• New lease of life. Following multiple years of huge losses in P1 (now known as webe) since its inception, GPACKET (Not-rated: Target Price: RM0.34) roped in TM in 2014 to co-invest in webe embracing LTE on the newly awarded 2.6GHz spectrum. At this juncture, GPACKET’s stake in webe has been reduced to 13.3% on a fully diluted basis after few rounds of capital injections and webe has ceased to be GPACKE T’s associate company in Jul 2016.

• With the closure of this chapter, GPACKET is expected to begin a new chapter moving forward, supported by 4 new synergistic business pillars i.e. Pillar 1: Hardware/Solution; Pillar 2 – Communications; Pillar 3 - Internet of Things; and Pillar 4 - E-services Plat form (please refer 9 Sep report for details).

• Poised for a downtrend line breakout. YTD, the stock is consolidating nicely above immediate support near RM0.23. The “Tweezers Bottom” candlesticks on daily charts lately could suggest potential reversal of downtrend and GPACKET is likely to stage a triangle breakout in the short to medium term (weekly chart).

• We reckon that buying interest should pick up after prices swung past its downtrend resistance near RM0.26 to advance further to retest RM0.27 (8 Aug high) and RM0.285 (13 Apr high) territory before reaching our LT objective of RM0.305 (52-week high on 7 Dec). Cut loss at RM0.225.

Source: Hong Leong Investment Bank Research - 19 Sep 2016