Tuesday 19 November 2013

51sen To 29sen?? R U Sure?

Instacom is the stock that RHB Research promotes heavily this year. It gave it a target price of 51sen on 30 Sep 2013, which represented a 85% upside from its share price.

After less than 2 months, the target price is pared down spectacularly to just 29sen!

RHB must have their reasons I guess.

       RHB Research 19 Sep 2013

Instacom's FY13Q3 financial results is still yet to be released, and it is widely believed to be a decent one. After 3 quarters of excellent performance, it is unlikely that the upcoming result will drop markedly.

Furthermore, Instacom has received a letter of award worth RM205mil in May. It was mentioned in Instacom announcement that it will contribute to its earning from FY2013 to FY2015.

From Budget 2014, the government will also spend and build more telecommunication towers in East Malaysia next year.

Its CEO Anne Kung has just been awarded Sarawak Entrepreneur of The Year a few days ago!

       Talk Is Cheap

Everything seems good and nicely in place, but when things start to turn to the wrong direction, we can always dig out of a lot of negatives.

Why do the executive directors dispose their warrants & shares in the company?

Why is there still no further news regarding the RM205mil award? An agreement is still needed between both parties before the work can start. Now it is already end of year 2013.

Why did its previous auditor Messrs. Chong & Co. want to resign in early October?

Why don't the directors clear the cloud when purposely contacted by RHB? Why did RHB say that the directors were unable to provide satisfactory explanations? What did the directors actually say?

Why do RHB downgrade Instacom to such an extent after hearing the directors' explanation?

I still believe that Instacom upcoming FY13Q3 result will be good. However, its long term prospect and credibility are hanging by a thread.

If current panic selling is proven to be wrong later, then it will be an opportunity to maximize profit from investing in Instacom.

But who knows? It is better to be more cautious.

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