Green Packet Bhd (Trading Buy)

• GPACKET has ambitious plans to grow its digital services business (comprising e-wallet, payment gateway, various technological solution platforms) to complement its legacy telecommunication-related divisions (namely software & devices and communication services segments). In addition, the Group intends to bid for a digital banking licence in Malaysia.
• The Company also owns a 28.2% stake in G3 Global, a listed company on Bursa Malaysia which is involved in Artificial Intelligence technology and Big Data platform. Based on G3 Global’s current market cap of RM1,282.8m, GPACKET’s share works out to be RM361.7m, which accounts for a sizeable 63% of its existing market valuation.
• Its recent share price movements have been volatile, swinging from a low of RM0.395 on 23 March this year to peak at RM1.65 on 19 May before falling sharply to as low as RM0.49 last Friday. On the back of a return of buying interest, the stock – which ended at RM0.52 amid heavy trading volume yesterday – may break away from its prevailing consolidation pattern.
• On the chart, a likely technical rebound could lift the stock to reach our resistance target of RM0.61 (R1; 17% upside potential) before testing the next resistance threshold of RM0.68 (R2; 31% upside potential).
• Our stop loss level is pegged at RM0.46 (which represents a 12% downside risk).

Insas Bhd (Trading Buy)

• INSAS offers twin exposure to the high-growth technology industry (mainly via listed Inari Amertron) and the surging stock market activity (through its wholly-owned stockbroking company M&A Securities). The Group’s other businesses are in investment holding & trading, retail trading & car rental and property investment & development sectors.
• Interestingly, its share of Inari Amertron’s existing market cap (18% of RM6,120.8m) already comes up to RM1.1b, which is more than doubled INSAS’ current market valuation of RM503.9m.
• From a technical perspective, the stock has been charting higher highs and higher lows after hitting a trough of RM0.35 on 19 March this year. It closed at RM0.76 yesterday.
• Riding on the positive momentum, its share price will probably test our resistance target of RM0.86 (R1; 13% upside potential) before challenging the next resistance barrier of RM0.92 (R2; 21% upside potential).
• We have placed our stop loss level at RM0.67, which represents a downside risk of 12%.
• Valuation-wise, the stock is presently trading at a PBV multiple of 0.29x (on its book value per share of RM2.62 as of end March 2020), which is at 0.5SD below its 3-year historical mean.
• In terms of corporate development, on 9 July this year, INSAS has proposed to undertake a renounceable rights issue of up to 132.6m RPS (Redeemable Preference Shares; 5-year tenure with cumulative preferential annual dividend rate of 3.8% on the issue price) together with up to 331.5m warrants on the basis of 2 RPS and 5 free warrants for every 10 existing INSAS shares held at an issue price of RM1.00 per RPS.

Source: Kenanga Research - 22 Jul 2020