Post by
Tobuyornot on Apr 01, 2013 10:18am
Ccord notes
GLENTEL Inc. (GLN : TSX : C$19.65) - Buy - Target:C$23.00
Strong end to the year; maintaining BUY rating; decreasing target to C$23.00 (from C$24.00)
Investment recommendation We are maintaining our BUY rating but lowering our target price to C$23.00 (from C$24.00) following in line Q4/12 results. Investment highlights GLENTEL reported in line Q4/12 earnings results on Friday morning. Revenue increased to $317 million from $175 million last year, driven by recent acquisitions. EPS of $0.49 was in line with our estimate and ahead of Q4/11 at $0.43. Same-store activations at the Retail Canada division were flat YoY; however, the company did experience strong sales of the iconic iPhone 5 and Samsung Galaxy S III during the quarter, but as is typically the case, demand outstripped supply in the weeks immediately following the launch of these phones. EBITDA of $13 million was below last year at $16 million. At Diamond Wireless, sales increased an impressive 45% YoY to $77 million during Q4/12, due predominantly to new store openings and the launch of the iPhone 5. EBITDA increased to $7 million from $3 million last year as promotional
programs were less impactful during the quarter. Valuation Our 12-month target price represents 14.4x our 2013 EPS estimate of $1.59, which we revised lower on account of increased Target start-up cost s and lower margins at AMT Group. However, we believe GLENTEL's positive smartphone leverage and attractive valuation should allow investors to capitalize on increased smartphone penetration over the course of our forecast period.