NeraTel - Potential For Higher Yield

Date: 
2013-08-12
Firm: 
OSK
Stock: 
NeraTel
Price Target: 
0.93
Price Call: 
BUY
Last Price: 
0.075
Upside/Downside: 
+0.855 (1140.00%)
NeraTel's 2QFY13 results came in slightly below expectation, with SGD10.5m PATAMI (+213.4% y-o-y) on the back of SGD47.2m revenue (+13.1% y-o-y). Notably, order intakes increased across all business segments. Reiterate BUY, with our TP unchanged at SGD0.93, based on 11.4x blended FY13/14 P/E (+1 SD). The counter remains as the top pick in our technology sector coverage.
  • Higher revenue across all segments. Taking off the negative goodwill gain of SGD7.0m, core PATAMI was SGD3.5m (+4.8% y-o-y). Despite the increase in revenue across all business segments (+29.3% q-o-q), core net profits came in lower (-39.7% q-o-q) as GP margins normalised back to about 30%, along with higher selling and administrative expenses as well as the absence of the other operating income.
  • Expanding workforce to capture opportunities. The higher selling and administrative expenses can be justified by the group's ongoing expansion of its workforce to capture the robust opportunities presented in new markets (eg Nigeria). NeraTel has secured SGD121m worth of new orders in 1HFY13 (+21.2 y-o-y).
Source: OSK
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Pang Sing Tan

A potential key beneficiary of Myanmar's growth story. Well managed small cap stock.

2013-08-28 07:23

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