Relook at GreenPacket Stock – Problem or Opportunity?

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Jun 25 2007
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Since my last article on why I think Green Packet Stock Pattern Behaving like Google Stock, Green Packet Berhad (KLSE: GPACKET, stock-code 0082) has rebound from second support level of RM 4.00 to above $4.80 per-share (first support) and even touched the trend-line (refer to chart below). Subsequently the stock plunged back to the RM4.00 level and today’s closing saw the stock floating just above $4.00. Such is the power of support and resistance – hence the trading range (between $4.00 and $4.80) which was in question earlier on has been established.

Stochastic and RSI both shows the stock price in the oversold territory. Compare today’s closing (25th June) with previous low (18th May) will shows a similiarity – both occasions saw oversold position and touching the $4.00 level. Looking at the chart, it seems GreenPacket is set to rise above $4.00 level again giving an equal opportunity to investors to make money. As I have blogged about the fundamental of GreenPacket, I would not elaborate it again here.

Concern on Green Packet Stock
One of FinanceTwitter readers has asked me recently about this stock again. The reader is very concern about the yo-yo behaviour of the stock price. To me, I’ve been looking for such a chart’s pattern for years as it presents a great opportunity to make money again and again. Could you imagine how much money one can make from such trading range should the stock can be long (buy) and short (sell) as easily as in U.S. stock market. Too bad you’re seeing this stock in Malaysian stock market. Such a trend is perfect for traders to make huge profit. But am I very sure that GreenPacket will trades within the range as I mentioned above?
Technically and fundamentally, I’m very sure it will rebound above $4.00. So if I happened to have bought the stock at a higher price previously, I would definitely pinch some to average-down. For all you know, the stock could be establishing a nice double-bottom before giving you a surprise rocket boaster.
Problems with Green Packet?

Having said so, there’s a third factor or variable which is beyond my (or anyone) control – internal bleeding. What the heck am I talking about? A look at the revenue, profit and shareholders’ ROE (return on equity) for the financial year 2004-2006 shows a great and handsome performance. But so was Transmile Group Berhad (KLSE: TRANMIL, stock-code 7000) which attracted Malaysian’s richest man, Robert Kuok and some foreign big-boys but ultimately the accounting irregularities came out of the hole. Could the same happen again to GreenPacket? I sincerely hope it won’t because chances are more investors will get hurt this time if it happened, due to the simple reason that investors who have high-hope on the rumors of DIGI.com Berhad (DIGI: stock-code 6947) acquiring or partnering with GreenPacket have stocking up the shares, not to mention of investors who diversify into other telecommunication stocks since the privatization of Maxis.
The only problem seems to surface for GreenPacket is the high receivables which will affect the company as far as capital and cash-flow turnaround is concern. But according to market sector, such high receivables are common within telecommunication business due to the long-period of getting user-acceptance-test and users’ sign-off. The nature of such projects makes the full-payment quite lengthy. Also, foreign investors are not as “long-term” as before – since the 1997-1998 Asia Crisis, foreign investors are more sensitive to the region’s business and profit-taking is a norm.
Green Packet’s Expectation
If Green Packet can register another quarter of good numbers couple with a smooth roll-out of WIMAX which it has secured, chances are high that investors’ confidence would be strengthern further. As I’ve blogged before, I still favor a partnership between Green Packet and DiGi.com and I still believe both parties are talking about it (unless the government stir the water with the intention of rescueing TimeDotCom). Again, I would like to stress that stocks investing is a risky business if you could not take the heat and control your emotion.
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