This article first appeared in The Edge Malaysia Weekly on January 20, 2020 - January 26, 2020

VIVOCOM International Holdings Bhd is in the news again with the emergence of a new substantial shareholder. On Jan 3, Datuk Seri Chia Kok Teong acquired 1.31 billion shares in the company, equivalent to 23.04% equity interest, in an off-market transaction, making him the company’s largest shareholder. He was also appointed CEO on Jan 3.

At the same time, Ng Boon Sing and Haslinda Abdul Hamid bowed out as substantial shareholders after disposing of 1.26 billion shares through Golden Oasis Resources Sdn Bhd.

How Kok Teong came into the picture is also noteworthy. On Dec 30, Vivocom announced that its 78.6%-owned subsidiary, Vivocom Enterprise Sdn Bhd (VESB), had entered into a joint venture agreement with Handy Goals Development Sdn Bhd (HGDSB) for the development and completion of an ongoing residential development comprising 14 bungalows on a 10,385 sq m parcel in Sungai Besi.

HGDSB is 96.8% owned by Kok Teong and the company is the legal owner of the land. Under the deal, HGDSB is providing the land and Vivocom will undertake the remaining construction work, in addition to pumping RM20 million into the project.

The gross development value of the project is expected to be at least RM37.5 million. The project is ongoing, with 90% of the development works completed with VESB as a subcontractor.

Along with the joint venture proposal, Vivocom is also proposing to diversify its business to include property development. Vivocom is principally in the business of investment holding, provision of civil engineering and construction, aluminium design and fabrication, and telecommunication engineering and service business. The largest contributor to revenue is the construction business, making up just over 50% of group revenue.

Those who have been following Vivocom from the old days may remember another Chia in the company — Jason Chia Kok Chin. It is not clear if Jason and Kok Teong are related.

If Jason’s name rings a bell, it is because he is the founder of I-Power Bhd, an IT solutions provider that debuted on Bursa Malaysia in 2005. I-Power was the precursor to Vivocom. But sometime in the span of 10 years before the change of name to Vivocom, it was also known as Instacom Group Bhd.

When I-Power debuted in 2005, its initial public offering price was 43 sen per share. It did quite well in the first few months of trading, hitting a high of 97.5 sen on April 1, 2005. However, the momentum did not last and it nosedived to 21.1 sen by May. The share price was volatile, fluctuating between 22.8 sen and 90.6 sen until 2008.

But the company soon ran into trouble. Net profit contracted substantially in FY2009 to RM140,000, on account of a challenging business environment, from a net profit of RM12.52 million in the previous year. The company slipped into a net loss of RM94.77 million in FY2010. It was no surprise that its share price fell to a low of 3.6 sen in 2011.

In August 2011, a white knight in the form of telecommunication tower builder Instacom Engineering Sdn Bhd came to its rescue and undertook a reverse takeover exercise.

I-Power then became Instacom. With a new name, it also had a new management team and new controlling shareholders. Jason was redesignated executive director and Anne Kung Soo Ching was appointed CEO. Thomas Ngu Sing Hieng and Choo Seng Choon were appointed executive directors. Jason retired from his post on Dec 18, 2012.

In April 2013, Instacom’s largest shareholder was Chan Chuck Yan with a 21.79% stake, followed by Kung, Ngu and Wong Say Khim, with 14.52% equity interest each.

Ngu was reported as saying that Instacom wanted to build a 3,000km fibre-optic cable network to link up the whole of Peninsular Malaysia in three to five years. This caught the attention of investors. From a low of 3.6 sen, the share price surged to a high of 15.5 sen almost a year after the reverse takeover.

The hype over Instacom was also partly fuelled by talk that it had secured a RM205 million contract for telecommunication infrastructure works in Sarawak.

Instacom returned to the black after FY2012. It changed its year end from June 30 to Dec 31. For FY2013, it reported net profit of RM26.22 million against a net loss of RM2.87 million previously.

(It is worth noting that Vivocom changed its year end back to June 30 last month.)

The share price continued to trend higher, hitting 19.4 sen in May 2013. But the directors had actually started selling shares on the open market in September 2013, while Instacom was reporting stellar earnings.

Ngu and Wong’s shareholdings had dropped to 6.67% each as at May 2014, while Chan trimmed his interest in the company to 10% from 21.79%.

After FY2013, Instacom’s earnings shrank to RM3.7 million in FY2014, significantly lower than investors had expected, given the potential growth story Ngu had told at media interviews and investor briefings.

The share price fell to 7.7 sen in October 2014, after the company failed to deliver on earnings promised to investors, and it continued to trend lower to 5.7 sen that December.

To cultivate a new revenue stream, Instacom proposed to acquire a 35% stake in aluminium window and door manufacturer Neata Aluminium (M) Sdn Bhd for RM58.8 million from four individuals — Neata founder Albert Chia Kok Seng, Ang Li-Hann, Nor Mohd Amin Shaharudin and Ooi Eng Kean — in late 2014. The acquisition was settled via the issuance of new Instacom shares.

By June 2015, Instacom had increased its stake in Neata to 78.6% by buying a 43.6% stake from Golden Oasis for RM73.58 million, which was settled by RM13 million in cash and the issuance of new shares. As a result, Golden Oasis became the single largest shareholder in Instacom with 24.5%. The former is 70% owned by Ng and 30% by Haslinda.

With the new shareholder in the company and a new business, Instacom again caught the eye of investors. Its share price climbed to a high of 20.8 sen in November 2015 from 5.5 sen in September 2015.

In November 2015, Instacom appointed Dr Yeoh Seong Mok as joint CEO. He is the founder of Vivocom Enterprise Sdn Bhd, a wholly-owned subsidiary of Neata.

Instacom changed its name to Vivocom in January 2016 and has since morphed into a construction outfit from a telco tower maker.

Under a new name and with a new shareholder in tow, Vivocom’s share price climbed to 23 sen by May 2016. But since then, it has been volatile with a downward bias.

From a high of 23 sen seen in May 2016, it fell to 14.4 sen in June that year. Although Vivocom’s share price rebounded thereafter, it never climbed above 20 sen after that.

Vivocom’s net profit grew to RM49.39 million in FY2016 from RM8.29 million the previous year. However, it fell to RM14.71 million in FY2017. By FY2018, it was once again in the red. It recorded a net loss of RM62.84 million and reported a loss in FY2019 of RM51.43 million.

For the whole last year, the share price has been hovering between 2.5 sen and 1.5 sen. The recent emergence of a new shareholder did not pique interest in the counter. Its share price has not crossed the 2.5 sen threshold.

Last Friday, the counter closed at two sen, giving Vivocom a market capitalisation of RM113.3 million.

That said, a lingering question is whether history will repeat itself at Vivocom with the emergence of a new shareholder.

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