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NeraTel 2015 Third Quarter Results – Disappointing

NeraTel Empowering Connectivity Globally

NeraTel has announced their third quarter results on 6th November 2015.  Revenue for third quarter 2015 declined across Telecom, Network Infrastructure and Payment Solutions. NeraTel makes up 6% of my current stock portfolio.

Neratel 3Q 2015 Results

Revenue

3Q FY15

Revenue declined 20.2% as compared to the same quarter last year.

  • Telecom – declined 15.9% ($2.4m) y-o-y from $15.5m to $13.1m
  • Network Infrastructure – declined 30.3% ($6.5m) y-o-y from $21.5m to $15.0m
  • Payment Solutions – declined 8.3% ($1.1m) y-o-y from $12.6m to $11.5m

YTD 3Q FY15

Revenue for YTD 3Q FY15 declined 3.0% ($4.0m) y-o-y from $134.1m to $130.1m

  • Telecom – declined 15.4% ($7.1m) y-o-y from $45.8m to $38.7m
  • Network Infrastructure – declined 4.6% ($2.7m) y-o-y from $59.4m to $56.7m
  • Payment Solutions – increased 20.0% ($5.8m) y-o-y from $28.9m to $34.7m

Administrative expenses

For YTD 3Q 2015, administrative expenses increased 5.5% ($0.5 million) Y-O-Y mainly due to higher rental costs (from new office in Myanmar and expansion of office space in certain countries) and higher depreciation expenses.

Other expenses

Higher other operating expenses for YTD 3Q 2015 was mainly due to exchange loss.

Financial Positions

NeraTel mentioned in the second quarter that they had strong cash position with S$24.9m as of 31 Mar 2015. In third quarter of 2015, cash position fell to S$18.7m as of 30 September 2015.

Outlook

The group believes payment solutions business will continue to grow as a result of factors such as government initiatives towards cashless transactions and banks outsourcing their point of sales infrastructure. The Group also mentioned that they will continue to focus on providing a secured end-to-end payment infrastructure offering various business models such as sales, rental, leasing of point-of-sale terminals and related services as well as mobile payment and e-Commerce payment products and solutions.

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