Results Update
For QE30/6/2011, GPacket's net loss declined by 20% q-o-q or 57% y-o-y to RM15 million. Its turnover increased by 5% q-o-q or 42% y-o-y to RM128 million. The q-o-q increase in turnover was due to higher subscribers base for the wireless broadband business, which saw its turnover increased from RM56.2 million to RM68.6 million.
Table: GPacket's last 8 quarterly results
Past 22 quarterly results reviewed
From Chart 1 & 2 below, we can see steady growth in GPacket's top-line as well as the continued losses from the wireless broadband business. It is noted that the margin of losses decline as the base (top-line) increased. At some point, the base could be large enough to absorb the overhead & every Ringgit of revenue would flow straight to the bottom-line. That day could be 3 or 4 quarters away.
Chart 1: GPacket's last 22 quarterly results
Chart 2: GPacket's profit or loss margin for the past 22 quarters
Technical Outlook
Despite persistent losses, GPacket's share price performance has not been complete washed out. The recent market turmoil did not cause the stock to make a new low. In fact, we can see that a rising horizontal line has formed. That 'horizontal' line provides support at RM0.63-0.65 (see Chart 3). A similar line can also be seen for the weekly chart (Chart 4) below.
Chart 3: GPacket's daily chart as at August 15, 2011 (Source: Quickcharts)
Chart 4: GPacket's weekly chart as at August 15, 2011_plotted on log scale (Source: Tradesignum)
Conclusion
GPacket's strong top-line growth & decline in its losses are positive signs that the company is on track to achieve a breakeven in its wireless broadband operation. If & when that happens, GPacket's bottom-line would look very different from today or what we have been seeing for the past many quarters. This stock is definitely worth close tracking.
Hi Alex
ReplyDeleteDo you make any study before on MFlour ?
Pls advise how u link the MFlour with current market and what is the best price to consider buy in
TQ
Hi Alex
ReplyDeleteWould the fact that the director's and substantial shareholder have been offloading their shareholding to a negligible number in the recent months be a concern?
Thanks
Hi Alex
ReplyDeleteCan you give some advice on Malton. Among Malton, Malton-wa and Malton-LA, which one is cheaper entry. I've done some analysis on their value, please advice if i'm wrong:
After the right and warrant issue, i though Malton mother share should be the one benefit a lot as its manage rise capital through issuance of LA which carry interest rate at 6%, save a net of 2% interest cost than current borrowing cost.
In addition, there will be no immediate earning dilution as LA is convertible based on 1: 1, by surrender LA into ordinary within 7yr. The free warrant which currently trade at 23.5sen, also exercisable at price of RM 1.00, which surely no dilution in near term and malton-wa carry unusual high premium >200% + low gearing level compared with matlon mother share indicate further upside limited.
Hi cheer
ReplyDeleteMFlour's immediate support & resistance is at RM7.00 at RM8.00, respectively. It may be too hopeful to expect the stock to retest the recent high of RM8.50.
Hi Sam
ReplyDeleteThe last announcement of directors' or major shareholders' disposing shares in GPacket was in October last year.
Hi hng
ReplyDeleteWith regards to Malton, I still stand by my earlier recommendation ( here ), where I think the better instrument is the ordinary share. However, the market seems to put a higher value on the warrant (which has a premium of 156%) & the RCSLS (which has a premium of 67%).
Malton-LA, which is redeemible, secured & pays high interest, may be priced at a premium to the ordianry share but to command such a high premium is very unusual. You see this kind of mispricing in problematic companies, such as Talam, where investors are worried that the company being liquidated & their claim ranked lower than another stakeholders. Obviously, the holder of a RCSLS would come out ahead of an ordinary shareholder. Should we worry about such thing in the case of Malton? If you have to worry about this scenario, should we not avoid the stock completely?
Thanks Alex
ReplyDeleteI thought those investor opt to subscribe right for Malton-LA have to pay RM 1.00 cash to malton in exchange for for 1 Malton-LA that carry interst 6% + 0.5 free malton-wa. After listing, those Malton-LA holder definitely at paper loss, which can partially compensated if opt to sell its free malton-wa but stand to earn interest yield of 6sen over 7yr. therefore, it justify current Malton-LA although trading at premium (80sen) but in actual at paper loss (RM 1.00 cash cost).
Malton-LA holder cann't get back their cost of RM1 in cash, as their LA only can redeem by exercise the right to surrender the malton-LA for conversion into new malton shares (par value RM1.00) at any time commencing from the issue date of the LA and ending on the maturity date.
In this scenario, malton ordinary share stand to benefit by issue LA to raise capital at RM 1.00 cash to subscriber, but malton have never in past 5yr trade above RM 1.00.
In short, malton get fresh capital that issue at RM 1.00 cash (par value) to LA subscriber without any harm to malton exiting shareholder, but stand at least 4 benefits
1. Raise higher new capital by issue LA at RM 1.00 cash, compared if issue ordinary share at current price
2. No earning dilution, as LA can convertible to ordinary share by ratio 1: 1. there will be no capital outlay to redeem outstanding LA, instead, malton just need to issue new share at its par value (RM 1). LA unlike to redeem unless malton share trade above RM 1.00
3. Outstanding malton-wa is exercisable to malton share have to pay RM 1.00 cash. which again is unlikely in short term unless malton share trade above RM 1.00
4. Malton save interest cost of net 2% as its bank borrowing cost carry interest of 8% - LA interest 6%
Hi alex,
ReplyDeletegreat blog. just curious, i heard QL is giving out dividend this september. When is the right time to buy? RM2.2?
Keep up the good work.
Cheers,
What is your thought on perdana and m3tech?
ReplyDeleteHi solomon
ReplyDeletePerdana broke the horizontal support at RM0.75 & made a new all-time low of RM0.59 on Aug 9. It managed to climb back above the RM0.75 horizontal line yesterday. It is still above that level today. Why did it break the RM0.75 support earlier? We need to check it out. Something is not right about this stock.
M3tech may have broken above its ling-term downtrend line at RM0.18-0.185. I am not familiar with this stock. Please check out its financial statements & examine its business before making your decision.
Hi Joan Doe
ReplyDeleteQL appears to have broken its intermediate uptrend line at RM3.10-3.20. The recent selldown was so severe that it went below the 200-day SMA line at RM3.00 before recovering. I believe this stock is likely to trade sideway for a while before it can regain its momentum. If it were to break the 200-day SMA line again, it may go all the way to the 400-day SMA line support at RM2.50. That would be an excellent level for entry into the stock.