Neratel

[lonewolf]

If one looked at their FY11 report in Jan or Feb this year, they actually declared a 4 cent dividend pending the Scheme. Since the Scheme is now off, they should be giving out this 4 cents which was what was declared 2 years ago when they upped the annual dividend from 3 to 4 cents. At 40 cents the yield would be about 10%.

Not true. I think the 4c you saw in the report was for the corresponding FY10 result which was paid out 12 May 2011.

The 6c dividend was part of the scheme. And in the meeting, management has clarified that if the scheme did not go through, then there will be no dividend paid. Pending the outcome of the meeting, management will revisit the issue of dividend payment.

So the speculation now is whether they will paid an interim special dividend in Nov. Neratel paid one (a real juicy 15c) in 2006 after they sold off their stake in Nera Electronics.

[mrEngineer]

Kopikat, will appreciate if you elaborate more why you say there is no growth potential. Is it because you think there is limited capital from Eltek?

Also someone can advise when did Eltek took over Neratel?

[paullow]

let me try to answer part of it. company revenues n assets are fairly stagnant for the past 5yrs. i don't see any dividend in 2011 but the rest of the yrs range from 3-4c. unless one can foresee some potential in it, i dun think this is an exciting stk.

[KopiKat]

Kopikat, will appreciate if you elaborate more why you say there is no growth potential. Is it because you think there is limited capital from Eltek?

No, I didn't mean No Growth Potential. What I meant was EVEN IF No Growth, I'm still ok to own a stock that pays High Yield, have High Cash and Negligible Debts.

To get a quick feel of NeraTel, you may want to quickly go through the posts in this thread, many of which were contributed by long term shareholders of NeraTel. A couple of them even have more detailed analysis in their blogs.

I have yet to check all the facts and figures but the gist is, NeraTel had been paying consistently good dividend yield for >5years (sometimes more than EPS but within their FCF), little growth and if measured using PE, then not that attractive.

My GUESS is that the irony (to Eltek) is that, to make NeraTel more attractive to a potential buyer, they may have transferred (sold?) the rights to Mid-East + North Africa market (according to one of the post). That may explain why we see Q112 EPS = 1.79ct vs 0.63ct (Q111) vs 3.73ct (FY11). Suddenly, Growth Spurt! Makes existing shareholders, who'd been enjoying good dividend yield, even more reluctant to let go...

[mrEngineer]

[My GUESS is that the irony (to Eltek) is that, to make NeraTel more attractive to a potential buyer, they may have transferred (sold?) the rights to Mid-East + North Africa market (according to one of the post). That may explain why we see Q112 EPS = 1.79ct vs 0.63ct (Q111) vs 3.73ct (FY11). Suddenly, Growth Spurt! Makes existing shareholders, who'd been enjoying good dividend yield, even more reluctant to let go...

Precisely, you got my point!

[VestedInterest]

If one looked at their FY11 report in Jan or Feb this year, they actually declared a 4 cent dividend pending the Scheme. Since the Scheme is now off, they should be giving out this 4 cents which was what was declared 2 years ago when they upped the annual dividend from 3 to 4 cents. At 40 cents the yield would be about 10%.

Not true. I think the 4c you saw in the report was for the corresponding FY10 result which was paid out 12 May 2011.

The 6c dividend was part of the scheme. And in the meeting, management has clarified that if the scheme did not go through, then there will be no dividend paid. Pending the outcome of the meeting, management will revisit the issue of dividend payment.

So the speculation now is whether they will paid an interim special dividend in Nov. Neratel paid one (a real juicy 15c) in 2006 after they sold off their stake in Nera Electronics.

Oops! Yes, I made a mistake. Sorry about that. So we will wait and see.

[wsreader]

With the benefit of hindsight, considering
1) there was no 2nd buyer to bid up the offer price,
2) many retail investors (at least in this forum) were not in favour of the Scheme
3) some 3.7mil shares were done between 51.5c and 48c on 10 feb 12, just before the offer price was announced. The buyers are sitting on confirmed loss and probably will vote against the Scheme to prolong their suffering
4) the market price was 44c to 44.5c on most days leading to the Scheme meeting, only 2c from the amount they will get if the Scheme is approved
5) the 6c sweetner dividend will be off if the Scheme is off

perhaps the best course of action was to sell off just before the Scheme meeting and buy back if the Scheme is confirmed voted down. The risk reward was 2c vs 6c.

[KopiKat]

With the benefit of hindsight, considering
1) there was no 2nd buyer to bid up the offer price,
2) many retail investors (at least in this forum) were not in favour of the Scheme
3) some 3.7mil shares were done between 51.5c and 48c on 10 feb 12, just before the offer price was announced. The buyers are sitting on confirmed loss and probably will vote against the Scheme to prolong their suffering
4) the market price was 44c to 44.5c on most days leading to the Scheme meeting, only 2c from the amount they will get if the Scheme is approved
5) the 6c sweetner dividend will be off if the Scheme is off

perhaps the best course of action was to sell off just before the Scheme meeting and buy back if the Scheme is confirmed voted down. The risk reward was 2c vs 6c.

Perhaps more importantly, what's the long term shareholders (who'd opposed this scheme because they say that it's undervalued) doing now? Not feeling shell-shocked at the drop in share price and mopping around, feeling sorry for themselves, I hope! Instead, they ought to be gleefully mopping up more of their favourite High Yield stock at current prices! Hey! it's ~10% lower than the rejected Offer Price! Right? That's what I'd do anyway..

[Drizzt]

a much more sensible approach is to use net profit of the year where business is average over the last 5 years. i have a feeling recent biz is good. if there is no big shift in dynamics of the company, it would be more conservative to use a more sensible net profit. which year should i use?

[KopiKat]

a much more sensible approach is to use net profit of the year where business is average over the last 5 years. i have a feeling recent biz is good. if there is no big shift in dynamics of the company, it would be more conservative to use a more sensible net profit. which year should i use?

One tiny (?) shift in dynamics is they'd acquired (took over) the rights to MENA (Mid-East, North Africa) from Nera Networks Norway from Jan-11. This should provide some growth in Revenue + Profits. But, for FY11, I see Morocco ($8.6M), Mid-East ($5.5M), .. Extracts,

The increase resulted from higher sales in microwave radio equipment in the Transmission business area, with sales to the new markets of Middle East and North Africa amounting to $10.6m for the quarter and $14.2m for FY 2011.

For Q112, MENA Revenue = $12.4M

The other interesting news (old news) I found from internet search is that Eltek had sold Nera Network AS (Norway?) to Ceragon Networks on Jan-11. Ceragon also have a presence in Asia (have Singapore office).

The puzzle just got a lot more interesting to me. I suppose Ceragon wasn't interested in Neratel but was somehow agreeable to allow the rights (altho' non-exclusive) to MENA to be sold to Neratel. It'd also appear that Neratel must now be getting their products + technical support from Ceragon (the new owner of Nera Networks) for Nera products?

Haiz... more Qs than answers.. Have to go read some ARs soon..

---

Found something on the agreement with Eltek for use of Nera trademark from Ceragon AR (pg23),

In connection with the SPA and on the same day, Nera entered into: (i) a Trademark Purchase Agreement with Nera Telecommunications Ltd. ("NeraTel"), a subsidiary of Eltek ASA, under which it sold to NeraTel certain trade names and domain names of Nera, retaining a right to use the name "Nera" for the first two years, and NeraTel undertook a three-year period non-compete; and (ii) a non-exclusive OEM supply agreement..

Also, SGX Annc on 20 Jan 11