Stock Name: NeraTel
Company Name: NERATELECOMMUNICATIONS LTD
DMG & Partners Research in an Aug 31 research report says: "NeraTel posted a weaker than expected results, with $2.5 million in net profits (-16.1% y-o-y) on the back of $35.8 million in revenue (-6.0% y-o-y).
"The increase in gross margin (+2.1 ppts) was due to more maintenance service rendered and increase in distribution and selling expenses (+52.1% y-o-y), attributable to higher labour costs. The stock is currently trading at 11.4x FY11F P/E, and the share price had remained unaffected despite the recent market sell-off for the month of Aug (STI: -13.5%).
"We attribute this to its high dividend yields (>10% in FY10), as NeraTel had been consistently paying out more than what it earned for the past five years. Target price of 34 cents pegged to 11.1x 5-yr average forward P/E. MAINTAIN NEUTRAL."
Company Name: NERATELECOMMUNICATIONS LTD
| Research House: DMG | Price Call: HOLD | Target Price: 0.34 |
DMG & Partners Research in an Aug 31 research report says: "NeraTel posted a weaker than expected results, with $2.5 million in net profits (-16.1% y-o-y) on the back of $35.8 million in revenue (-6.0% y-o-y).
"The increase in gross margin (+2.1 ppts) was due to more maintenance service rendered and increase in distribution and selling expenses (+52.1% y-o-y), attributable to higher labour costs. The stock is currently trading at 11.4x FY11F P/E, and the share price had remained unaffected despite the recent market sell-off for the month of Aug (STI: -13.5%).
"We attribute this to its high dividend yields (>10% in FY10), as NeraTel had been consistently paying out more than what it earned for the past five years. Target price of 34 cents pegged to 11.1x 5-yr average forward P/E. MAINTAIN NEUTRAL."
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