This article first appeared in The Edge Financial Daily, on September 30, 2015.
Instacom Group Bhd (+ve)
SHARES of ACE market-listed Instacom (Fundamental: 1.25/3, Valuation: 0.9/3) soared by a whopping 47.8% in just a week to close at 17 sen yesterday. This came after the company announced that it obtained Bursa’s approval for proposed 1-for-3 bonus issue and the listing of new shares last Tuesday.
In August, the company proposed to acquire 43.6% equity interest in Neata Aluminium (Malaysia) Sdn Bhd for RM73.6 million, raising its stake from 35% to 78.6%. The acquisition will be satisfied via RM13.0 million in cash while the remaining through issuance of 605.8 million new shares.
The acquisition will see Instacom, which specialises in erecting telecommunication towers, diversifying into aluminium design and fabrication, civil engineering, and construction. The acquisition of Neata entails an aggregate net profit guarantee of RM34 million for FY2015–FY2016.
In 2Q2015, Instacom recorded a net loss of RM1.5 million due to higher cost of sales and operating expenses.