Analysts see Binacom as rising telco supporting services provider

KUCHING: Binasat Communications Bhd (Binacom) has been viewed as a rising telecommunication (telco) supporting services provider.

In initial public offering (IPO) report prior to its potential listing, the research arm of Public Investment Bank Bhd (PublicInvest Research) noted that Binacom is seeking a listing with an enlarged issued and paid-up share capital of 260 million shares on Bursa Malaysia’s ACE Market.

Pursuant to IPO listing, the company’s market capitalisation is RM119.6 million based on its IPO price of RM0.46.

“As the company focuses on aggressive organic growth to strengthen its presence in local telecommunications network supporting services industry, we therefore value Binacom at RM0.54 based on 11-folds financial year 2019 forecast ( FY19F) earnings per share (EPS), ascribing a 60 per cent discount to telecommunication sector’s average price earnings ratio (PER) of 27.6-folds.

“We reckon a discount is warranted given Binacom’s small market capitalization relative to its peers. The IPO is expected to raise approximately RM39.6 million from the issuance of 86 million new shares, with 64.6 per cent of its proceeds to be utilised for capital expenditure that is earmarked for future expansion, through setup of teleport and regional offices and purchase of transportation means, tools and equipment,” the research team said.

Of note, Binacom is principally engaged in the provision of supporting services for satellite, mobile and fibre optic telecommunications networks which includes installation and commissioning (I& C), and operations and maintenance (O& M) services for its customers.

Customers that it serves include all the major telcos in Malaysia, either directly or indirectly through equipment suppliers. Binacom also provides uplink and downlink services for the satellite network.

According to PublicInvest Research, some of Binacom’s growth would focus on setup of new teleport facility with satellite downlink services for video content, O&M services capability enhancement, fiber optic network I& C services capability enhancement, and regional business expansion particularly into Vietnam, Myanmar and Laos, which is still at preliminary stage.