Neratel

Neratel: 1Q13 earnings declined 10.0% y/y to $5.8m, led by a 16.3% decline in revenues to $36.5m. The decline in revenues were mainly due to both its Telecom and Infocomm business segments- lower sales volumes of microwave radio equipment and satellite equipment, as well as network equipment to the service provider market sector due to delay in projects. Going forward, Group cites the intense competition within the Telecoms segment, as well as the mobile operators being cautious in their capital investments due to uncertainties in regulations, spectrum and licensing in some countries. The group is more optimistic in its Infocomm segment despite the competition, as service providers will still continue to expand and upgrade their networks with the rapid growth in the internet traffic. IT spending will grow with increased spending from businesses to improve their competitiveness and security. The brightest spot comes from govt's spending in IT, in line with their initiatives to lower costs and improve public service standards. Neratel trades as 13.1x trailing P/E, 3.9x P/B.