanks to its fairly resilient business and high payout ratio, we continue to like M1 as a defensive stock, especially in the current volatile market. We maintain our S$2.33 fair value and BUY rating.