This article first appeared in Corporate, The Edge Malaysia Weekly, on June 27 - July 3, 2016.

THE stock with the code “0069” started off its journey as a public-listed company with the name I-Power Bhd in 2005. It changed its name twice in the following 10 years, becoming Instacom Group Bhd in 2012 and then finally, Vivocom Intl Holdings Bhd. 

Its share price was barely eight sen nine months ago but soared to 36 sen last month. 

However, the share price has been drifting lower amid concerns that CEO Datuk Seri Dr Yeoh Seong Mok, who is perceived to be the key person who secures contracts from China Railway Construction Corp Ltd (CCRC), is retiring soon. 

It is rather common for companies to undertake restructuring exercises to revive their financial health. One route is to bring in a white knight to inject new business.

This is what Vivocom has done — twice. 

When I-Power made its debut on the Mesdaq Market of Bursa Malaysia, it was an IT solution provider founded by then-CEO Jason Chia Kok Chin.

I-Power was the first IBM Corp Premier Business Partner in the country to be inducted into IBM’s independent software vendor (ISV) advantage programme. I-Power was said to have priority access to IBM’s e-business application knowledge and expertise, including its technical infrastructure, resources and support.

Its initial public offering (IPO) was priced at 43 sen per share. Subscribers must have laughed all the way to the bank when the share price almost doubled to 85 sen on its maiden trading day on  Jan 18, 2005, and continued to climb to a high of RM1.52 on March 30, 2005. 

But the upward momentum was unsustainable and the share price plunged to 40 sen a few months later. One needed a strong heart to hold on to the investment. The stock was on a roller coaster ride, fluctuating between 80 sen and RM1.40 until 2008, the last year in which I-Power was profitable. In the financial year ended June 30, 2008, the company reported a net profit of RM12.57 million.

The following financial year, the company’s net profit plunged 99% to just RM136,904, citing the challenging business environment. While hoping for a better future, I-Power posted a widest net loss of RM94.77 million in FY2010, wiping out its retained earnings and ending up with an accumulated loss of RM65.02 million.

Its share price dipped below 10 sen to a low of two sen in 2011 — six years after the IPO.

Interestingly, I-Power’s board of directors, including its chairman Tan Sri Wan Sidek Wan Abd Rahman and Chia’s wife Ha Mun Keet, started selling their shares in the company shortly after the IPO. 

By October 2008, none of the board members held I-Power shares except Chia, who held a 25.88% stake. Did they have doubts when everyone thought things were rosy at the company?

A white knight emerged in August 2011 in the form of telecommunication tower builder Instacom Engineering Sdn Bhd, which undertook a reverse takeover exercise.

Subsequently, I-Power became Instacom, with a new management as well as controlling shareholders. 

Chia was redesignated executive director while Anne Kung Soo Ching became CEO. Thomas Ngu Sing Hieng and Choo Seng Choon were appointed executive directors too.

Chia retired from his post on Dec 18, 2012.

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

EA Holdings Bhd CEO Mohammad Sobri Saad was the 12th largest shareholder, holding a 1.14% stake. Although Chia ceased to be notable shareholder, his wife was the 27th largest shareholder with a 0.35% stake.

Note that Choo was also a non-executive director in EA Holdings.

Ngu told the local media 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 helped to fuel interest in the stock. Once again, the stock with the code “0069” was a hot stock on Bursa Malaysia. From a trough of two sen, the share price surged to a high of 42.5 sen about one year after the reverse takeover. 

The rise in Instacom’s share price was also driven by market talk that it had secured a RM205 million contract for telecommunication infrastructure works in Sarawak. 

Instacom managed to deliver a good set of financial earnings. For financial year ended Dec 31, 2013 (FY2013), Instacom returned to the black after three consecutive years of fiscal losses. It reported a net profit of RM26.22 million against a net loss of RM2.87 million previously.

However, in early September 2013, the company’s directors started selling shares on the open market while Instacom was making handsome profits. 

Ngu was telling the investing public about Instacom’s bright prospects at briefings with investors and media interviews. Interestingly, together with Wong, he was paring his equity interest in the telco tower builder. 

Less than two years after the reverse takeover, Ngu and Wong’s shareholdings were down to 6.67% each as at May 2014. The equity interest of controlling shareholder Chan was trimmed to 10% from 21.79%. The share sale by the substantial shareholders exerted pressure on Instacom’s share price, which fell to 21.5 sen from above 42 sen previously.

Again, had the substantial shareholders, who were also management executives, felt that something was not right when interest in the stock was growing?

Instacom’s earnings shrank in the following two financial years. Its profit decreased to RM3.7 million in FY2014 — substantially lower than what the investing public, including institutional fund managers, had been expecting. The share price lost ground, drifting to 17 sen in October 2014 as the company failed to deliver the stellar earnings that it had promised investors. 

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 — the latter’s 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.

Filings with Companies Commission Malaysia show that Neata reported a net profit of RM6.81 million for FY2014, a 3.38% decline from RM7.05 million in FY2013, backed by a revenue of RM64.35 million, which was 20.22% higher than RM53.53 million previously.

However, the company’s net profit for FY2012 was just RM708,666 while revenue was only RM6.49 million.

The acquisition was completed in January last year. The equity interest in Neata helped to boost Instacom’s earnings to RM8.79 million in FY2015. 

About six months later, Instacom decided to raise its shareholding in Neata to 78.6% by buying an additional 43.6% stake from Golden Oasis Resources Sdn Bhd for RM73.58 million, which was settled with RM13 million cash and the issuance of new shares.

Consequently, Golden Oasis became the single largest shareholder in Instacom with 24.5%. Golden Oasis is 70%-owned by Ng Boon Sing, with the remaining stake held by Nor Haslinda Abdul Hamid.

In a nutshell, this might have been seen as another reverse takeover exercise for the listed company, which changed its name to Vivocom Intl Holdings Bhd in January this year. 

For the third time, the stock with the code “0069” became a hot stock on Bursa Malaysia. Since late September last year, when Bursa approved Instacom’s proposal to raise its stake in Neata, its price climbed from eight sen to 32.5 sen in November — a four-fold increase in three months.  

On Nov 2, Instacom appointed Yeoh as joint-CEO. Yeoh is the founder of Vivocom Enterprise Sdn Bhd, which subsequently became a wholly-owned subsidiary of Neata.

From being a telco tower maker, Vivocom has become a construction outfit. At press and investor briefings, Vivocom claimed it was the sub-contractor for CRCC in Asean.  

In a 26-page report dated Nov 18, 2015, CIMB Research pegged Vivocom’s target price at 72 sen, citing potential job wins from CRCC as a catalyst. “Share price catalysts are newsflow of contract wins from CRCC throughout 2016 and a possible upgrade to the Main Board of Bursa Malaysia next year,” said the Unleashing the Giant report.

Last Thursday, Vivocom announced that it had secured two contracts with a collective value of RM37.8 million. But the positive newsflow failed to stem the fall in its share price, which declined 32% from the peak of 36 sen last month. 

On the selling pressure, Choo believes it was mainly due to the overall market conditions.  “This is beyond our control. Under these conditions, even the most positive news would have little impact on the stock market,” he says.

Will there be a different ending for the company this time around? Perhaps the management could shed some light in the next briefing, as well as in the financial results for 2QFY2016.  

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