COUNTER: NERA TELECOMMUNICATIONS LTD
BUSINESS:
The counter mainly operates in three business segments:
(1) Telecommunications: Sales and engineering in solutions for wireless infrastructure networks (3G/LTE base stations) and satellite communications.
(2) Network Infrastructure: Deploy IP, broadcast as well as optical network.
(3) Payment Solutions: Provide end to end electronics payment solution for finance, banking and retailers.
BUSINESS:
The counter mainly operates in three business segments:
(1) Telecommunications: Sales and engineering in solutions for wireless infrastructure networks (3G/LTE base stations) and satellite communications.
(2) Network Infrastructure: Deploy IP, broadcast as well as optical network.
(3) Payment Solutions: Provide end to end electronics payment solution for finance, banking and retailers.
OVERVIEW:
1Q2015 financial results saw net profit fell 34% year on year as Telecommunication segments reported a 42% plummet. It was due to late recognition of revenue from Middle East and Africa region. To increase chances of securing long term maintenance contract, a one-off low-margin project was committed to one Thai customer. It resulted gross margin fell 9% in latest quarter.
The latest results did provide some bright spot. Both network and payment segments registered 17% and 51% in revenue improvement. As of March 2015, management only drawn down $5.3mil of the $25mil 5 years loan facility. The remaining will be used for operation and potential M&A opportunity. Cash position is close to $20mil.
As of now, the counter has deployed 200,000 payment terminals in market. It is now the largest payment t
erminal provider in Thailand. On 18 May, it announced new contract worth $13mil has been secured.
REASONS TO BUY:The latest results did provide some bright spot. Both network and payment segments registered 17% and 51% in revenue improvement. As of March 2015, management only drawn down $5.3mil of the $25mil 5 years loan facility. The remaining will be used for operation and potential M&A opportunity. Cash position is close to $20mil.
As of now, the counter has deployed 200,000 payment terminals in market. It is now the largest payment t
erminal provider in Thailand. On 18 May, it announced new contract worth $13mil has been secured.
(1) The management is confident to grow 10% in profit by 2015. Combining current cash position, it is believed that annual dividend 4 cents per shares can be achieved. Based on past record, investor could expect 2 cents as dividend on coming quarter.
(2) Due to late recognition of revenue in 1Q2015, 2Q2015 shall be registered with significant improvement.
(3) Looking ahead, management plan to build up in-building mobile coverage network in major buildings in Indonesia. These networks will be leased to domestic Telco which will drive the growth of recurring revenue in years ahead.
ENTRY PRICE:
The counter has been trading in lower price region over last 2 years. It has formed strong support ~0.65. Immediate ceiling is 0.695. Suggestion is to accumulate <0.0695.
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