Glentel's StoryCompiled following information from variousthreads, news releases and sedar.
Two Analysts have Strong Buy ratingon stock (Haywood’s High target $14, low $12.50)
1. Shown Spectacular growth. Retaildivision exceptional. 264 organically grown corporate locations by year end.
2. Glentel has crossed itsmagic number revenues of $289.33 million in 2008. Income before Interest Taxes andAmortization was nearly 27 million up from 23.4 million in 2007,
3. For year 2008, Glentel hasshown1.30 Dollar EPS. 2 brokers with strong buy rating expect it to earn 1.56Dollar EPS this year that is 19% higher for the year 2009 and $1.95 for theyear 2010 taking forward PE to 3.2.Please note that this does not take in to account dividend paid out of55 cents a share, renovations, upgrade and opening of number of wireless wavestores at the cost of nearly $1.00 per share. If expansion stops today and no dividendare paid out, one can safely add $1.55 per share to the existing $1.30 pershare to make it $2.85 per share earnings for 2008 and $3.10 to 2009. Cashposition has improved drastically to 23.2 million dollars from 10 million in 2007.Debt is only 3.7 million which is negligibly small compared to revenues of $290million.
4. Bringing together 6 former entities has been a huge challenge, but they'vehad plenty of inspiration. They knew that many of these changes won't happenovernight. It's going to take time to successfully integrate the formerentities and two to three years to see the full benefits. They're not startingfrom scratch. Skidmore’s know what they need to achieve and they know that theycan achieve the goals they set. I am sure that they will be setting ambitiousperformance measures in their new strategic plan. Their new approach challengeseach of them to think differently. It challenges them to build on theinnovation already occurring across the nation, and ensure good ideas and bestpractices from one area are implemented in all others. While they haveaccomplished much in the past few months, it is clear they have much more workto do. Glentel is already a leader in wireless success and innovation inCanada, so they've been able to bring the best of what the former entities coulddeliver separately onto their team. All established companies like Nortel,Circuit City, G.E., G.M and many others are facing credit crunch and recessionof a century. Oil prices have dropped nearly $100a barrel in past 7 monthsalone; Canadian dollar has been fluctuating wildly from $1.10 to 78 cents to aUS dollar. Oilfield activities in western Canada and GM, Nortel, Air Canada’slooming bankruptcy protection on one hand and banking sector uncertainty iscausing job losses in eastern Canada. Business centers sales are relativelyflat during these historically challenging times when project after projectsare shelved or kept on back burner. Business centers will pick up as soon asoil sector projects and market economic conditions improve. There valuableassets are not going anywhere. Selling assets in this market condition is not awise move as suggested by few respected shareholders. By continuing to build on theirstrengths, skills and commitment of their staff, they are building a wireless-wall mart that will be the envy of others and serve as a model company soon.
5. New state of the art fixed satellitehub in place, ready for expansion.
7. Broadband sales have increased. Firstresponder’s have responded to Glentel mobile satellite system. call. There are manynew hot irons in oven.
8. Tower, sites, radio airtime recurringrevenues continues to grow. CRTC issued new instructions for spectrum buyerswho paid over 4 Billion dollars to acquire the spectrum. They must use existingtowers if space is available. Glentel can sell or rent its 340 tower sites and300 plus frequencies and make a killing like government did in auction. Eachtower site with land, tower, building, utilities, equipment, clearances fromIndustry Canada, Aviation, municipal, CRTC is worth about half million to 600thousand dollars. Glentels tower infrastructure across the country is worthover $120 million at today’s market demand. Government is relaxing takeoverrules for foreign companies to invest in telecommunications. That createsfurther demand for infrastructure. In addition each retail store on anaverage is worth about $400,000 plus in today’s market therefore 245 retaillocations are worth over 100 million dollars. They have 17 business locations,trunking systems, buildings, state of the art satellite hub, and valuablecustomer base with thousands of customers including emergency systems andpipelines across the North America from Alaska Network to mobile satellite inMaxico totally dependent on Glentel for 24x7x365 operation. Glentel is inCanada for last 46 years, just completed 25 years on Toronto stock exchange andits name carries value in today' market.
9. Multi year contract signed with Costco,wants to expand with others and in USA. I phone sells going really well asGlentel with is 245 retail stores is number one reseller of Rogers and numbertwo for BEL.
10. Disclosed Cash balance of $23million plus till 31 December 2008 though store count increased by 54 plus in12months.
11. During 12 months Cash used for investingactivities totaled $11million i.e. 1$ per share. Just imagine if there was nogrowth and company did not pay 55 cent dividend company would have added $1.55to existing 1.56$ totaling$3.10 forward EPS for 2009 making PE ratioof 2.4. Show me a company with that kind of record and 24 consecutiveprofitable quarter’s of organic growth. This clearly shows company has cash andinternal controls in place. ..
14. Deregulation, Merger and acquisitionhappening in wireless telecommunication sector should skyrocket its share priceas current price does not reflect company’s intrinsic value and amount ofactivity IMHO.
15. Glenel is in its 46th year.DavidGraham and Jennifer Law, Managers think Glentel's valuation is attractive andit should generate EPS growth of 18 to 20% per year. Its forward PE is 2.35,Thinkit is a roll model for case study.
16. Ryan Irvin of Keystone publishingreally likes this stock
17. 77% more dividend than last year,55 cent a share compared to 30 cent in 2007
18. Received business of the year award.
19. Best training academyaward of excellence for retail division. Has a total skilled trained staff of1100employee which is rare to get in current economy.
20. New entrants for spectrum announcedwill seek Glentel’s towers for quick roll out as the cost to buildfrom scratchis over 2billion dollars. It is sitting as a lame duck takeover target.
21. Glentel’s current marketcapitalization is only 77 million and revenues approaching 290 million. Its peersare trading at 4-5 times revenue and Glentel is trading at less than 1/4 of itsrevenues. I have not seen such a financially sound well company. Show me one onTSX that matches its performance of 24 consecutive profitable track records.Shares are grossly undervalued.
22. Federal Industry Minister JimPrentice said “the intention was always that they would have to build their ownnetworks rather than just use those of rivals”. Glentel stands a better chanceof takeover target unless new entrants wants to build their network fromscratch over 5-6years period and pay the enormous start up costsupfront(Remember Glentel built their network over 45 years ago when land priceswere peanuts and land was easily available in cities, now the cost of one sitealone with tower, land, equipment, frequency and all types oflicenses/clearances is exorbitantly high, therefore Glentel has intrinsic valuein today’s market considering its triple digit tower sites that are readilyavailable). Even the existing careers may takeover Glentel to prevent newentrants from taking it over and saving on their startupcosts. Just the existing 264 highly profitable retail and business locationsand the fact that Glentel is number one and two reseller of all carriers (Rogers,Bell, Fido, Vonage, Virgin, Solo) is lucrative enough to justify the takeover.On top of it its current market capitalization is too attractive to ignore. Nodebt, 24 consecutive profitable quarters, dividend paying company,23.2 milliondisclosed cash and skilled trained workforce of 1100, good track record of fourdecades is icing on the cake. Currently Glentel is grossly undervaluedconsidering all above factors.