The establishment of new offices will be funded by 3.8% of the proceeds from the IPO
By RAHIMI YUNUS / Pic By AFIF ABD HALIM
Binasat Communications Bhd has begun negotiations with its regional partners particularly in Vietnam, Myanmar and Laos to explore new international markets.
The telecommunication network supporting services provider is currently in ongoing preliminary talks with equipment suppliers in the countries, a process that is expected to continue for the next 12 months.
“We need to strategise our position in order to penetrate the regional markets based on the needs of each country.
“Our plan is to penetrate into the very small aperture terminal (VSAT) segment first, which would then be followed by the mobile segment. We feel those countries have a very good potential to put up a VSAT system,” Binasat COO Zulamran Hamat said in a press conference after the company’s debut on the ACE Market of Bursa Malaysia yesterday.
In the pipeline for Binasat are representative offices in Vietnam and Myanmar that would be established by the third quarter of 2018 (3Q18). A similar office would also be set up in Laos by 2Q19.
The establishment of new offices will be funded by approximately 3.8% or RM1.5 million of the proceeds from the initial public offerings (IPOs).
The IPO is the first in 2018, and it witnessed Binasat’s shares opening at a 30.4% premium to 60 sen, up 14 sen from its issue price of 46 sen.
Binasat has offered 125.98 million ordinary shares with a retail tranche of 13 million shares that had oversubscribed 34.23 times.
“This first IPO of the year is off to a promising start, signalling a welcome positive note for the capital market this year.
“The oversubscription of over 34 times is a real testament to the confidence of the market. We anticipate more listing exercises in the pipeline this year,” group MD to the principal advisor for the listing exercise Kenanga Investment Bank Bhd Datuk Chay Wai Leong said.
The listing raised a total proceeds of RM39.55 million from the public issue, of which approximately 36.3% will be utilised for the setting up of a teleport, while 12.4% is for the enhancement of operations and maintenance (O&M) services capability.
Another 12.1% will be used to enhance fibre optic network installation and commissioning services capability.
“We need to expand our three business segments, which are the satellite, mobile and fibre optic first, and then increase our value by having our infrastructure such as the teleport.
“With that, we then can expand our customer base, and services that we currently offer to existing customers,” Zulamran added.
Binasat plans to build a teleport in the Klang Valley within the next two years, and increase its O&M efficiency level by employing more technical personnel and by increasing number of resources, facility and vehicles for service support.
As at October 2017, its market share for the maintenance of satellite ground stations at petrol stations in Malaysia was estimated at 57%.
In 2016, the group had an estimated 64% market share for all satellite ground stations in Malaysia.
Malaysia remains its principal market, accounting for 98.7% of the RM54.5 million total revenue for the financial year ended June 30, 2017 (FY17).
Of the company’s clients, 53.1% are telcos, 32.5% are equipment suppliers, and 4.4% are turf club operators.
Maxis Bhd and Huawei Technologies Co Ltd are two major customers which contributed 49.5% and 26.3% respectively to the group’s revenue in FY17.
The group registered a pretax profit of RM2.2 million for the 1Q ended Sept 30, 2017.
Meanwhile, Rakuten Trade Sdn Bhd has recommended a ‘Buy’ on Binasat’s stock, with a target price of 65 sen based on 13 times per FY19, as per the FTSE Bursa Malaysia KLCI Small Cap Index.
“Binasat’s gearing would reduce to 0.14 times from 0.34 times post-listing.
Revenue has been growing steadily for the past four years, at annual rate of 19.7% and is anticipated to remain robust with double-digit growth and earnings per share growth of 12.8% in FY18 and 13.6% for FY19,” Rakuten Trade head of research Kenny Yee said in a statement.
Binasat’s shares closed at 59 sen a piece, up 28.3%, or 13 sen, yesterday.