NeraTel

NeraTel: 1Q14 earnings of $4.6m below NRA estimates, due to lower than expected sales in both in Telco and Infocomm business segments. Revenue increased 11.5% yoy to $40.7m, driven by improved contribution from both segments. Within Infocomm segment, Network infrastructure revenue grew 40.8% yoy, offset by the 24.8% decrease in its payment solution segment. Gross profit declined slightly from 41.6% in 1Q13 to 38.2% in 1Q14 due to product mix . The group continues to diversify its geographical base by expanding in Nigeria and Myanmar. It is still in the early phase of setting up and the group has indicated that it will take some time before business in these countries start bearing fruits. NRA believes the group continues to expand at a healthy pace overseas and concurrently build a stable recurring revenue stream. Our fair value remains $0.76, still pegged at 11.1x FY14 PER. Maintain Neutral