Thursday, January 3, 2013

Neratel

Neratel: DMG note that the mandatory cash offer for NeraTel will close at 5.30 p.m. on 8 January 2013 (next Tue) and house believe that the privatisation will most likely fail in view of the poor valuation (7.0x T12M P/E vs. its peer’s average of 11.8x) with the group’s mgt as well as independent financial advisor (IFA) saying no to the offer. With a much stronger parent – Northstar on board, NeraTel is in a favorable position to capitalise on the strong Telco spendings in the MENA region as well as robust demand for retail payment system in ASEAN market. Believe that the stock is grossly undervalued with the upcoming catalyst possibly being a record FY12 performance along with a hefty 4.0S¢ dividends, translating to an attractive yield of 8%.

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