Post by
Tobuyornot on May 13, 2014 10:22am
Ccord dials it up
GLENTEL Inc. (GLN : TSX : C$11.14) - Buy - Target:C$15.00 In-line quarter; further improvement expected in H2/14; reiterating BUY rating and C$15.00 target Investment recommendation We are reiterating our BUY rating and C$15.00 target price following slightly better than anticipated Q1/14 results. Investment highlights GLENTEL reported Q1/14 earnings results on Monday, before the market open. Revenue of $342 million increased from $306 million last year. Adjusted EBITDA of $12.5 million was ahead of our estimate of $10 million but below the $14 million reported in Q1/13. Sales at Retail Canada increased 14% YoY to $101 million, despite unfavorable weather and a pause in demand caused by recent institution of higher priced two-year plans by carriers. We anticipate activation growth to resume in the back half of the year as consumers adjust to the new, higher price point two-year contracts. As consumers continue to shift towards higher-margin smartphone devices, GLENTEL's ability to sell a vast array of products and brands has the company well positioned to capitalize on increasing smartphone penetration, in our view. Valuation Our target represents 14.7x our 2014 EPS estimate of $1.02 and 10.6x our 2015 EPS estimate of $1.42. While the next quarter could still face pressure at Retail Canada due to the change in regulations, we believe this will subside later in the year, leaving GLENTEL well positioned to capitalize on increasing smartphone penetration, and we would be BUYers at current levels.