Citigroup downgraded telecommunications company M1 Ltd
to 'neutral' from 'buy' and lowered its target price
to S$2.70 from S$2.86, citing higher capital spending over the
next few years.
M1 shares were 0.4 percent higher at S$2.76, and have gained
1.8 percent since the start of the year, compared with the FTSE
ST Telecommunications Index's 5 percent rise.
Citi has cut its earnings estimates for M1 by 10-11 percent
for 2013-2014 to factor in higher capital expenditure (capex)
expectations and an estimated S$100 million in LTE spectrum
payments in 2015 and 2016.
The brokerage cited M1's management as saying it expects
capex to be between S$130-S$150 million this year, higher than
S$123 million last year, due to higher quality of service and
increased coverage and capacity requirements.
"With the 19 percent return over the last year, we find M1's
share price no longer as attractive on a relative valuation and
yield basis," said Citi in a report.
In Southeast Asia, Citi prefers Thai telecommunications
companies such as Advanced Info Service Pcl and Total
Access Communication Pcl.
1027 (0227 GMT)