Back in October 2016, i watch this stock fall together with the sector in what was a fairly lackluster year for equities. I thought to myself, it's pretty significant off the highs, i am going to take a pessimistic estimate of its earnings, and then find an entry that will make me feel comfortable.
That entry came and i took up a position in M1. News of fourth Telco were fairly widespread then and coupled with some political uncertainties around the world, were some of the reasons thrown out for its decline.
It was a few days before they announced their results so i did some calculations on whatever latest results they had and took my own estimations of the fall in Earnings and therefore yield. Telcos have had a good run since 2010 together with the population boom and has became a fairly stable and good yielding defensive stock.
Stable in the sense that the price doesn't fluctuate much and the yields are fairly high. Considering that their revenue are pretty steady due to many of us being tied to contracts, it is not unreasonable to call it defensive and describe it that way.
Having said that, i entered expecting that the next 12 months dividend should come up to around 12c.
Now that their 2nd quarter results are out, and i have held it almost to full 12 months, i am pretty disappointed to see that even my estimates were too optimistic. Actual dividend comes up to only 11.1c and you can kind of extrapolate that the rest of the figures are not healthy.
The price has since fell big time after this recent earnings announcement. While i strongly advocate proper money management of cut loss, i am still holding it. I hate to admit it but i think i do still suffer from loss aversion. There are some positive stories that i am still hoping to play out so that is keeping me in.
Maybe not so much a disconnect per se, but more like a lag in bandwidth.
As of this post, the price has not fell enough for me to consider adding more stakes. I did not take a big position (relative to full portfolio) so i have some room to add. Management has since warned that Full Year net profit will be lower than last year and i am going to estimate that the next half year will see a poorer showing in percentage wise than the first half.
Lessons learn here are that i need to consider more factors in my estimation. Clearly the fourth telco is known, and the threat should probably worth more than i gave it credit for.
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