GPacket has just announced its results for QE30/9/2009. GPacket's net loss increased by 14.3% q-o-q or 210% y-o-y to RM32 million while turnover increased by 11.6% q-o-q or 247% y-o-y to RM63 million (see Table 1 below). What's disappointing is that the growth in its turnover has slowed due to a slower growth in the revenue from the Broadband services & Solution segment (see Table 2 below). This means that new customer sign-up for the Wimax broadband service for the 3rd quarter failed to keep pace with the 2nd quarter.
Table 1: GPacket's 8 quarterly results
Table 2: GPacket's 8 quarterly segmental results
Other concern
On November 10, GPacket made a surprise announcement that it proposed a private placement of up to 84,800,157 new ordinary shares, representing up to ten percent (10%) of the total issued and paid-up share capital. This came less than 2 months after it had completed an earlier Rights Issue of 208,320,775 new ordinary shares at RM0.50 each. GPacket is obviously building up its war chest to undertake what's expected to be a difficult & costly business venture, with uncertain chances of success. For more on the private placement, go here.
Technical Outlook
From the chart below, we can see weaknesses in the indicators. I expect the stock to pull back to the tentative uptrend line support at RM1.10-20.
Chart: GPacket's daily chart as at Nov 13, 2009_10.00am (Source: Quickcharts)
Conclusion/Comment
Based on the above, one should underweight GPacket.
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