Sell @ $3.55
Contra off 2 outstanding batches.
Did an FCF study over the weekends and was very surprised that FCF < Dividends for last 2 years! The first thought is M1 Div Payout is not sustainable. However, after studying their Cash Flow for the past 6 years, I realised that M1 is declaring Div based on furture FCF. As CAPEX is a known Figure & Timing to their mgmt, it is not impossible to do that. In several instances where FCF + Cash is insufficient to pay the Dividends (End-Apr & Mid-Aug), it was observed that Debts (CL) had increased for that Quarter ie Short Term Debts must have been utilised to cover for any shortfall.
As such, my conclusion is that whether M1 will continue to do a 100% Payout (their Policy is min 80%), will be more dependent on FY16 CAPEX requirements. Looking at Q1 low Cash Level and the 11.8ct Div paid out on 30-Apr (Q2), I have lowered my enthuaism for a 100% payout. Perhaps things may be clearer in Q3… 😀