GPACKET (TP RM1.30 – BUY) Re-Initiating Coverage (OSK)

We re-initiate coverage on Green Packet (GP) with a BUY rating based on target price of RM1.30, or 8x FY11 EV/EBITDA. We like the company’s turnaround story and its exposure to the thriving wireless broadband market via the fledgling WiMAX service. Despite the aggressive go-to-market strategy heavily weighing down its earnings since commercial rollout in Aug’08, GP’s longer-term prospects appear attractive with losses set to bottom out by year-end upon achieving a critical mass of subscribers. The key share price re-rating catalysts are (i) a quicker than expected earnings turnaround; (ii) strong subscriber additions; and (iii) positive industry outlook and global developments on the WiMAX front.