Monday, March 31, 2014


Neratel - Latest news was this morning where the group announced that it has received $31.1m worth of contracts. Apart from that, in its latest FY13 results few weeks back, NeraTel posted FY13 earnings of $23.5m (+21%) that came in above street estimates, while flat revenue of $178.2m slightly missed. For 4Q13, net profit of $3.8m and revenue of $44.5m was largely unchanged y/y. For the quarter, NeraTel’s top line was hurt by slower sales of microwave radio equipment in the Middle East and Africa market under its Telecom segment (-28% y/y), but balanced by better sales of network equipment to the service providers under its Infocomm segment (+22%). The group’s gross margin improved from 31.0% to 35.1%, driven by an improved sales mix, as well as higher profit margin recorded from the completion of projects, but the impact on bottom line was negated by absence of a one-off gain related to accounts collection in 4Q12. Going forward, competition in the Telco segment is expected to remain intense, with major global telecom equipment vendors aggressively competing to gain market share and customers driving down operational and capital expenditures. The Telco segment ended FY13 with an order in-take of $67.6m (-8% y/y) as a result of lower orders from both Wireless Infrastructure Networks and Satcom business areas. The Infocomm segment may perform better, having secured $125.7m (+24% y/y) of order in-take, driven by the Network Infrastructure and Payment Solutions businesses. Management declared a final dividend of 4¢, bringing full year payout to 6¢ (FY12: 8¢), implying an attractive 8.2% yield. NeraTel continues to maintain its strong financial position, with zero debt, and cash of $39.3m (10.9¢ per share). At $0.735, NeraTel trades at 11.3x P/E.

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