Recently read an article and interest on the strategy their introduce called CNAV strategy. Which use to valuate stock.
I have not attend their course however base on the what article describe so I try to apply it into one of my watch list stock which is Neratel.
I use back 2013 financial data to calculate CNAV strategy. Let see result :
The Key Quantitative Indicators of CNAV Strategy:
Net Asset Value (NAV) = $0.1662
Conservative Net Asset Value Per Share = $0.27
- Intagible Asset : 1.138m
- Bank cash : 39.270 m
- Conservative Asset (I'm not exclude tangible assets like furniture...): 97.683m
- Long Term Debt + Short Term Debt : 0 m
- Num of share : 361.897m
- Sum (Conservative Asset - Liability) = 97.683 m
Current Price = $0.790
Discount For CNAV2 = -292%
The price look a bit premium some compare to NAV. The current price is 400% premium against NAV. As we know teleco company is capital intensive company. Hence CNAV not enough to tell whether want to vested or not.
POF Score
1. Profitability
Gain 1 Point
Reason : It current traded with PE 12 with market capital around 285.899 M. I try calculate average PE among those company similar to neratel which is PE 13.
2. Operating Efficiency
Gain 1 Point
Reason : Three year have positive operating cash flow which from 2011 to 2013.
3. Financial Position
Gain 1 Point
Reason : Neratel have cash around 39.270 m + recievable (50% discount) around 25 m. It stand with no debt. Hence I believe it have strong balance sheet.
Conclusion : 3 out of 3 it consider pass POF score. My preference PE ratio around 5-10 however compare to teleco market average it seem still acceptable range.
Dividend Yield
To be more play safe I need have some compensate even though market adjustment. lol.
Neratel with current price the dividend yield at 7.59%, Which is already catch up my attention, but i need see how stable for dividend.
| Year | Div Per Share | Free Cash Flow Per Share |
|---|---|---|
| 2010 | 0.04 | 0.063 |
| 2011 | - | 0.072 |
| 2012 | 0.08 | 0.032 |
| 2013 | 0.06 | 0.0338 |
In POF have mention that Neratal past three year operating cash flow is positive. From above dividend history against the FCF of Operation cash flow which stated Neratel money generate from operation not enough cover current dividend payment.
Is it still sustainable for current yield. As I know they start of retail solution business, which can help them generate recurring income and it is important when talk about dividend. I personal more prefer this type business and it easily to expand.
