Tuesday, July 2, 2013

****** Trading BUY: NeraTel. Share price 0.675. (Cleared 0.65 resistance finally after 2 months)

NeraTel has been trading below 0.65 for about 2 months since yesterday. Finally manage to break out today and staying above currently as of now. Next Critical resistance is at 0.700… likely to test this level within the coming days. Possible to average up on this break of 0.700 and can see it find a new high. As long as 0.65 holds as new support, still positive on this counter. Quite a clear breakout as seen after testing 0.65 for about 4 times for the past 2 months. A break above 0.700 can pave the way to 0.74 to 0.75 near term.
Stop loss 0.635
DMG – 1 JULY 2013
Nera Telecommunications: S$0.63
BUY (TP: S$0.79)

Myanmar Telco’s Real Singapore Beneficiary
Myanmar  government  announced  the winners for the two coveted licenses to
Norway’s  Telenor  and  Ooredoo  (formerly  Qatar  Telecom), which beat out
SGX-listed  Singtel  and  Yoma.  In  view of the fact that both victors are
NeraTel’s established customers, we expect the latter to emerge as the sole
Singapore  winner  in  the  Myanmar  telco  battle.  Reiterate  BUY with an
unchanged TP of SGD0.79 as we look forward to a strong year ahead.

The  only  Singapore winner in Myanmar’s telco battle? While
SingTel and
Yoma  have  lost the battle for Myanmar’s telco licences, NeraTel may score
an  indirect  victory.  This  is  because  our checks show that both of the
Myanmar  license  winners  -  Telenor  and Ooredoo - are NeraTel’s existing
customers. NeraTel is currently providing services to them in Indonesia and
in  Malaysia.
 According  to  the  terms  in  the  contract, effective from
September  2013,  both  Telenor  and  Ooredoo  have nine months to commence
operations,  and  need  to cover 75% of Myanmar with voice services and 50%
with  data  services  within  the next five years. In order to maximise the
15-year license benefits, Ooredoo has even outlined a more aggressive plan,
spending  USD15bn  to  reach  90% of Myanmar’s population within two years.

In  order  to cover such a vast area in a short time frame, we expect these
telco  operators  to  soon  open up project tenders to equipment and system
integrating  vendors as well as to use radio transmission technology in the
process.  Given  NeraTel’s  established  track  record and expertise in the
field,  we believe that the group has a high chance of winning the tenders.
The  group  has already been deploying payment terminals in the country and
we  expect  them  to  formally  set  up  a telco company in bidding for the

Another pleasant surprise coming up? As mentioned in our
previous report
dated  29th  April,  the  recent  Nera  Malaysia acquisition will result in
one-off profits of around SGD7m, of which SGD5m is in cash. We believe that
there  is  a  high chance that the gain will be recorded in the upcoming 2Q
results,  thereby increasing the likelihood for the company to surprise the
market with interim dividends. As such, we adjust our FY13 profit estimates

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