Neratel

[KopiKat]

An interesting transaction,

With the divestment of 675,000 ordinary shares in Nera Telecommunications Ltd (the “Company”), Ang Seong Kang Samuel is acquiring, through a company wholly-owned by him, a minority stake in Canopus Asia Systems, L.P., the controlling entity of Asia Systems Ltd ("ASL"). ASL owns approximately 53.38 per cent. of the total issued shares of the Company.

[GreedandFear]

An interesting transaction,

With the divestment of 675,000 ordinary shares in Nera Telecommunications Ltd (the “Company”), Ang Seong Kang Samuel is acquiring, through a company wholly-owned by him, a minority stake in Canopus Asia Systems, L.P., the controlling entity of Asia Systems Ltd ("ASL"). ASL owns approximately 53.38 per cent. of the total issued shares of the Company.

My guess is that the CEO is being given an opportunity to get significant upside if Neratel really performs (ie more upside than just being long common shares). When I discussed, with one of the Northstar board members, how critical retaining the CEO would be, they seemed very focused on incentivizing him to stay and ensure that the company performs.

No longer vested but hopefully at a lower price in the future

[WolfT]

An interesting transaction,

With the divestment of 675,000 ordinary shares in Nera Telecommunications Ltd (the “Company”), Ang Seong Kang Samuel is acquiring, through a company wholly-owned by him, a minority stake in Canopus Asia Systems, L.P., the controlling entity of Asia Systems Ltd ("ASL"). ASL owns approximately 53.38 per cent. of the total issued shares of the Company.

Actually it is 1040,000 ordinary shares... 2 transaction within 2 days.

History lesson for those interested...

Asia Systems Ltd owns 53.38% of Neratel
Canopus Asia Systems, L.P. owns 100% of Asia Systems Ltd.
PGA Partners Ltd is the general partner of and controls Canopus Asia Systems, L.P..
Mr. Sugito Walujo, Mr. Glenn Timothy Sugita and Mr. Ashish Jaiprakash Shastry are the holders of all the issued share capital of PGA Partners Ltd. Each of them holds one-third of the shareholding interests in PGA Partners Ltd.

I wonder how much shares is he allocated in Canopus...

[GPD]

Another case of selective disclosure to Lim&Tan securities:

Our conversation with Nera Tel suggests that 2Q’13
(expected in early Aug’13) would be a strong quarter
boosted by several delayed orders in 1Q’13 which
spilled over into 2Q’13 as well as a one-time negative
goodwill gain of $7+mln from their acquisition of their
Malaysian associate company. Order books have
increased about 10-15% in 1H13 boosted by higher
orders in South East Asia and the Middle East as Telco
service providers upgrade their networks to cater to
higher demand for faster internet speed. They are
currently awaiting to bid for orders from Telenor and
Ooredoo as they target to roll-out their telecom
network in Myanmar. Demand for point of sales
terminals continue to be strong, underpinned by
increased demand for cash-less payment solutions
globally.

If I were to use Q1 Proforma EPS provided during Nera Malaysia acquisition SGX Annc, that means an additional 1.93ct. Also, assuming Lim & Tan analyst got the right suggestion from their conversation with Neratel mgmt about spillover of delayed orders, I suppose it does suggest an EPS that's higher than last year's Q212 = 0.92ct. Add that up, we ought to see Q213 EPS of at least 3ct. Further Lim & Tan analysts got a one-time negative goodwill figure of $7Mil+ from their conversation, which is higher than the $6.61Mil figure from the SGX Annc for Proforma Q113. Perhaps an EPS closer to 3.5ct (depending on the spillover quantum)??

I estimated Q2 EPS of 3cts with FY13 EPS about 7.2cts. Without the one-off gain, the FY13 EPS will be about 5.6cts (I assumed that $7mil is taxable) which seems pretty inline with NeraTel's stable and conservative approach to very modest business growth.

Without the Myanmar story, and if the technologies they survived on doesn't get obsolete, we might be looking at EPS of 5-6cts for a few years to come. NeraTel has paid out almost all their earning for the last six years. If they maintain this unofficial policy, then future dividend might increase accordingly.

NeraTel doesn't pursue growth or acquisition aggressively and doesn't hoard cash. In fact, the alternative way to look at this is that they protect their hard-earned cash pretty aggressively. Perhaps with no better use of those cash and knowing the stability of their cash generating businesses, in 2006, they paid out 15cts special dividend in addition to the 3cts dividend for FY05. That 15cts is all their free cash at that time. Their free cash has been at about 12cts for the last three years.

How will NeraTel utilize them this time

[WolfT]

Another case of selective disclosure to Lim&Tan securities:

Our conversation with Nera Tel suggests that 2Q’13
(expected in early Aug’13) would be a strong quarter
boosted by several delayed orders in 1Q’13 which
spilled over into 2Q’13 as well as a one-time negative
goodwill gain of $7+mln from their acquisition of their
Malaysian associate company. Order books have
increased about 10-15% in 1H13 boosted by higher
orders in South East Asia and the Middle East as Telco
service providers upgrade their networks to cater to
higher demand for faster internet speed. They are
currently awaiting to bid for orders from Telenor and
Ooredoo as they target to roll-out their telecom
network in Myanmar. Demand for point of sales
terminals continue to be strong, underpinned by
increased demand for cash-less payment solutions
globally.

If I were to use Q1 Proforma EPS provided during Nera Malaysia acquisition SGX Annc, that means an additional 1.93ct. Also, assuming Lim & Tan analyst got the right suggestion from their conversation with Neratel mgmt about spillover of delayed orders, I suppose it does suggest an EPS that's higher than last year's Q212 = 0.92ct. Add that up, we ought to see Q213 EPS of at least 3ct. Further Lim & Tan analysts got a one-time negative goodwill figure of $7Mil+ from their conversation, which is higher than the $6.61Mil figure from the SGX Annc for Proforma Q113. Perhaps an EPS closer to 3.5ct (depending on the spillover quantum)??

I estimated Q2 EPS of 3cts with FY13 EPS about 7.2cts. Without the one-off gain, the FY13 EPS will be about 5.6cts (I assumed that $7mil is taxable) which seems pretty inline with NeraTel's stable and conservative approach to very modest business growth.

Without the Myanmar story, and if the technologies they survived on doesn't get obsolete, we might be looking at EPS of 5-6cts for a few years to come. NeraTel has paid out almost all their earning for the last six years. If they maintain this unofficial policy, then future dividend might increase accordingly.

NeraTel doesn't pursue growth or acquisition aggressively and doesn't hoard cash. In fact, the alternative way to look at this is that they protect their hard-earned cash pretty aggressively. Perhaps with no better use of those cash and knowing the stability of their cash generating businesses, in 2006, they paid out 15cts special dividend in addition to the 3cts dividend for FY05. That 15cts is all their free cash at that time. Their free cash has been at about 12cts for the last three years.

How will NeraTel utilize them this time

The reason for the special div in 2006 is because of this.

2006 july
Nera Tel has agreed to sell its 68.27% stake (225.307mln shares) in Nera Electronics to Nile Holdings, a wholly owned subsidiary of The HSBC Private Equity Fund for 26 cents per share or $58,579,820 in cash. Nera ASA who owns 50.01% of Nera Tel has agreed to vote in favour of the sale.
Nile Holdings will make a mandatory general offer for the remaining 31.73% stake in Nera Electronics at the same price.
The takeover offer of $85.806mln (330mln shares * S$0.26) represents a price to book of 1.72x, price to trailing earnings of 9x and price to sales of 0.81x. This represents an 18% premium to Nera Electronics’ last transacted price of 22 cents per share, but at a 21% discount to its IPO price of 33 cents per share.


In fact shareholders who hold it( Nera electronics) since ipo suffered losses...

[KopiKat]

Another case of selective disclosure to Lim&Tan securities:

Our conversation with Nera Tel suggests that 2Q’13
(expected in early Aug’13) would be a strong quarter
boosted by several delayed orders in 1Q’13 which
spilled over into 2Q’13 as well as a one-time negative
goodwill gain of $7+mln from their acquisition of their
Malaysian associate company. Order books have
increased about 10-15% in 1H13 boosted by higher
orders in South East Asia and the Middle East as Telco
service providers upgrade their networks to cater to
higher demand for faster internet speed. They are
currently awaiting to bid for orders from Telenor and
Ooredoo as they target to roll-out their telecom
network in Myanmar. Demand for point of sales
terminals continue to be strong, underpinned by
increased demand for cash-less payment solutions
globally.

If I were to use Q1 Proforma EPS provided during Nera Malaysia acquisition SGX Annc, that means an additional 1.93ct. Also, assuming Lim & Tan analyst got the right suggestion from their conversation with Neratel mgmt about spillover of delayed orders, I suppose it does suggest an EPS that's higher than last year's Q212 = 0.92ct. Add that up, we ought to see Q213 EPS of at least 3ct. Further Lim & Tan analysts got a one-time negative goodwill figure of $7Mil+ from their conversation, which is higher than the $6.61Mil figure from the SGX Annc for Proforma Q113. Perhaps an EPS closer to 3.5ct (depending on the spillover quantum)??

I estimated Q2 EPS of 3cts with FY13 EPS about 7.2cts. Without the one-off gain, the FY13 EPS will be about 5.6cts (I assumed that $7mil is taxable) which seems pretty inline with NeraTel's stable and conservative approach to very modest business growth.

Without the Myanmar story, and if the technologies they survived on doesn't get obsolete, we might be looking at EPS of 5-6cts for a few years to come. NeraTel has paid out almost all their earning for the last six years. If they maintain this unofficial policy, then future dividend might increase accordingly.

NeraTel doesn't pursue growth or acquisition aggressively and doesn't hoard cash. In fact, the alternative way to look at this is that they protect their hard-earned cash pretty aggressively. Perhaps with no better use of those cash and knowing the stability of their cash generating businesses, in 2006, they paid out 15cts special dividend in addition to the 3cts dividend for FY05. That 15cts is all their free cash at that time. Their free cash has been at about 12cts for the last three years.

How will NeraTel utilize them this time

The reason for the special div in 2006 is because of this.

2006 july
Nera Tel has agreed to sell its 68.27% stake (225.307mln shares) in Nera Electronics to Nile Holdings, a wholly owned subsidiary of The HSBC Private Equity Fund for 26 cents per share or $58,579,820 in cash. Nera ASA who owns 50.01% of Nera Tel has agreed to vote in favour of the sale.
Nile Holdings will make a mandatory general offer for the remaining 31.73% stake in Nera Electronics at the same price.
The takeover offer of $85.806mln (330mln shares * S$0.26) represents a price to book of 1.72x, price to trailing earnings of 9x and price to sales of 0.81x. This represents an 18% premium to Nera Electronics’ last transacted price of 22 cents per share, but at a 21% discount to its IPO price of 33 cents per share.


In fact shareholders who hold it( Nera electronics) since ipo suffered losses...

It's a different Neratel now... different controlling shareholder, different directors in the board, very likely, we are going to see different strategies and directions...

This is further supported by the observations of 'GreedandFear' which'd summarised the last AGM in an earlier post, plus the recent article in TheEdge. It points to a Neratel that's going to embark on more aggressive growth thro' both organic growth (leasing model) & acquisitions. If so, this means they'll burn up cash... If they're very aggressive, they may even need to raise more cash, either thro' debts or equity fund raising (Rights, Placement, Acquisition via Shares issue,...). 'WolfT' also pointed out in an earlier post on the background of the CFO, which'd fit in nicely...

So, much as I'd hope that Neratel would be increasing their dividends, the indicators I'm seeing seems to point otherwise...

For better or worse, I don't know... We'll just have to do our analysis as and when things happen...

[ValueBeliever]

Is SA sale a aberration that the Co. fundamental has changed? Day to day events have impact but got to look at the context of the major shldrs NorthStar is buy SA shares and not that he sell outright but is instead exchanging it for partnership stake in ultimate holding probably for tax or incentive purpose.

His selling had caused impact to the market but SA is probably tasked to perform at a higher level now.

So L&T 1 day ago said its +ve on Co. growth and next day without exploring further said its a sell? Flipping here and there later will loose its credibility?

[NTL]

Does he need to sell in order to acquire the shares of Canopus Asia?

[GPD]

If I were to use Q1 Proforma EPS provided during Nera Malaysia acquisition SGX Annc, that means an additional 1.93ct. Also, assuming Lim & Tan analyst got the right suggestion from their conversation with Neratel mgmt about spillover of delayed orders, I suppose it does suggest an EPS that's higher than last year's Q212 = 0.92ct. Add that up, we ought to see Q213 EPS of at least 3ct. Further Lim & Tan analysts got a one-time negative goodwill figure of $7Mil+ from their conversation, which is higher than the $6.61Mil figure from the SGX Annc for Proforma Q113. Perhaps an EPS closer to 3.5ct (depending on the spillover quantum)??

I estimated Q2 EPS of 3cts with FY13 EPS about 7.2cts. Without the one-off gain, the FY13 EPS will be about 5.6cts (I assumed that $7mil is taxable) which seems pretty inline with NeraTel's stable and conservative approach to very modest business growth.

Without the Myanmar story, and if the technologies they survived on doesn't get obsolete, we might be looking at EPS of 5-6cts for a few years to come. NeraTel has paid out almost all their earning for the last six years. If they maintain this unofficial policy, then future dividend might increase accordingly.

NeraTel doesn't pursue growth or acquisition aggressively and doesn't hoard cash. In fact, the alternative way to look at this is that they protect their hard-earned cash pretty aggressively. Perhaps with no better use of those cash and knowing the stability of their cash generating businesses, in 2006, they paid out 15cts special dividend in addition to the 3cts dividend for FY05. That 15cts is all their free cash at that time. Their free cash has been at about 12cts for the last three years.

How will NeraTel utilize them this time

The reason for the special div in 2006 is because of this.

2006 july
Nera Tel has agreed to sell its 68.27% stake (225.307mln shares) in Nera Electronics to Nile Holdings, a wholly owned subsidiary of The HSBC Private Equity Fund for 26 cents per share or $58,579,820 in cash. Nera ASA who owns 50.01% of Nera Tel has agreed to vote in favour of the sale.
Nile Holdings will make a mandatory general offer for the remaining 31.73% stake in Nera Electronics at the same price.
The takeover offer of $85.806mln (330mln shares * S$0.26) represents a price to book of 1.72x, price to trailing earnings of 9x and price to sales of 0.81x. This represents an 18% premium to Nera Electronics’ last transacted price of 22 cents per share, but at a 21% discount to its IPO price of 33 cents per share.


In fact shareholders who hold it( Nera electronics) since ipo suffered losses...

It's a different Neratel now... different controlling shareholder, different directors in the board, very likely, we are going to see different strategies and directions...

This is further supported by the observations of 'GreedandFear' which'd summarised the last AGM in an earlier post, plus the recent article in TheEdge. It points to a Neratel that's going to embark on more aggressive growth thro' both organic growth (leasing model) & acquisitions. If so, this means they'll burn up cash... If they're very aggressive, they may even need to raise more cash, either thro' debts or equity fund raising (Rights, Placement, Acquisition via Shares issue,...). 'WolfT' also pointed out in an earlier post on the background of the CFO, which'd fit in nicely...

So, much as I'd hope that Neratel would be increasing their dividends, the indicators I'm seeing seems to point otherwise...

For better or worse, I don't know... We'll just have to do our analysis as and when things happen...

Hey guys, thanks for all the info.

Seems likes all the recent developments in NeraTel are indeed gearing towards growth. I hope they still maintain at least that unspoken 4cts dividend payout.

With the new CFO, there should be a higher tendency to raise fund thru equity rather than debts to if they need cash to grow. It seem pointless in hiring a CFO to borrow monies from banks. If any fund raising is backed up by announcements of big contract win and shares issued at the right price (about 5% discount to market as baseline?), it should be good for NeraTel's price since it is backed up by solid evidence of growth. Shares issues at the right price should shout out confidence a lot louder to the market than loans from bank.

I wonder if the drop in price is market sobering up from the potential being priced-in lately since nothing is concrete so far. SA's sale may just be a catalyst to that effect?

Agreed. We will only know as things unfold themselves.

[ValueBeliever]

I think its not the right word to say sell, in the filing it in fact is off market transaction, ie, there must be some kind of private arrangement.

Correction is is via market transaction - so it sold in market to acquire the shares in CAL