• New lease of life. Following multiple years of huge losses in P1 (now known as webe) since its inception, GPACKET (HLIB non-rated SOP fair value: 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 GPACKET’s associate company in Jul 2016.
   
• With the closure of this chapter, GPACKET is expected to begin a new drive moving forward, supported by 4 new synergistic business pillars i.e. (1) Hardware/Solution; (2) Communications; (3) Internet of Things; and (4) E-services platform.
   
• Likely to resume uptrend after a brief consolidation. Following the long-term downward channel was taken out in mid Nov, share prices advanced to 52-week high of RM0.315 on 6 Jan before ending at RM0.29 yesterday on profit taking pullback
   
•  Overall, we remain optimistic that after a brief consolidation to neutralise overbought positions, share prices will advance further in the mid to long term, reflected by the double bottom formation in its weekly chart. A strong breakout above RM0.315 is likely to lift prices to RM0.325 (200-w SMA) and our LT target at RM0.36 (38.2% FR). Key supports are RM0.27-0.28. Cut loss at RM0.25.

Source: Hong Leong Investment Bank Research - 11 Jan 2017