Instacom: Flat But Great

Instacom FY13Q3 Financial Result

INSTACOM	FY13Q3	FY13Q2	FY13Q1	FY12Q4
Revenue	36.4	36.3	30.2	20.0
PBT	7.7	7.6	7.0	7.0
PBT%	21.2	20.9	23.2	35.0
PAT	7.8	7.7	6.8	6.5
Total Equity	160.1	152.4	144.7	137.7
Total Assets	266.8	266.3	256.8	253.7
Work progress	27.7	27.5	29.2	34.4
T/Receivables	69.6	55.0	52.5	32.3
Inventories	4.8	4.1	3.6	3.0
FD pledged	11.3	11.0	10.4	13.5
Cash	13.5	7.6	7.3	1.4
Total Liab	106.7	113.8	112.1	115.9
T/Payables	19.6	24.3	15.8	17.4
HP Payables	2.3	2.5	1.9	2.2
LT Borrow	9.6	10.1	20.5	19.9
ST Borrow	69.0	69.7	65.2	70.1
Net CF	4.1	-1.9	-2.1	13.9
Operation	6.8	18.2	2.1	-15.9
Investment	10.9	8.3	0.8	-12.6
Financing	-9.5	-28.4	-5.1	42.4
EPS	1.11	1.09	0.97	0.99
NAS	0.23	0.22	0.21	0.34
Net D/E Ratio	0.41	0.47	0.54

Instacom posts a flat but good FY13Q3 result, with revenue, PBT & PAT almost the same compared to its preceding quarter. Its profit margin stays at above 20%.

As long as the profit does not fall, it is good enough for me.

Besides, its cash has increased while total borrowings reduce slightly, giving it a lower net debt/equity ratio of 0.41.

After nearly one month of turmoil in Instacom counter, which saw its share price fell from 35sen to 25sen, finally the cloud does settle to a certain extent. However, I still wish to know more about the RM205mil project award in mid 2013.

For the whole FY2013, Instacom's net profit may reach RM30mil, giving it an EPS of 4.27sen, or PE of only 5.9x at current share price of 25sen. Its fair value may be 43sen base on PE of 10x.

Instacom's strength is its specialty in telecommunication infrastructures field, but its weakness is lack of diversification in its business. It may have trouble if less projects are awarded to it in the future.

I think Instacom FY2014 prospect will still be good, if the government does not delay its roll-out of high-speed broadband, building more transmission towers and underwater cables.

I may start to accumulate Instacom shares, if its share price does not shoot up too much.