REDTONE (0032) VERSUS GPACKET(0082) Compare & Contrast Their Accounts & Prospects, Calvin Tan Research

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THE INVESTMENT APPROACH OF CALVIN TAN

REDTONE (0032) VERSUS GPACKET(0082) Compare & Contrast Their Accounts & Prospects, Calvin Tan Research

calvintaneng

Publish date: Sat, 16 May 2020, 05:51 PM

Hi guys,

Yesterday Gpacket gone up into Multi year high and Limit Up while Redtone also up by 10%

Now what piqued my interest was why should Gpacket up so much in comparison to Redtone?

So i went to check up on their accounts

And these are some findings

1) BOTH REDTONE & GPACKET ARE PART OF THE NFCP FIBERISATION THEME

Malaysian Government has Allocated Rm21.6 Billions for Nationwide Fiberisation so both will be beneficiaries

That is good

2) Now let's take a look at their last quarterly report

Redtone

SUMMARY OF KEY FINANCIAL INFORMATION
31 Dec 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31 Dec 2019	31 Dec 2018	31 Dec 2019	31 Dec 2018

		$$'000	$$'000	$$'000	$$'000
1	Revenue	44,126	0	101,032	0
2	Profit/(loss) before tax	8,055	0	18,679	0
3	Profit/(loss) for the period	6,226	0	15,077	0
4	Profit/(loss) attributable to ordinary equity holders of the parent	5,678	0	13,746	0
5	Basic earnings/(loss) per share (Subunit)	0.74	0.00	1.79	0.00
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	1.00	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.2235		0.2154

Redtone profit is 0.74 sen

If annualised 0.74x 4 = 2.96 sen

At 47 sen Redtone has a P/E of 15.87

Now look at Gpacket

SUMMARY OF KEY FINANCIAL INFORMATION
31 Dec 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31 Dec 2019	31 Dec 2018	31 Dec 2019	31 Dec 2018

		$$'000	$$'000	$$'000	$$'000
1	Revenue	201,726	96,668	609,600	398,682
2	Profit/(loss) before tax	-30,067	-28,674	-49,959	-63,644
3	Profit/(loss) for the period	-27,602	-28,488	-49,396	-62,504
4	Profit/(loss) attributable to ordinary equity holders of the parent	-26,098	-27,883	-43,689	-59,693
5	Basic earnings/(loss) per share (Subunit)	-2.90	-3.70	-4.80	-7.90
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.2900		0.1900

Definition of Subunit:

In a currency system, there is usually a main unit (base) and subunit that is a fraction amount of the main unit.
Example for the subunit as follows:

Country	Base Unit	Subunit
Malaysia	Ringgit	Sen
United States	Dollar	Cent
United Kingdom	Pound	Pence

Announcement Info

Company Name	GREEN PACKET BERHAD
Stock Name	GPACKET
Date Announced	28 Feb 2020
Category	Financial Results
Reference Number	FRA-28022020-00007

Greenpacket made a loss of -0.29 sen

So there is no P/E

P/E means price earning

Since no Earning there is also no correct pricing of P/E for now

Many years ago in Kl during the Go Go years of the Asian Finacial Crisis I first heard about P/E

Not knowing what I asked Alfred Ong the Remisier

"What does P/E stands for"

Alfred replied "Punters' Expectation"

3. Let us Look into the Balance Sheet

Please go to both Redtone & Gpacket Latest Qtr report

Redtone

It has Rm225 millions in cash, receivables, contract assets & ppe

It has Rm109 millions in payables, contract liabilities & others (loan stocks have been converted to redtone shares

So it has 48% liability of Net Value

Redtone has Rm43 millions Cash

At 47 sen with NAV of 22.35 sen

Redtone is selling at 2.1 times book value

Dividend is 1 sen

Dividend for loan stock was 2.75% (Now fully converted. No further interest payment needed)

Gpacket

It has Rm579 millions in long term investment & receivables

It has Rm437 millions in long term borrowings & payables

So its borrowings are 75% of Value

Its Cash position is Rm39.9 Millions

NAV is 29 sen

At current closing price of Rm1.21

Gpacket is selling at 4.17 times book value

Dividend is nil

From these comparisons we can SEE that Redtone Balance Sheet is more sound than Green Packet

As such market has under priced Redtone while over chasing Gpacket

Of course Gpacket is launching some businesses that might generate lots of projected profits

That is yet to be seen

For now we SEE Redtone as Undervalue therefore worth considering

The motto of buy low and sell high can be applied to Redtone

For Gpacket it will be buy high and expect to sell higher

For Value Investor we always "buy low".

Best regards

Calvin Tan Research

Please buy or sell after doing your own due diligence. In doubt please consult your Remisier or Fund Manager

Discussions

Be the first to like this. Showing 10 of 10 comments

Lewis Lee

I like Chun Chun call Calvin Tan 's FA write up when he dug deep to analyse the account of the company !! Can't agree with you more !

2020-05-16 18:00

momo33

ahh cannot compare Apple with Orange.
GPacket working with Tencents , i see vast potential in Fintech services if hit jackpot ...the future .
What is your estimate of profits from NFCB for redtone , binacom etc..
my guess is a few millions . < 5 million a year .

2020-05-16 19:47

aikinlai

Gpacket up is due to different story..can not use NFCB as the reason for gpacket shoot up lately

2020-05-17 00:38

calvintaneng

For Gpacket it has been spending lots of money marketing its services all over the place and making lots of noise and share prices pumped up.

It will take a very long time before it can settle its high debt and pay any decent dividend

For Redtone

it has paid 1 sen dividend

And for its loan stock it quietly pay 2.75% for 10 years already see

03-Feb-2020 25-Feb-2020 INTEREST Interest Payment 2.7500% Dividend Detail
04-Feb-2019 19-Feb-2019 INTEREST Loan Stock Interest 2.75% Dividend Detail
06-Feb-2018 20-Feb-2018 INTEREST Loan Stock Interest 2.75% Dividend Detail
03-Feb-2017 17-Feb-2017 INTEREST Loan Stock Interest 2.75% Dividend Detail
22-Jan-2016 10-Feb-2016 INTEREST Loan Stock Interest 2.7500% Dividend Detail
23-Jan-2015 09-Feb-2015 INTEREST Loan Stock Interest 2.75% Dividend Detail
27-Jan-2014 12-Feb-2014 INTEREST Loan Stock Interest 2.75% Dividend Detail
25-Jan-2013 13-Feb-2013 INTEREST Loan Stock Interest 2.75% Dividend Detail
26-Jan-2012 14-Feb-2012 INTEREST Loan Stock Interest 2.75% Dividend Detail
09-Feb-2011 22-Feb-2011 INTEREST Loan Stock Interest 2.75%

Now that loan stock fully matured & converted to mother share no more need to pay Redtone LB as it merged into Redtone mother

From now will Redtone pay more dividend?

If dividend increased from 1 sen to 2 sen then at 47 sen the yield is 4.25%

If dividend increased to 2.5 sen then the yield is 5.3%

And if Redtone increase dividend to 3 sen then the yield will be 6.3%

THIS WILL SET REDTONE APART AS A SUPERIOR COMPANY

2020-05-17 00:39

calvintaneng

Redtone Flexicraft is the answer to MCO lock-down

Don't need to go visit showroom or show houses

They all come to you thru Flexicraft

see

https://www.redtone.com/virtualreality/

2020-05-17 15:41

birkincollector

so funny....who buy houses during this period

2020-05-17 19:45

calvintaneng

Fkexicraft is applicable to all industries not just property

Hospital operation can be viewed
Supermarket food display can be surveyed
Tourist scenary could be captured
Highway can be mapped
All goods sold at lazada could be viewed. The shape and the sizes
Everything human eyes can see Flexicraft can bring all into view

This technology brings things near us from far and wide

NO need travel there

They are Brought to us at our convenience

This will help buyers or users to see first hand

Excellent technology

2020-05-18 10:38

calvintaneng

Gpacket 2 days limit up

Time to load up more redtone while cheap

2020-05-18 11:31

apolloang

GREENpacket…..REDtone…..green vs red

2020-05-18 11:32

calvintaneng

Depeche

Now we know Gpacket rise is speculation play.
18/05/2020 1:42 PM

Depeche is correct!

Gpacket is 101% speculation and goreng to trap water fish, ikan bilis, sotong, sorchai and sardine

1.gpacket JV with tencent for digital banking yet unproven

Now with interest rate at multi year low of 2% and still going down how can bank make profit?

e-KYC already pioneered by Netx

Netx is only 1 sen with the news but gpacket limit up? Epay also pioneered by Netx only now gpacket trying to play catch up?

4g? Redtone also into 4g.

Even tencent with all the hooha only made extra 6% profit. Tencent got fierce competition from Alibaba

This gpacket is now at a most dangerous stage

They pushed up mother share to throw down gpacket warrant and unload them to suckers

Where is Mickey mouse Mikecyc?

You better go warn sorchai in gpacket forum and stop disturbing Netx people

2020-05-18 13:58

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