Instacom’s 1Q14 results were below expectations.  We had expected to see  a  new  leg  of  growth  for  the  company  in  the  telco  infra  lease business,  but  progress  has  not  been  within  our  expectations.  At  the same  time,  visibility  has  also  been  lacking.  With  a  lack  of  re-rating catalyst, we are ceasing coverage on this stock.

• Below  expectations.  Instacom’s  net  profit  of  MYR4.7m  ( -31.8%)  was below  expectations  due  to  slower-than-expected  revenue  growth.  We believe this was primarily due to lower-than-anticipated work orders for new  telco  sites.  This  resulted  in  an  adverse  impact  on margins,  which caused the company’s 1Q14 PBT to decline by 33% y-o-y. As expected, Instacom did not declare any dividends.
• Ceasing coverage. We had expected to see a new leg of growth for the company  in  the  telco  infra  lease  business,  but  progress  has  not  been within our expectations. Visibility has also been lacking. With a lack of rerating  catalyst,  we  are  ceasing  coverage  on  the  stock.  Our  previous recommendation  was  NEUTRAL  with  a  FV  of  MYR0.28,  which  was based on 10x FY14F P/E.

Source: RHB