In an announcement to Bursa Malaysia this evening, Vivocom Intl Holdings Berhad (“Vivocom”; stock code 0069) said that the company will be undertaking a bonus issue of up to 870,311,821 new Vivocom Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every four (4) existing Vivocom Shares held on an entitlement date to be determined later.
According to Vivocom executive director Choo Seng Choon, the 1-for-4 shares bonus issue represents a “reward for all our existing shareholders and to thank them for their continuous support through ‘thick and thin’.”
“Many of our loyal following have been with us since our Instacom days,” said Choo, referring to the Company’s past when it was previously only involved in telecommunications.
“Bulk of these shareholders are retailers who believed in the company when we were still in our infancy and, as we grow from strength to strength, we would like to reward them with this bonus issue as only with their loyal and continued support, Vivocom can surge ahead to attain greater heights,” he added.
“What’s more, this corporate exercise shall enhance our capital base and enlarge the number of Vivocom shares held by the Company’s existing shareholders without increasing the percentage equity interest,” Choo added. “This would further encourage trading liquidity of Vivocom Shares on Bursa Securities and greater participation by investors as well as potentially broadening the shareholder base of the Company’s Institutions investors.”
Choo also said that the bonus issue shall increase in the Company’s issued and paid-up share capital to a level which would be more reflective of its current scale of operations and assets employed. As it stands, Vivocom is the largest Company on the ACE market with a market capitalisation of close to RM1 billion, assuming all warrants are converted.
Moreover, at present trading price levels of 25.5 sen, Vivocom shares represent great value for bargain hunters especially in view of the Bonus Issue reward just announced.
It’s noteworthy that Vivocom shareholders base has jumped from 12,255 (on 19 February) to almost 15,000 today, a confirmation that interest in the company is still strong and growing.
Obviously there are many investors out there who see tremendous value in Vivocom, indicating a high level of natural support for the share. Hence, this explains the consistently high volume and liquidity on the counter of at least 1 billion shares turnover on average monthly for the past 8 months, a feat rarely seen in Malaysian stocks.
Vivocom’s orderbook in excess of RM1.4 billion, sees itself as “Wealth Creators”
The Vivocom Group of today is a Malaysian Giant in the making with subsidiaries involved in construction, manufacturing and telecommunications. The Group’s orderbook, meanwhile, is in excess of RM1.4 billion at the time of writing – and still growing strongly.
Certainly, the five research houses covering Vivocom believe its current share price to be hugely undervalued. CIMB, MIDF, Mercury Securities, TE Research and SJ Securities continue to emphasis a “BUY ON VIVOCOM” – with target prices ranging from 59 sen to RM75 sen per share, signaling strong upside potential and capital appreciation of some 145% from the most conservative estimate for Vivocom’s fair value (which is MIDF’s at 59 sen).
Besides its ability to bag local contracts both large and small on a “Rolling Thunder” basis, Vivocom also counts China Giants such as China Railway Construction Company and the China General Nuclear Power Group as its strategic partners.
“Rome wasn’t built overnight, hence despite the share price having in the past several weeks corrected from its 37 sen high, long term shareholders have much to gain by staying invested in Vivocom,” observed Choo, adding that the recent price correction is a healthy phenomenon and represents an excellent opportunity for investors to buy as its price weakness has made the share relatively cheap compared to its peers.
“As a matter of fact, we are now in the last stage of finalising another Head of Agreement for another project worth over RM600 million in Ipoh. The HOA will be announced in due course when completed and signed. The Company’s second quarterly results to be reported and announced in the coming weeks also look very promising and would be at least as strong as the first quarter just announced. Vivocom shall continue to grow from strength to strength,” he further said.
Based on its annualised 1st quarter results, it’s worthwhile noting that Vivocom is currently only trading at less than 10 times price-earnings multiple whilst its peers with similar market capitalisation are currently trading at price-earnings multiples ranging from 14 times to 17 times.
“We pride ourselves on our pursuit of excellence in our core businesses, and we intend to be wealth creators on a sustainable basis for all our loyal shareholders in the long run,” he added.