Rachel Lau, email@example.com
KUCHING: Vivocom International Holdings Bhd’s (Vivocom) newest upcoming major shareholder – Hong Kong Stock exchange listed developer CNQC Holdings Ltd (CNQC) – is set to bring the group good tidings to their construction segment.
To recap, the group had announced last Friday that two of their major shareholders, Ang Li-Hann and Golden Oasis Resources Sdn Bhd, had on October 13, 2017 signed indicative term sheets for the proposed sale of up to 317,920,140 and 652,346,283 ordinary shares in Vivocom respectively to CNQC. If finalised, the proposed sale would allow CNQC to emerge as the largest shareholder in Vivocom with 970,266,423 shares or 29.15 per cent of its total issued shares.
While the term and conditions of the proposed sale have yet to be finalised, MIDF Amanah Investment Bank Bhd (MIDF Research) is anticipating that the purchase of Vivocom shares would be conducted via a share swap.
The news has been a pleasant surprise for all as it is expected that CNQC – who is an established real estate developer and construction player in Singapore, Indonesia, Hong Kong, Macau and Vietnam – will be able to lend some strong support for Vivocom’s growth in the construction segment.
“CNQC is expected to compliment Vivocom’s construction team in areas such as sub-structure, water infrastructure construction, real estate financing and residential development.
“All in, with the crosspollination of expertise, we estimate that construction margin will improve by +1.2 per cent in financial years 2018 and 2019 due to slated expansion of the project team to undertake higher volume of construction activities,” predicted the research arm.
In addition, CNQC is also part of the infamous Qinjiang Group’s network in mainland china that has completed high profile infrastructure projects such as the Qingdao Olympic Sailing Centre and Qingdao Liuting International Airport.
With to this strong track record, CNQC’s tie in with Vivocom will hopefully strengthen the group’s expertise to bid for higher-scaled projects such as the East Coast Railway Link.
“Altogether, we maintain our ‘buy’ call with an adjusted target price of RM0.395 per share based on discounted cash flow with a weighted average cost of capital of 7.4 per cent,” MIDF Research concluded.