KUALA LUMPUR: A Hong Kong listed construction and property developer is believed to be looking to take a controlling stake in fledgling construction firm Vivocom International Holdings Bhd
The plan is to use Vivocom as its vehicle to bid for large construction projects in Malaysia, sources said.
The new major shareholder is also looking to undertake a rebranding exercise, and this will involve a name change for Vivocom, said the source.
The Hong Kong listed company will take a stake at a slight discount to Vivocom’s current market price. There is also a three-year moratorium for this new shareholder, added the source.
Shares of Vivocom were among some of the actively traded stocks since last week.
It closed up 0.5 sen to 14.5 sen on volume of 34.89 million shares on Thursday. At this price, the stock is currently trading at a FY17 price earnings ratio of five times.
Vivocom has a market capitalisation of RM480.5mil comprising of some 3.31 billion shares.
Golden Oasis Resources Sdn Bhd is the single largest shareholder with a 22.85% stake followed by Ang Li Hann with a 10.29% stake.
“This Hong Kong listed company, it is looking to make inroads into Malaysia, having established itself in Hong Kong and Singapore. This company has cash of some HK$2.2bil as of June 30, 2017,” said the source.
Vivocom is a mid-sized construction company but its earnings have been on a downward trend of late.
In the second quarter to June 30, 2017, it posted net profit of RM5.72mil, sharply lower from RM21.01mil previously. Revenue dropped to RM45.94mil from RM121.57mil.
For the first half, Vivocom’s net profit fell to RM10.96mil from RM40.89mil previously. Revenue also dropped to RM86.97mil from RM263.1mil.
The lower profit for the H1 of 2017 was due to the aggressive roll-out of projects under the construction segment to clear the backlog in 2016 as compared to 2017 which had slower progress billing.
The company is completing its 10% private placement exercise, which it first announced on June 29.
It is looking to place out 435.15 million new shares to third party shareholders.
Macquarie Bank Ltd subscribed for 323 million new shares at prices ranging from 12 sen to 13 sen.