NeraTel

NeraTel: The market has reacted negatively to the recent sale by NeraTel CEO Mr Samuel Ang of all the company’s shares under his name. To the contrary, checks show that Mr Ang actually raised his stake as the parent PE fund, Northstar, has allowed him to hold a bigger stake in NeraTel as an incentive to retain him. Northstar, the parent of NeraTel, is an Indonesian US$1.2b private equity firm with a long and solid track record in partnering with institutional giants such as GIC and TPG. Its recent deals are the Indonesian national bank TPN’s exit, from which sources confirm that Northstar stood to make a 7x gain. Similarly, Northstar has also set a target for NeraTel to double its profits in three years. As such, OSK DMG deem NeraTel’s future still bright. OSK DMG expect the company to continue with its trend of delivering solid results in 2QFY13. The strong core profits will be underpinned by full contribution from Nera Malaysia as well as spillover revenue from the telco projects delivered in 1Q. The group is also expected to recognize the exceptional gains arising from Nera Malaysia’s acquisition in this quarter, which will boost the final numbers. OSK DMG maintain BUY with TP of $0.93.