Instacom wins CRCC contract, orderbook now at RM2 billion December 8, 2015, Tuesday Sharon Kong, [email protected] KUCHING: Instacom Group Bhd (Instacom) yesterday announced that its subsidiary company, Vivocom Enterprise Sdn Bhd (Vivocom), had received and accepted the Letter of Award (LOA) from CRCC Malaysia Bhd for the provision of construction works for a gated community housing scheme consisting of semi-D units, villa mansions, apartment block and housing units under the Rumah Selangorku scheme, in Bandar Ulu Klang, Daerah Gombak, Selangor. This project is valued at RM116.4 million and is in addition to the contracts totalling RM231 million received from CRCC Malaysia last month. With this Project, the Instacom Group has to date successfully secured projects amounting to almost RM600 million from CRCC Malaysia. CRCC Malaysia Berhad is owned by China Railway Construction Corporation Ltd, which is known globally as one of the largest construction enterprises in China and the world, and ranked 80th within Fortune Global 500 companies. “This development means that we have even stronger earnings visibility until end of 2017,” said Instacom chief executive officer Dato Seri Dr Yeoh Seong Mok. “We are in final negotiations for more projects. Hence, there will most definitely be more contracts secured over 2016 and 2017 and beyond,” he further said, adding that the Instacom Group’s pipeline is estimated at approximately RM2 billion currently. In line with its growing order book and anticipated influx of more projects, Instacom is currently undertaking a private placement of up to 10 per cent of its issued and paid-up share capital to third party investors to be identified and at an issue price to be determined later. In a statement to Bursa Malaysia last week, the company said that, based on the indicative issue price of RM0.28 per Placement Share, the Proposed Private Placement is expected to raise gross proceeds of at least approximately RM65.53 million. Meanwhile, Instacom’s share price came under heavy selling pressure on December 3 and 4, declining 15 per cent over the two days which analysts note was likely caused by media reports creating market confusion. The research arm of CIMB Investment Bank Bhd (CIMB Research) believed that this could be due to the numerous media reports about Fajarbaru Builder Group Bhd (Fajarbaru Builder) claiming that the group was confident of winning the RM8 billion Gemas-Johor Baru (JB) double-track rail project. According to CIMB Research, the reports may have created the market misconception that Instacom stood to lose its position as China Railway Construction Corp’s (CRCC) subcontractor. “A particular media report implying that Instacom could be the biggest loser of the Fajarbaru Builder news may have caused further panic. That media report has since been retracted,” it said. CIMB Research noted that investors should take advantage of the current price weakness to accumulate Instacom shares. The research arm continued to believe that Instacom is a direct proxy for increasing Chinese foreign direct investment in Malaysia. All in, CIMB Research maintained the ‘add’ rating on Instacom and its sum of parts (SOP)-based target price of RM0.67 per share.