KUALA LUMPUR (Nov 19): Instacom Group Bhd, on which CIMB Research had initiated coverage yesterday, has been issued with an unusual market activity (UMA) query by Bursa Malaysia after its shares spiked as much as 20.8% or 5.5 sen to 32 sen earlier today.

As at 4.41pm, Instacom was trading at 31 sen, still up 4.5 sen or 16.98%.

In the regulatory's UMA query, which also advised investors to take note of the company's reply, Instacom was requested to disclose any corporate development, rumour or report concerning the business and affairs of the group, or any other possible reason that could account for its share price rally.

In a note yesterday, CIMB Research placed an 'add' rating on Instacom with a target price of 72 sen, saying that Instacom, which will be renamed Vivocom, will morph into a potential giant construction company, with the asset injection of the Neata Group.

The newly renamed Vivocom will be the in-house contractor for global Chinese construction giant China Railway Construction Corporation Ltd in Malaysia and South East Asia.

"We initiate coverage with an 'add' rating and SOP (sum-of-parts)-based target price of 72 sen, valuing the construction business at 9x FY17 P/E.

"We believe that Vivocom has massive P/E rerating potential given the large valuation gap with its construction peers and zero analyst coverage.

"It is trading at FY17 fully-diluted P/E of 3.0x, 80% discount to the sector FY17 P/E of 14.5x, which is unjustified given 456% FY15–17 EPS CAGR. On a P/BV basis, the stock is also very cheap, trading at 0.9x FY17 P/BV versus FY17 ROE of 48%," it said.

(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)