Monday, 30 September 2013

Gpacket and Digi - The Designed Marriage

As the market heightens up with debt ceiling issue in a sudden 180% degree turn back where market had taken a slight correction in this opportunity, it seems that the unseasoned traders are rather confused with the broad economy directions, not disregarding the seasoned trader as well who might got cheated into this drama.

However as for me, I am not so much troubled, or probably I would choose to say that I do not want to be bothered about how the broad market economy wants to go about with the different kind of news that they want to release from time to time, which I am seeing that they are purely just doing their hired job for a salary for making ups and downs in the market. You have to thank them that they create some dips for you to buy, but at the same time, you will be cursing them when they created a big hole in your pocket as well if you had entered into wrong position as they play around with the market news.

While the economist are trying hard to make a good drama on giving some genius solution in solving ever challenging economy that is full of QE, debts, bonds and so on, I am too having my another piece of mind in my opinion on the latest mega hit - Gpacket.

Well, what might be so great in this deal that involves Gpacket and Digi as much as it had been much speculated by the public. Could it be another historical dramatic event that will turn into ashes or a pact of the year? As concerned as you are, but let me bring you to see a strings of event that could make you concerned about whether you had enough position in Gpacket, or not after reading.

Let me start off with the technical side of it. A simple chart here will recommend that Gpacket had hit over a new leaf and started it's upwards trending that is supported by a good amount of volume. As Gpacket had been seen steadily rising from the valley at 30 cents, it had been well supported off at 50 cents now in 12 trading days with volume consolidating and price seeking yet another burst run up when the volume resumes it's activity. By the way I am looking at it, Gpacket had torced above RM 0.65 in 25th October 2012, which I would say an easily achievable target this time around with no time to loss. Time will prove again.

With media turning their guns on and off towards Gpacket, we had yet to see IBs turning their guns at Gpacket for the time being despite the heavy speculation from the public with local media coverages. Can this be a target too bad to write, or too good to promote?

I will refresh your memory once again for the 5th time, 1st on Digi's interest in acquiring additional spectrum, which is being announced publicly in the media. And to be more precise, before the end of Q4 of 2013 as they plan to roll out LTE services as soon as their corporate timeline can be. While in another counter part, we had Gpacket which is as desperate as Digi, fighting it's way to survive in this competitive market with a major deficit accounts on the top priority of the corporate. While Digi is suffering badly seeing their customer switching over to LTE ready network with a 2 years contract, without the spectrum, Digi is prior to head southwards as market appetite are looking at LTE network, which can carry more than 30mbps.

While there had been reported news that Digi is looking at 80% of their RM 750m CAPEX on LTE,  P1 in another hand had been tweaking a call for RM 1.5b or no deal. Now, who is really desperate? As curious as you are,  we will look into what alternative that Digi and Gpacket have.

Digi is just thirst and hunger for a band of spectrum that can enable them to roll out LTE network to their customer. While Gpacket with P1 is their primary option, Puncak Semangat might be another out of the blue contingency plan for them in case Gpacket pull the trigger at their own head. But with Syed Mokthar sitting on an empty shell company with just spectrum only, it is a way too expensive idea for Digi to consider as I am confident that Syed Mokthar is not in any hurry to pact his delicious spectrum away so soon, not for a chicken thigh, but probably a chicken farm. Digi's negotiation power, with CAPEX constraint, will be only best used to tackle Gpacket, which had the spectrum, and the infrastructure as well as ready site. As for this, I am sure that Digi will be putting 99% effort in settling down with Gpacket.

On the other hand, what about Gpacket? Gpacket position might be worst than Digi, because there is no option for them, but only Digi. You may ask what about TM, or YES 4G. If you would understand TM core business, taking that little spectrum will do TM nothing great as they better focus on their UNIFI now. As for YES 4G, I would believe that their business direction for the spectrum is more towards Sekolah Bestari. Moreover, YTL group is having a major corporate exercise in privatizing YTLPower, taking P1 will not be a good move at this time as they are not really an establish player in this market at all. While Gpacket had sold off Packet Hub at Jalan Templar to free up some cash flow to buy time, Gpacket is buying time and Packet Hub is their last bet to make things happen. It is no use to keep something with great potential, but not able to release it's potential. Gpacket, in short, will gain nothing hugging it's spectrum once the company enter into administration. With this, Gpacket cannot be too rigid as they really only have 1 savior - Digi.

In short and a quick conclusion, No pact and both dies, similarly, Pact and both alive. Consider a win-win situation for Gpacket and Digi, I would opined that this deal will be in a 99.5% in shape - But at what price?

Since The Star is reporting 80% of RM750m from Digi and Nanyang is reporting RM 1.5b from Gpacket, I will playfully take it as (RM 600m + RM 1500m)/2 = RM 1.05b. At 690m shares in Gpacket, RM 1.05b will be knocking at RM 1.50 +/- per ordinary share.

As conservative as I am, I am taking a slash cut at 50% discount from RM 1.50 at RM 0.75 range. Of course, when Digi is taking over all the infrastructural cost for Gpacket, I am not surprise to see Gpacket delivering it's WiMax services as an operator without major overhead, which will definitely put them into gems of the Year 2014.

So now, are you still game out or game in now? Don't be late.

Bone's Short Term TP: RM 0.80

Cheers and regards,

Tuesday, 24 September 2013

Gpacket - The Final Countdown

As the market had taken a slight dip in a correction from the recent strong rebounds after a major sell down for a wrong reason, or right reason for some chances... Had you ever asked yourself on whether the market is really too big to fall and break apart? From September to Sep-Taper and October to Oc-Taper, the market is still in a good mood for such swings.

Well, with so much swings going on now, what about some local good swing which will be more practical for us, me and you. As this is not a stranger to you, maybe you might be interested in some wild and good swings in Gpacket this time around.

A quick look at the movement of the stock will definitely reflect a consolidation on the mark at RM 0.45 range as volume decreases in a drastically huge manner looking with transaction below the mark of 10m shares transacted. I would see this as one of the major consolidation in Gpacket, with the share price taking a huge fort hold at RM 0.45 as it prepare its charge forward.

Taking into consideration of the time frame for Digi to seal the final decision on the business trust program that they had been talking all the time, and as Digi need to finalize the whole deal in or by Q4 of 2013, that will leave you to look at October, November and December. However, if we are to take into consideration that major holidays are being scheduled at November and December, a huge contribution from school holiday and a habitual "clearing annual leave", the chances of this huge announcement might be fall as soon as October 2013, which will be interpreted with another 3.5 trading days left from now. As to reinforce my timeline prediction, a close industry player familiar with this informed that the final deal will strike out as soon as first half of October 2013.

Let's look at the whole sector again. A study found out that a lot of Gen Y-ers had been spending more than one quarter of their daily 24hrs on phone, not calls, but DATA. In fact, the rising use of DATA had propelled the whole industry into another level where we can see the rising use of Smartphones from i-Phone and Samsung. With strong development focusing on VOIP, we are seeing Viber, KakaoTalk, LINE that is providing free call through internet data, which had again emphasize how important DATA is going to be soon.

The only major set back for the usage of DATA is the coverage for the time being, as cost for maintenance is still at a considerably high level, but I am more convinced that as technology goes to another new level, coverage will not be a problem anymore and we will see a evolution in the telco industry.

Digi had not much time left to slip away from this, and I label this move as imminent for Digi to pact with Gpacket as they had literally no choice left with them in Malaysia. While Gpacket is desperate to sell off asset to hold onto their core money sucking asset - The Spectrum, it will still turn into dust if Gpacket do not have the power to fully bring out The Spectrum and deliver them to the nation. I am looking at any offer between RM 700m to RM 1b for this business trust, and Gpacket will be anything above RM 0.60 in a 50% slash cut conservative target from an estimation of RM 1.20. Of course on a long term outlook, Gpacket will remain as WiMax operator, but possibly without infrastructure maintenance and upgrading cost, which will definitely repackage Gpacket into another gem in the coming days, as I will see Gpacket be traded at RM 0.80 in a middle term outlook.

Are you in the game, or out of the game. You decide.

Bone's short term TP: RM0.60

Cheers and regards,

Thursday, 19 September 2013

YTL - A Sleeping Catalyst, or A Pounding Giant ?

The market had definitely taken a lot of people by surprise after the FEDs had announced on it's continuation of the quantitative easing, or well known as QE in short as many people had been bugged down with all sort of crisis talk back then 3 weeks ago. Those who are still in the position of shorting the market are really in a big mess now had they not cut their short position as KLCI had taken an easy week to reach 1790s in just a glimpse of eye. This is market, unless you are able to see what people still could not see, you will win.

While the KLCI resumes is happiness moment again, and this time might be poising to challenge higher into breaking above 1800 again, it will be nice to look at some of the fundamentally sound yet laggard company in the market.

As keen as you are to know what might be another big chunk of meat that had not be eaten yet, probably you might find YTL an interesting target for your accumulation, or who knows, a short term trade. Let me bring you the share price of YTL.

YTL had been hit back from the recent down, and had been lingering at it's resistant level at RM 1.55 range, which we can see it back at February 2013 earlier this year. As the market had started back it's bull run, YTL which had more than 10b shares in the market, had been rather laggard for the mean time as YTL is still lingering on RM 1.55 mark which will definitely make up a good target for accumulation.

As YTL would aim to make the mother company a dividend company that will pay out more, it's action in privatizing YTL Cement, and now, YTL Power, had not seen the mother share appreciated much for the time frame. I would see this action as an opportunity to acquire lower while waiting for this giant to be awaken soon.

A quick look at the chart will also suggest that YTL had been in a stage of accumulating for the past 4 to 5 trading days, which I will assume that another couple more days, we will be seeing YTL starting to move up soon as there will be more traders and IBs who will be locking their position that is low enough to make a good base for accumulation.

In a quick note, I am looking at YTL hitting another high volume session, which is more than 20m shares traded in a day, and a short term outlook will see YTL going back to it's level of RM 1.65, fueled by the better sentiment in a global outlook, the continuation of QE, and the positive sentiment at Asian market.

Bone's Short Term TP: RM 1.65

Cheers and have a nice day.

Tuesday, 17 September 2013

Gpacket - Rebouncing from Zero to Hero at Digi's Net

While the West had been going on who is the next chairman of the Federal Reserve as Ben S. Bernanke term expire, the market had been in a roll for an equity rally as the "Summers" talk had been rather quite interesting. I believe some of you might be thinking what is "Summer Rally" as Winter is coming soon and Christmas is another couple of months away. Christmas in Summer? Probably, it might be a good chance for you to try "Google Search" on some answers.

As the West talks, the East reacts, similarly, as Digi talks, we looking at Gpacket reacts. As my 3 previous post starting from Gpacket - On a Major Tech Stunner, going to Digi synergizing with Gpacket and then the later which is Gpacket setting up a stage drama, things had been rather hot for now which I will reveal further in some calculation on how profitable can Gpacket be in the coming days.

Let's have a look at Green Packet chart.

A quick outlook will suggest that Gpacket had been consolidating between the region lingering at 40 cents to 45 cents as a slash drop of volume from the peaking 70m shares transaction a couples of days ago. However, once volume resumes into the counter, I am expecting Gpacket to stand firmly above 45 cents and taking a better position at 50 cents while I am looking at material announcement from either Digi or Gpacket at October 2013, which is just another couple of weeks to go.

 As of 1st half of 2013, Gpacket had been running with a back of RM 300m revenue, of which RM 155m which is generated from Malaysia Broadband services by P1 (Packet One) WiMax while their overseas revenue is mainly from contribution of software and devices sales and communication services, both adding up to RM 144m.

While Gpacket had been taking a huge toll in developing, installing and maintaining their main infrastructure which is eating up more than half of their operating expenses at a staggering RM 318m, erasing this burden from their mark will definitely see Gpacket turning from zero to hero in no time as the next quarter will see them in the better greens soon without the deep plunge from the never ending cost from the infrastructure maintenance. But how could this happen?

The question will boils down to whether Digi and Gpacket will still co-exist in the market? Or Gpacket being taken up?

After looking back at the whole structure, I am more to believe that Digi and Gpacket will co-exist in the market through a business trust structure which was earlier mentioned by a Digi spokesperson as Digi will not risk Gpacket spectrum being withdraw by either seeing it delisted, neither will they want to take Gpacket under their roof and see MCMC knocking at their door to withdraw the spectrum as Digi did not entitle for that amount of spectrum. I am looking at the partnership like how U Mobile is doing on with Maxis, which is a clear example of how Gpacket will work out with Digi.

As it is desperate for Digi, it is as desperate as it is for Gpacket. According to some internal source, Digi will be taking up all the installed platform from Gpacket and the infrastructure will be handled by Digi while Gpacket will be leasing back the platform from Digi for their P1 WiMax operations, and this will definitely be sparkling a new chapter for Gpacket should this happen.

Should Gpacket maintain their revenue of RM 150m a quarter, and operating expenses be slashed by 20% to 30% going down to RM 130m, we will be looking at a positive flow of income at  RM 20m per quarter, which can be translated to approx of EPS of 2.5 cents per quarter and 10 cents per annum at the back of 690m shares. With a future potential earning of 10 cents per annum, at PER of 7, Gpacket will be easily trading at 70 cents in the coming days.

As the game heightens up itself, it is your call to be in the game, or away from the game. But, this will definitely be an interesting game.

Bone short term TP: RM 0.60.

Cheers and happy trading.


Thursday, 12 September 2013

Pelikan - Drawing a better outlook

The market had been performing rather well after the sudden sell down which happen not long ago, where by we can see how market tends to forget the bad things and move forward to the good thing. Those who are still hugging on a bearish moment definitely had saw how they had missed out such a quick opportunity into sealing at least a handsome 10 to 20% gain from those resilient counter.

With more and more to happen in the market, with more and more trimming done to the market, it is a game psychology, patience, believe, faith with some skills and self confidence. Overall, it isn't a day too bad for me with the latest run of Green Packet and the current hit of LFE Corporation Berhad, which saw how the stock had went from hell to heaven.

Without more delay, I am keen to inform you my recent findings - Pelikan Internation Corporation Berhad, or short name Pelikan 5231.

What could be more interesting with this company for this time around? Probably, we might have a quick glance at the chart itself.

According to the past performance of the share, there hadn't be much volume that is being traded on the market whereby transaction volumes is lesser than 1m a day, however not until May 2013 where the volume had been rising in a consistent manner at 1m to 2m a day.

Standing at NTA of RM 1.04 for 1st half of 2013, Pelikan had been able to perform better compared to previous quarter with a positive earning of 1.72 cents per share. Had Pelikan fundamental change? Being a major player in the stationery industry, unless primary schools starts to use Andriod and Ipad to teach, there is always a piece of cake in this industry for a change.

Technically looking at the chart, a quick outlook will suggest that the share is taking a toll of consolidation of it's recent hike at 50 cents, peaking up with more than 70 millions share transacted on the market. A healthy retrace off the mark with cooling off volume will definitely mark another higher mark once volume breach off the mark of 20 million, and we will see how Pelikan break 45 cents into lingering at 50 cents region. As suspicious I am with you, I buy into the next chapter of Pelikan as foreseeing some pending material announcement in the company, shareholding & ownership as well as business transformation. In a longer term outlook, we will see Pelikan heading back to RM 0.60 region given a 3 months time frame.

Bone short term TP: RM 0.50

Happy trading.

Tuesday, 10 September 2013

Gpacket - Setting up the stage drama

Market is very quick in forgetting major issue, as we can see with our eyes how fast the market changes from a crisis talk that might spin into recession, bad negative data feeds from different countries across the east and west, things had been taken a huge overhaul after 1 week with different sets of data and sentiment that had definitely caught a lot of traders pants down, especially those that are placing huge position in the shorting of futures will probably see their pants torn down to the underwear in no time.

Meanwhile, while market had been rebuilding back the bulls, I had been eying heavily on Gpacket as my recent 2 post which recall on Gpacket - On a Major Tech Stunner and Digi - Synergizing with Gpacket, a better move? had been seeing much development now after a series of speculation on the sale of Packet One (P1), a subsidiary of Green Packet, a core asset, however, a major core money burner for the holding company as well.

Gpacket mean business this time around? Or can they sustain another quarter in the black and red? Looking at their disposal at Packet Hub, situated at Jalan Templer at a price of RM 49million might reflect how desperate are them in which they are disposing their HQ literally, while taking some of the cash to avoid them from falling into PN17 status which will spell even wicked for them. Yes, and it is definitely a 100% yes, that Gpacket is desperate for a savior and they are real hard this time on cash.

Lucky for them this time around is the ever underdog Digi that is always way behind of local telco company Maxis and Celcom. Digi had no choice but to either be eaten or eat others in order to survive in this competitive industry where bigger players get bigger and gaining more market share. And with the devices from Apple and Samsung bolstering 4G LTE, Digi is going down the drain if they are not able to capture this market in which is a growing concern for them since day 1 when Maxis and Celcom launched their services nationwide. Desperate Digi as to say.

Technically looking at them, Gpacket had went back to their threshold of 40 cents, which had been lingering for sometimes. I would reckon that the hit down below 40 cents is to trigger off shareholders that are panicking on their balance sheet and cash flow, while looking how a 1 day performance can bring it back to 40 cents.

If you are able to look back to Nov 2012, Gpacket had risen up to 65 cents region on a sudden manner which might be a good assumption of internal accumulation, in which I will definitely be confident that the coming up spike will definitely bring Gpacket above 65 cents, above the price of their accumulation.

As the sentiment is going good, which story building up on Digi coming in first as the first contestant, we are seeing TM coming in to acquire 30% of P1 now which definitely brings me back to the history of how Proton Holdings Berhad is being taken over by DRB-Hicom back then with different parties eying the deal and rumors after rumors and even DRB-Hicom denying a deal on Proton which saw how Proton shares plunge from top to bottom down after syndicate remove and supporting level on the shares to allow a series of panic selling from the traders.

I am expecting traders in Gpacket to foresee some rough waters here, but I am definitely on the 100% bet that Gpacket will definitely seal up together with Digi for the good as a Win-Win situation for them. I am looking at Gpacket to rise further in the coming days and will take a 5 cent discount from previous peak of 65 cents as a conservative target. However, should Gpacket remain listed in KLSE, without any major cost in the infrastructure of the telecommunication devices, Gpacket will definitely be able to a new chapter, and will be foreseeing it to be trading above RM 1.00 in a longer tenure.

Bone Short Term target: RM 0.60

Cheers and have a nice day trading.