NeraTel

NeraTel - 18th Nov 2016

NeraTel from TA point of view it has gone into a super oversold territories.

From a high of 78.5 cents on 3rd Oct 2016 it has since drifted lower to touch 41.5 cents on 17th Nov 2016. Even if you have factored in the special dividend of 15 cents, which is still quite a drastic drop of 33.5 cents ( from 78.5 cents to 42 cents).

Both Macd & Rsi are also pointing to a oversold territories.
The selling volume has also slowed now.

Short  term wise, I think it may likely see a Technical rebound to be happen any moment.
The first resistance level will be at 49 cents . Second resistance level will be at 52 cents.

(trade base on your own decision)

The Group’s business comprises two main business segments, namely Telecommunications and Info-communications.

 In the first nine months of 2016, the Group secured approximately $136.6 million in order in-take, an increase of 8.9% compared to the corresponding period in 2015 of $125.4 million.

Financial Position

Borrowings As of 30 Sep 2016, long term and short term loans were $10.1m and $2.5m respectively.

• Warranty provision, approximately $2.3m

• Cash position of $74.1m as of 30 September 2016 For Q3 2016, the net cashflow from operating activities was negative $5.1 million due to the high working capital requirement. For first nine months of 2016, the Group generated positive cashflow from operating activities of $0.7 milion. There was a significant increase in net cashflows from investing activities due to the receipt of the net proceeds from the sale of the PS business. Part of the proceeds were used to repay bank loans

Revenue in 3Q FY16 increased 20.4% ($5.7m) y-o-y from $28.1m to $33.8m

‒ Telecom - increased 1.7% ($0.2m) y-o-y from $13.1m to $13.3m

‒ Network Infrastructure - increased 36.6% ($5.5m) y-o-y from $15.0m to $20.5m

9 Months FY16: Revenue in 9M FY16 increased 20.8% ($19.9m) y-o-y from $95.4m to $115.3m

‒ Telecom - increased 13.4% ($5.2m) y-o-y from $38.7m to $43.9m

‒ Network Infrastructure - increased 25.9% ($14.7m) y-o-y from $56.7m to $71.4m

On a YOY comparison, gross profit for Q3 2016 declined 29.2% from $9.0 million to $6.4 million.

Compared to nine months of 2015, gross profit for nine months of 2016 also declined by 7.2% from $32.0 million to $29.7 million.

• the continued devaluation of Nigerian Naira against the US dollar. During Q3 2016, Nigerian Naira depreciated by a further 13% compared to the end of Q2 2016, resulting in a total depreciation of 59% from the start of devaluation on 20 June 2016. This resulted in a loss of $1.2 million for a project in Nigeria as the equipment costs denominated in US dollar were higher in Nigerian Naira as a result of the devaluation, as compared to a profit of $0.3 million if the Nigerian Naira had not depreciated in value. Excluding this loss resulting from the Nigeria Naira devalution, the gross profit would have been $7.8 million (23.2%) for the quarter and $31.2 million (27.0%) for nine months of 2016.

• There were also higher equipment sales and lower writeback from project closures for nine months of 2016.