There has been much said about how the recent surge in NeraTel's share price could be due to expectations that they could be the only Singapore company to benefit from the Telco licences awarded by the Myanmar government. Although it is not ironclad, NeraTel's expertise in the microwave radio transmission segment gives the company a high chance of winning the tenders.
What is more certain, however, is that, by early 2014, NeraTel will be able to move into its own engineering business and develop its own products and this change will improve the company's profit margins. In the meantime, the successful acquisition of Nera Malaysia recently will result in a one time profit of about $7 million.
Samuel Ang, NeraTel's president and CEO has this to say to investors:
"When you look at NeraTel as a company, you need to look at the whole year because we are in a market that involves a lot of capital expenditure. We cannot recognise revenue at one go, we need to look at the work progress, and there may be some delays with some customers"
Therefore, it is more important to note the order intake which represents the health of the business.
OSK-DMG believes that there could be an interim dividend this year and that the current dividend payout of 4c a year is also sustainable.
Reference:
Pages 12 and 13 in The EDGE, July 15, 2013 issue.
AK says: "An excellent write up in The EDGE and if you are interested in NeraTel, go get a copy."
Related post:
NeraTel: Is there no telling how high it could go?