PETALING JAYA: An investigation has started to determine how a research report by an investment bank analyst on Vivocom International Holdings Bhd, a construction company, could be almost identical to its latest quarterly results.

It is learnt that the investment bank involved and the Securities Commission are looking into the report, which was made public “momentarily” a day before the company actually released its latest quarterly results.

“In the meantime, it is learnt that the analyst has been relieved of duties,” said a source.

Yesterday, blogs were alive with discussions on the research report that was released before the company had announced its earnings to Bursa Malaysia.

The research report was dated Nov 28 while Vivocom released its earnings to the stock exchange on Nov 29. Currently, there are three research houses covering Vivocom.

They are CIMB Investment Research, MIDF Amanah Investment Research and Mercury Securities Sdn Bhd.

The research report had been pulled out of the investment bank’s website, but not before it had been noticed by blogging sites that discuss corporate governance issues in Malaysia.

The source noted that the analyst had some autonomy when it came to releasing the earnings update report.

Being earnings results season, the analyst was probably bogged down with other reports and had unintentionally released the report prematurely.

“This is not to make excuses. There’s definitely been a breach of policies and procedures,” said the source.

What caught the attention of many is that in the report, some of the analyst’s figures were strikingly close to the actual numbers.

“To think that the analyst estimated the numbers himself would not be impossible, but extremely difficult,” said a source.

One example is Vivocom’s revenue breakdown. The report accurately estimated the revenue breakdown among Vivocom’s three different sectors.

The report stated that construction contributed 62% to third-quarter revenue, while telco and aluminium contributed 24% and 15%, respectively.

In Vivocom’s actual results, construction contributed 60%, aluminium contributed 15.69%, while the telco industry contributed 24.42%.

Another telling sign was the net cash position, in which the research report said that Vivocom had RM8mil as of Sept 30, 2016, while the actual figure was RM7.7mil.

“It would have been very difficult for any analyst to estimate the figures so closely. Predicting cash flow is very hard. It is even more difficult than predicting profits.

“At least for profits, if you know how they bill, whether upfront or progressive, then you can estimate,” said one analyst.

For the record, Vivocom’s earnings were up 108.77% to RM14.07mil on the back of a 151.48% jump in revenue to RM55.91mil for the third quarter to Sept 30, 2016.

On a nine-month basis, it recorded a 741.44% jump in revenue to RM319.02mil, while net profit was up 754.59% to RM53.04mil.