Neratel

[Drizzt]

one of the reasons why i am not invested was because of the apprehension being in similar industry. no one actuallly gave a run down why the business year after year could be so stable. is it because its a relationship business where if your sales channel are on good terms with the telcos and key customers they dont generally tend to change?

[ValueBeliever]

Agree, NorthStar has a track record of returning great value to its sharehldrs. and I think with all the opportunity at NERA door step, its up to NorthStar to make sure things in NERA get organize to meet market expectation.

It need not win all the contract as they can afford to work with other vendors. Remember Jupiter Network is their partner and they are at the forefront on high speed network gear and Cloud. NERA is not just reselling NERA product, but a Integrator of telecom wireless gear!

[NTL]

According to reports, Singtel also stands as a potential beneficiary for Myanmar Telco play. Will Singtel be engaged to build up the network too? Is Nera going to benefit from it as a sub-sub-contractor?

Back to the question, how much Nera can take before they themselves break?

[corydorus]

According to reports, Singtel also stands as a potential beneficiary for Myanmar Telco play. Will Singtel be engaged to build up the network too? Is Nera going to benefit from it as a sub-sub-contractor?

Back to the question, how much Nera can take before they themselves break?

I find this concern interesting. Isn't this a good problem to have or do we think the management is sleeping ?

[KopiKat]

one of the reasons why i am not invested was because of the apprehension being in similar industry. no one actuallly gave a run down why the business year after year could be so stable. is it because its a relationship business where if your sales channel are on good terms with the telcos and key customers they dont generally tend to change?

Since you're in a similar industry, wouldn't you be the best person to answer that question??

My guess is,

1. Recurrent Biz. From 'GreedandFear' AGM summary,

Very focused on creating more stable recurrent revenue (currently around 45%) as opposed to opportunistically chasing contracts.

2. Different Product segments, Telecom & InfoCom. Perhaps different biz cycles helps to average out. Revenue for Telecom dominates till FY09 but InfoCom accounts for >50% of Revenue & Profits from FY10 till now.

3. Geographical Spread
For FY12, Singapore accounts for ~40% of Revenue. I counted 6 other countries which accounts for >5% of Revenue contribution each. The Revenues swings for these different countries does appear to help to average out each other over the years.

[NTL]

According to reports, Singtel also stands as a potential beneficiary for Myanmar Telco play. Will Singtel be engaged to build up the network too? Is Nera going to benefit from it as a sub-sub-contractor?

Back to the question, how much Nera can take before they themselves break?

I find this concern interesting. Isn't this a good problem to have or do we think the management is sleeping ?

I am concern about the execution given the short period. 9mths from Sep means 1yr from now. Furthermore, Myanmar is not a small country, and the infrastructure is not there yet.

Let see what the management intend to do with this good problem.

[Drizzt]

one of the reasons why i am not invested was because of the apprehension being in similar industry. no one actuallly gave a run down why the business year after year could be so stable. is it because its a relationship business where if your sales channel are on good terms with the telcos and key customers they dont generally tend to change?

Since you're in a similar industry, wouldn't you be the best person to answer that question??

My guess is,

1. Recurrent Biz. From 'GreedandFear' AGM summary,

Very focused on creating more stable recurrent revenue (currently around 45%) as opposed to opportunistically chasing contracts.

2. Different Product segments, Telecom & InfoCom. Perhaps different biz cycles helps to average out. Revenue for Telecom dominates till FY09 but InfoCom accounts for >50% of Revenue & Profits from FY10 till now.

3. Geographical Spread
For FY12, Singapore accounts for ~40% of Revenue. I counted 6 other countries which accounts for >5% of Revenue contribution each. The Revenues swings for these different countries does appear to help to average out each other over the years.

I think i am refering more to the nature of products sold and how a systems integrator or a vendor is able to form a recurring revenue stream. I would say i wasn't able to visualize it and Neratel's IR does not reply to my questions.

Here are some thoughts how their products can be recurring:

Product Lifecycle. Business equipments are perishable due to End of Life and End of Support. Even though the equipments are working, without support it presents a business risk. Customer would likely not take such a risk.

Licensing. More applicable for vendor of the solution. Basically the right to use the product for an x duration. Possibly more lucrative if you come up with the solution. Less so for the system integrator.

Maintenance. Provide maintenance, which are usually embedded within the original contract:
Service Helpdesk
Preventive Maintenance with varied availability time
Corrective Maintenance with varied turn around time
Consultation
Software Change / Modification

Equipment replacements are usually staggered. Because things are not replaced all at once, it becomes like REIT rentals where equipments gets replaced batched by batch


The value of the deal will depend on who holds the higher intellectual property and who does most of the knowledge work.

Because of the value and the need to address fraud and corruption, There is usually not an exclusive working relationship.

System Integrators who end up being a preferred partner, and are able to maintain a good relationship due to their ability to deliver, competency and price competitive will have a limited moat to ride the coat tails of sturdy customers.

[KopiKat]

2. Different Product segments, Telecom & InfoCom. Perhaps different biz cycles helps to average out. Revenue for Telecom dominates till FY09 but InfoCom accounts for >50% of Revenue & Profits from FY10 till now.

For FY12,
InfoComm : Revenue = $109,551,000 ; Profit = $15,509,000
TeleCom : Revenue = $69,288,000 ; Profit = $7,447,000

For FY09 (when Telecomm dominates),
InfoComm : Revenue = $79,273,000 ; Profit = $6,806,000
TeleCom : Revenue = $92,468,000 ; Profit = $5,603,000

We're seeing growth in the InfoComm segment since '06 (didn't compile before that year) except for FY11 (after a huge jump in FY10).

Let's look at what I'd stumbled on at Ikea last time (posted in another thread),

[Image: 9hhyxc.jpg]

[Image: 2urnjtv.jpg]

What comes to mind (I may be wrong) is the recurring income is coming mainly from InfoComm. Very likely, besides the initial Revenue from providing the Systems, they also continue to generate recurring Revenue for the maintenance and support of these systems.

PS. It'd appear that OCBC is their customer as I'd also observed other OCBC Visa payment systems (restaurants, shops,..) also have the Nera logo.

[Drizzt]

hi kopikat, that's the one i couldn't actually concretely figure out. do note the latest quarter their capex was jack up to 7 mil. it has not been so high before. full year capex is usually 4 mil.

the reason given is that they are buying alot of these pay stations and leasing them out.

at the end of the day i wonder if they are selling full system or just mainly these paying terminals.

[GreedandFear]

Wasn't the increase in capex due to the sale lease back to the bank in Myanmar ?