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QuestionsNera telecoms
Cecilia Foong asked 7 years ago

Hi Victor/Rusmin
I am looking at nera Telecoms as a relative invested  in this last year and is panicking because the stock price seems to be spiraling down.
1.I tried googling for the company website but it says website is under construction!
2. I looked at the latest unaudited full year Financial statement on SGX and they have figures for year ended dec 2014 and 2015.
3. The revenue, net profit, FCF, OCF all down. Debt increased, cash in bank decreased, also I see from figures from Shareinvestor that the dividend distribution instead of growing in the past 5 years has been going down plus the payout ratio is very high.
4. In spite of price correcting, I notice that the PE in fact is climbing (because of lower earnings?) and their P/NAV and POCF all higher than previous years despite the price correction..
4. I remember at one of the workshops it was mentioned that they are trying to grow their payment solutions segment and that might be a catalyst for growth.
This stock currently doesn’t at all look like a good investment to inexperienced me. Would very much appreciate your views

1 Answers
Victor Chng answered 7 years ago

Hi Cecilia,  
Personally, I view Neratel as a bond that give me 5% dividend Yield every year. The drop in their earnings was due to their main business which is quite project based in nature. Revenue generate from their main business are lumpy in nature which you can see why the share price react to it. On the other hand their payment solution business is till growing but not that fantastic. It is rather resilient in  nature and had been increasing it’s contribution to the revenue.

Cecilia Foong replied 7 years ago

Hi Victor
Thanks for sharing your thots on this company. As a dividend investor seeing that the dividend Instead of growing is fact decreasing what should we look out for in terms of metrics and over what period would be reasonable to give us an indication that we should maybe abandon ship? Tq:))

Victor Chng replied 7 years ago

Hi Cecilia,

For Neratel case when I invest in it, the dividend was a bonus. I was buying it for a long term for the payment solution eventually to grow to 50% of the total revenue. I will only abandon ship if the payment solution business is not doing well as I expected.

Cecilia Foong replied 7 years ago

Thanks Victor for sharing your thoughts:))