Instacom catches investors’ eye after Neata acquisition

Instacom Group Bhd saw high volumes of trade the past two days following the acquisition of an additional 43.6 per cent stake in Neata Aluminium (Malaysia) Sdn Bhd (Neata) which raised the group’s stake in Neata to 78.6 per cent from 35 per cent.

Instacom was the third most active counter on Bursa Malaysia on Monday with more than 50 million shares traded, rising to a high of 23 sen and closing at 21.5 sen on Monday, October 12.

According to Instacom executive director Choo Seng Choon, Instacom is confident that the acquisition will be beneficial to the group given the strong track record of Neata-Vivocom with its current order book or RM247 million – with visibility up to March 2018.

“This means that, the Instacom Group will have strategically diversified into new areas and viable businesses. This exercise forms part of a longer term plan to strategically position Instacom on an even more solid and stable footing in terms of having sustainable and recurring revenue growth. With this acquisition, there will be another stream of income, thus diversifying the earnings base, which is expected to enhance shareholders’ value,” said Choo.

The acquisition of an additional 43.6 per cent stake in Neata which raises Instacom’s stake in Neata to 78.6 per cent from the group’s current 35 per cent will result in Neata being a subsidiary company of Instacom. This thus allows Instacom to consolidate the financial results of the Neata group with Instacom’s.

Neata is mainly involved in the design and fabrication of aluminium structures while its wholly-owned subsidiary, Vivocom, is engaged in civil engineering and construction. This means that Instacom will be actively and directly involved in the industries of telecommunications, manufacturing and construction.

Choo further revealed that this acquisition also comes with a profit guarantee of at least RM34 million for the forthcoming two years from Neata to Instacom.

Aside from increasing the income of the group, Choo added that the acquisition will result in the sharing of resources and know-how, and expansion of business opportunities through cross-marketing of products and services and cross-referencing of customers within the enlarged Instacom.