Vivocom’s FY15 beats expectations, group in search of new projects

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An artist’s impression of the Phase 5 Desa Tasik, Sg Besi project. On the construction front, the Vivocom Group has secured projects amounting to RM1.228 billion to date.

An artist’s impression of the Phase 5 Desa Tasik, Sg Besi project. On the construction front, the Vivocom Group has secured projects amounting to RM1.228 billion to date.

KUCHING: Vivocom International Holdings Bhd (Vivocom), previously known as Instacom Group Bhd, saw net profit of RM8.4 million for the financial year 2015 (FY15) as analysts continue to see potential rerating catalysts ahead for the Sarawakian

player.

According to CIMB Investment Bank Bhd’s research arm (CIMB Research), Vivocom’s FY15 net profit of RM8.4 million exceeded expectations by eight per cent as it consolidated its two key divisions, Neata Aluminium and Vivocom Enterprise’s revenues and net profits.

“We understand that Vivocom is in the midst of finalising negotiations for a few potential projects, which could be announced as early as this month,” it cited in a report yesterday.

“This is a potential re-rating catalyst for the stock.”

Year-to-date, the group has secured almost circa RM600 million in new building contracts from Coneff Corp valued at RM570 million and CRCC at RM116 million.

On the construction front, the Vivocom Group has secured projects amounting to RM1.228 billion to date, including RM594 million from CRCC Malaysia.

To note, Vivocom has a strategic relationship with CRCC Malaysia, a subsidiary of China’s construction behemoth China Railway Construction Corporation Ltd, and is their in-house contractor as well as their project delivery partner in Malaysia.

Its recently awarded notable projects from CRCC Malaysia include a RM116 million project in Gombak and two projects totalling RM230 million related to the 1Gateway project in Klang and 1Pavilion Hilltop in Mont Kiara, Kuala Lumpur.

In addition, the group has also secured potentially up to RM470 million with Coneff Corporation for developments in Sungei Besi.

These projects together with the company’s current order book are expected to give a strong earnings visibility until end-2017 and beyond.

“Based on projects secured so far, Vivocom is confident of surpassing management targets it has set for itself for 2016,” said Vivocom executive director Choo Seng Choon in a February 26 statement.

“We strongly believe that 2016 will be a bumper year for the Vivocom Group.”

CIMB Research gathered that Vivocom is looking at sub-contracting its non-CRCC works to a major Chinese contractor.

This will be advantageous for the group, it said, noting that the Chinese contractor will guarantee completion, and this will free Vivocom’s capacity to undertake even more jobs, in addition to easing working capital requirements as the Chinese contractor will fund a large portion of the works.

“We maintain our earnings per share forecasts, add rating and target price. We understand that the recent share price weakness is due to the liquidation of large proprietary positions by some retail brokerage firms.

“We view this as an excellent opportunity to add Vivocom as the positive fundamentals of the stock are unchanged. Vivocom is a proxy for the increase in Chinese FDI flows to Malaysia.”