KUALA LUMPUR,– Kenanga Research has forecast that REDtone International Bhd’s near term catalysts would be led by its RM82.5 million Universal Service Provision (USP) project, as well as RM25.0 million spectrum resource sharing fee from Maxis.
“The group’s future earnings are likely to depend on the ability to secure more USP projects and the degree of aggressiveness of the Maxis 4G LTE services rollout, which we have yet to be imputed into our forecast,” it said.
REDtone International will soon recognise a sizeable revenue from the USP project as well as its maiden spectrum sharing fee from Maxis.
Based on Kenanga Research’s estimation, REDtone has recognised about 20 per cent of the USP project in the third quarter 2013.
In a research note today, it said Redtone’s nine months net profit of RM9.9 million came within its expectation.
“Together with the significant cost synergy, as a result of Redtone’s larger economics of scale in the fourth quarter 2013, this should bring its full-year net price close to an estimated RM23.6 million, which is what we have forecast,” it added.
Kenanga Research said the net profit forecast for 2013 is more than a 10-fold year-on-year jump, and expects in 2014 for Redtone to register a net profit of RM25.0 million (+6.0 per cent growth year-on-year).
It said the group’s pre-tax profit for the nine months, meanwhile, soared 36-fold to RM12.3 million, thanks to the divestment of non-core and loss-making business as well as from the higher date revenue.
For the full financial year, it expects the Redtone group to declare a 1.5 sen DPS, which implies a 3.4 per cent dividend yield and translates to a 30 per cent payout ratio (in line with its dividend policy of a minimum 25 per cent payout ratio).
Kenanga Research has maintained its “outperform” rating on REDtone with the target price of 56 sen.
source link via REDtone’s Near Term Catalysts To Be Led By USP Project, Says Kenanga Research — BERNAMA
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