Monday 09/09/2013

Anne Kung - BusinessWeek front cover by MDV

. Instacom 2Q PBT soars to RM7.6 million with record revenues of RM36.3m. 1H FY13 net profits amounts to RM14.5 million.
. RHB Research makes a 'buy’ call on Instacom with fair value of 46 sen after recommending company as a 'Top 5 Jewel’ on Bursa Malaysia.
. Healthy order book with Instacom confident of securing another RM50m worth of contracts by year-end.
. Bonus warrants list today, providing potential investors with lower entry point

KUALA LUMPUR, Sept 9 (Bernama) -- Buoyed by its strong first half results for the current financial year, Instacom Group Berhad (“Instacom”), is currently working with its principal sponsor, RHB Investment Bank Berhad, to transfer to the Main Board of Bursa Malaysia by year-end 2013 or first quarter 2014.

For its recent second quarter, Instacom’s group profit before tax soared to RM7.630 million (Q1 2013: RM6.956 million) on the back of record revenue of RM36.302 million (Q1 2013: RM30.210 million), soaring a whopping 218.4 times over the RM35,000 posted last year. Cumulatively, 1H FY13net profit climbed substantially to RM14.5 million on the back of unprecedented group revenue of RM66.5 million. 

Compared to Instacom’s subsidiary companies’ financial performance in 2012 (Revenue: RM92.6 million; Net profit: 15.7 million), Instacom is on course to achieve double-digit growth for the current financial year.

Instacom also announced in May that the company had received and accepted a Letter of Award for the supply, installation, testing and commissioning of telecommunication network and infrastructure together with engineering works throughout the state of Sarawak. The value of this project to Instacom is RM205 million and is expected to contribute positively to Instacom’s earnings and net assets for financial years ending 2013 to 2015.

Meanwhile, Instacom’s bonus warrants - Instaco-WB - was listed on Bursa Malaysia this morning as reward to shareholders in line with the company’s strong balance sheet and robust growth. The warrants also provide potential investors with a lower entry point to invest in Malaysia’s leading end-to-end solutions provider for the telecommunications industry. 

Moving forward, the company is confident of securing more projects of significant sizes in the foreseeable future, including the laying of fibre works in Johor which is estimated at being from RM50 million upwards.

“The telecommunications industry is growing in leaps and bounds as Malaysia moves into the LTE (long term evolution) era with major operators looking to expand their data earnings. Mobile data traffic in Malaysia should double this year in line with the global trend,” said CEO Anne Kung, quoting a report by telecoms equipment firm, Ericsson, which foresees mobile data volumes rising by a compound annual growth rate of around 50% between 2012 and 2018. 

“We have seen of late strong and sustainable interest from institutional funds that are also keen for us to transfer to the Main Board of Bursa Malaysia,” she added. “The company’s high margin earnings, accountable and 'high achiever’ corporate culture, robust growth and established leadership position with proven industry capability are key contributory factors for such strong interest.”

Not surprisingly, Instacom continues to be one of Bursa Malaysia’s more actively traded counters in recent weeks — consistently a top 30 traded stock for several weeks in a row, culminating with it being the top traded counter on Bursa Malaysia with a total volume of 57.5 million shares traded last Friday, 6th September 2013.

“We are pleased with the consistently strong following of Instacom shares as it shows that our shares have ample liquidity and high trade velocity with strong follow-through buying. We now have more than 6,800 shareholders with some institutional investors amongst them,” CEO Kung proudly added.

In its book entitled “Top Malaysia Small Cap Companies — 30 Jewels (2013 edition)” released for institutional investors, RHB Research makes a 'buy call’ on Instacom with a fair value of 46 sen based on a P/E multiple of 13x on FY14F earnings. 

In the book, RHB also ranked the top 30 Small Cap Jewels identified on the following criteria — 
. Ranking based on Forward FY13 PER (x) — Instacom ranked #8
. Ranking based on Forward FY13 P/BV (x) — Instacom ranked #9
. Ranking based on Highest 3-Year CAGR (FY09-FY13) (%) — Instacom ranked #1
. Ranking based on Lowest PEG (x) — Instacom ranked #1

“All in all, we like the company for i) its strong growth prospects within the telecommunications space, ii) its pool of recurring earnings, which provide earnings certainty, and iii) its attractive valuations based on the stock’s current price,” stated the RHB Research report, which is recommending Instacom as a “Top 5 Jewel” on Bursa Malaysia.

Instacom today provides a comprehensive set of services to all of Malaysia’s telecommunications giants including network planning, design and optimisation, network deployment together with infrastructure management and maintenance.

The company has certainly come a long way since its humble beginnings a decade ago. Since then, Malaysia Debt Ventures (MDV), which is wholly-owned by Malaysia’s Ministry of Finance, has been a supporter of Instacom and its various projects throughout Malaysia.

MDV had featured Instacom on the wrap-around cover of BusinessWeek for the 6th and 16th January 2006 edition (pic) which stated then that: “The company’s rise, however, wouldn’t have been as meteoric without a finance partner who truly understand their needs. A finance partner like Malaysia Debt Ventures, or MDV in short.”