Annual report out soon.

Yes nothing new.. just saying RHB themselves have vested interests in the company

RHB has a 14.5% direct interest in the company:
http://www.reuters.com/finance/stocks/INST.KL/key-developments/article/2828448

It is too early for them to wrap this up

Indeed a lot can change in 8 years. Though some things rarely change - like how BN has been in power for 57 years...

Everyone should read thoroughly this document and understand what sort of company you are investing in:

http://issuance.sc.com.my/uploads_issuance/Instacom-IM.pdf

It has the connections, political backing, technical know-how and capacity to win the tenders. There are only a dozen companies in Malaysia which are competitors, and even less so in East Malaysia. The pie is simply too big to be absorbed by 1 or 2 companies.

Final show before main board transfer and awarding of tender

T800 let's see who's right few months from now

Bargain price at 11.5 cts thanks to speculators throwing

Management is working to end the year on historic high. Doom or boom, you decide

Thanks lloydlim for the kind words. Itrader I have more warrants than mother now. Will switch all to mother at a later stage

Thanks sammj. Just be patient I am sure we will be rewarded eventually.

Hilmi to explain what I mean:

http://www.investopedia.com/articles/08/investment-banks.asp

"Investment banking is fraught with potential conflicts of interest. This problem has intensified through the consolidation that has swept through the financial services industry, to the point where a handful of large concerns - the fabled bulge bracket banks - account for a disproportionate share of business on both the buy and sell side.

The potential conflict arising from this is simple to understand. Buy-side agents - investment advisors and money managers - have a fiduciary obligation to act solely in the best interests of their investing clients, without regard for their own economic incentives to recommend one product or strategy versus another. Investment bankers on the sell side seek to maximize the results to their clients, the issuers. When a firm in which the main line of business is sell side, investment banking acquires a buy-side asset manager, and these incentives can be at odds."

In our context, RHB's buy side agents are acting for their own clients (by pressing prices down), and sell side agents are acting for Instacom (moving the market, publicity etc. to push prices up)

Steve that part was hypothetical. I'm saying there is no reason for directors to sell early and they could be pressured to do so by rhb.

Hilmi if you understand the workings of an investment bank you won't say that. It is common for Investment banks to have this conflict of interest.

Why RHB is playing games:

Let’s get this straight. RHB is the principal sponsor for Instacom. They are the guarantor for Instacom’s profit guarantee of RM15M and they will facilitate Instacom’s transfer to the main board. They are supposed to make the market to provide price support for the share. So, it is in their best interest that Instacom do well and that share prices go up right?

Right. But that is only part of the story.

RHB is also an investment bank with their own clients. So while part of their goal is to lift share prices as high as possible for Instacom, the other side of their business would prefer the price to be low so that they can allocate undervalued shares to their clients. Perhaps, it has something to do also with getting the institutional funds in. Certainly the funds will find it more attractive to take up an equity stake at 26 sen vs 34 sen.

To achieve their first goal, they went into high publicity mode to promote Instacom, having it as the RHB Top Jewel of 2013, High TP of 51 sen etc. Sure enough a lot of excitement is generated and Instacom becomes one of the hottest stock in Bursa. I'm not saying RHB hyped this up, Instacom is a great growth stock and deserves all the attention. So thumbs up to RHB for doing a good job here.

But with all the interest they now have difficulty achieving the second duty since prices are already high. What can they do?

Easiest thing is to issue a report to scare the investors. Slap a discount to the metrics used. Cut the PE from 13X to 10X, that should do the trick. Their reports are strategically issued on crucial moments. The previous report downgrading the shares is when the prices are near the bottom. Then they decided to make it worst and bring it down further by using scary but ambiguous phrases such as “Given limited visibility on the group’s contract flows and erring on the side of caution, RHB Research removed the fibre contribution of RM25 million to RM26 million and RM205 million worth of jobs from 1M Utama Sdn Bhd from its financial model.”

Obviously with this downgrade, prices are not going to move up further. It did not, right until the 3rd quarter results were released. Results were great. RM22M profit after tax over three quarters. Revenue from fibre contribution and RM205M were recorded. Management had redeemed themselves over allegations of insider trading for selling of warrants

So share prices are expected to explode right? It did for a while, the day after results were announced. Then, RHB being so worried that prices will shoot up, decides to hurriedly issue another report with TP at 30 sen. The report was issued barely hours after announcement was made! How much effort did they put in to analyse the whole situation and give a fair evaluation? No, they did not need any effort because this is just to create a ceiling so that prices won’t jump up too fast. Remember, they want prices to be low for their clients.

What can we take away from the above? If you read the third quarter announcement, the management is clearly saying that revenue from fibre contribution and 1M Utama are still there. Essentially, they are saying: "Hey RHB there is no basis for you to discount my TP from 51 sen to 29 sen based on “Limited visibility of contract flow”. Here it is, proof that these contracts are in our hand. Give us back our fair TP." So we know the management is not staging this wayang together with RHB. It is basically slapping RHB’s downgrade report in the face.

Does RHB care? Of course they don’t. They have generated enough interest among the investors. They will stick with their ridiculous metrics so that prices can be kept low.
For all you know, it is RHB that pressured the directors to sell their warrants so that prices can come down. This is hypothetical, but think about it. Why would the directors want to sell, if they know results will be good? They can always sell after results are issued, perhaps warrant would be 20 sen by then. The only reason I can think of is they are under pressure to do so.

So stop blaming the directors for selling the warrants. I am sure they don’t need the money so badly that they can’t wait for a few days to sell them at much higher price.

What can we do? Play along with RHB’s games. If they accumulate, we accumulate. Once they have enough, prices are going to shoot again. Be patient. Don't panic. Good things are coming soon and stop blaming the management.

Yup.. improve liquidity and provide lower entry point so that enough interest can be generated. This will help their transfer to the main board.

http://mrem.bernama.com/viewsm.php?idm=21241

Warrant was meant to reward shareholders as well as it was issued in the money. Win-win for both.

What do you mean could have met? They have already met the criteria it's just a matter of time now

RHB issue report like selling cabbage in pasar malam. Price can fickle wildly without any change in facts. Clearly to manipulate the stock price to serve their interest.

The last sentence of the report should be: "We advise investors to tread with caution when investing in the stock so that we can hantam more when you are panicking"

Who are their serious competitors in East Malaysia? I don't think there's any. the contracts will be given next year so don't believe the false rumours

Prices will shoot when:
- Main board transfer happens. Instacom has fulfilled criteria for transfer and this will take place soon (end Dec 2013 / early 2014)
- Contract secured to build telco towers (RM1.5B) and to lay underwater cables in East Malaysia in 2014 (RM850M). If they win just 20% of the works (very conservative estimate) it is RM470M worth of works.
- Revenue from ongoing projects (Johor fibre laying project, RM205M contract under 1M Utama) stabilise and contribute to profits over the next 2 years
- Institutional investors take up equity stake in the company
- RHB starts giving fair coverage. If they had been more objective in their analysis TP is easily 40-50sen.
- In the long term, setting up of tower REIT happens

All these have high probability of happening so accumulate all you can when prices are still cheap

Thanks Aero1!

"Two weeks ago, the operators were issued a stern warning to make the change or face hefty fines. One operator is rushing to do so, while the others are still waiting. They have till the year-end to face the regulator."

Expect more works for Instacom coming in soon.

Relax guys, all wayang by RHB and the hidden hand. Once they accumulate enough they will issue positive report for prices to shoot.

Fundamentals are there nothing to worry about.

Illoydlim. You must be good friends with RHB. The Belum Kenyang Gang

Can someone explain to me how does RHB justify using a P/E Multiple of 10X when OCK's is 19X? Bullshit coverage from RHB. At a conservative P/E of 13X (what they adopted previously), TP will be close to 40 sen. This is sheer propaganda to manipulate market price. What a shame!

No, Instaco needs a research house who gives a fair coverage.

They are obviously trying to influence the price to serve their own / proxies interests.

RHB belum kenyang.

Haha! Good point you raised there.. will proceed with care!

If yes, I agree with you completely.

Hmm.. so are you suggesting for long term investors, BUY. For speculative investors, be careful?

Steve. I think hard to repeat the same but definitely going up!

Haha!! Congrats to you and those who did not sell!

Yistock what do u mean no need to be in oven tomorrow?

It's just a figure of speech. As for the rule you can check with my good friend Warren!

Chinsing. Same as previous quarter, yes. Previous quarter results excellent. That makes this quarter results excellent too.

To those who are saying the report is not bad, flat etc.. Are you serious?????

Results are GREAT!

I admit I had serious doubts on this company over the past weeks, much like everyone had in this forum due to directors selling and I said I won't touch this counter until results are out.

Now that this quarter's result are here we can establish the following:
1. No insider trading involved - management credibility is restored
2. Fundamentals are strong - revenue and profits still coming in
3. Total profits after tax is RM22M through THREE quarters. No need for RM15M profit guarantee at all
4. At PE of 7X (vs OCK’s 19X), current price is way waaaay undersold.
5. Robinhood Research House’s downgrade to 29 sen is now baseless. 51 sen TP holds again.
6. PLUS all the positives that got us so excited in the first place – which was put into question over the past few weeks, are now validated again

Director’s selling of warrants is most likely to purchase mother share – and at a lower price too! They will be happy to sell warrants but they definitely won’t sell mother so easily.

Good luck to you if you still think results are mediocre and choose to stay out. We won’t be seeing a lot of days where this counter will trade at the artificially created 20+ sen range again.

Prices are gonna explode and I’m betting my house on this.

Chinsing, you call this "flat result"? Seriously?

Prices gonna explode...

Poor results would suggest that directors sold their warrants based on confidential information they had prior access to.. Whether or not this is the case, we don't know for sure. But if results are poor it will definitely reinforce the idea that there is insider trading... and that puts a big question mark to the management's credibility.

If results good, then all the doubts investors had over director's selling will be cleared. And this counter will be a clear favourite again...

Prices gonna explode either way depending on results.

Having a profit guarantee doesn't necessarily mean that no matter how they lose they will still get RM15M. If they can't achieve the target amount, the guarantor is supposed to cover the shortfall but it's not such a straightforward process and does not always end up that way.. usually a bad sign if they have to resort to compensating for shortalls

for warrant I mean

If quarterly results are bad, expect it to fall back to 9 - 10 sen level...

Robin hood research house.. hahaha good one!

It's a form of insider trading if the directors are asking someone else to buy low in anticipation of prices shooting up due to good quarterly results...

It is good sign he has stopped. Must now prove they are sincere about growing this company and not just here to make quick money. Cashed out once for personal reasons, pocket money bla bla bla. Its ok, we give benefit of doubt this time. But let's remember their actions. If they start selling again, then I suspect investors won't be so stupid to be played around by them again

Finally a positive uptrend! Let's hope the directors no longer mess around with the price so that this can sustain...

We have been played out by 2 parties: 1) directors who dump shares and slaughter the retail investors.. Their action is consistent with other struggling/failed RTOs. 2) RHB, who has a big position in this counter. There is conflict of interests here. RHB can easily manipulate the share price to their advantage as they are the only one covering this counter.. So long as these two parties keep playing their games, we are all screwed

Por Soon Keong, unfortunately i only started researching on RTOs recently after the strange selling activity of the directors and rhb's report... well, i'm not saying that it's definitely downhill all the way from here, but let's be realistic and at least be aware of the risks that we are taking on

The article describes accurately what i'm feeling now.. being slaughtered by legacy shareholders (anne and ngu) who dump stock...

Ok maybe i should stop spreading the negativity but I'm just saying, we should be careful with what the Instacom directors are doing..

Pay special attention to what the article says here "...As so often happens, existing shareholders sell when the price spikes after a reverse takeover, and cut their losses. Or they wait for higher prices and sell over the next few months, in turn creating an overhang of selling pressure that weighs on the stock. This is one reason so many backdoor listings struggle after official reinstatement to the ASX.

Investors who buy into the backdoor listing during or soon after its reinstatement to official quotation on the ASX, or through a capital raising, risk getting slaughtered by legacy shareholders who dump their stock..."

xmonster.. the RTO is not just a proposal in 2011, it's been done and completed in Oct 2012 and that is why we have Instacom group in the Ace market today.. if you're still interested in the risks typically involved in RTO listings, check this out:
http://www.afr.com/p/personal_finance/smart_money/traps_for_investors_in_backdoor_XrlfyUaOZuaMjyDtWjjHBI

well let's hope none of the risks happen and pray hard for a good Q3 result! Happy investing all!!