OPCOM (0035): RM82million variation order from TM Berhad: Review

Recently, OPCOM announces that it has secured RM82million variation order from TM Berhad which is expiring on 19 April 2013. In other words, the period of this contract is around four quarters or approximate to one year.

Based on previous four consecutive quarters' revenues and profits:
2011 Q3: R = RM33M,   PAT=RM4.4M, EPS = 3.42sen
2011 Q2: R = RM22.6M PAT=RM3.8M, EPS = 2.92sen
2011 Q1: R = RM33M    PAT=RM5.4M, EPS = 4.21sen
2010 Q4: R = RM34.2M PAT=RM4.8M, EPS = 3.73sen

(note: R = revenue, PAT = Profits after Tax, EPS = Earning per share, Q = quarter;)

If we simply divide the amount of this variation order by four, we get around RM20million per quarter. As you can see, this extra 20M revenue per quarter can have a quite huge positive influence toward the profits of OPCOM in next 12 months or four quarters.

Previously, OPCOM has extended its RM359 million with total period of around four years (2 + 2 (extend)), that is, from April 2009 to April 2013. Now, let's review the total revenues of OPCOM in last few years as follows:

2011: 88.7M (total 3 quarters only)
2010: 136M
2009: 121M
----------------------- (before awarded the 359million contract from TM)
2008: 62.8M
2007: 55M

As you can see, TM contract doubles the revenue of OPCOM after the fiscal year 2008. If we assume that the revenues from other parties besides TM are remained, say 60M per year, it looks like only around 180 million from the 359million of the contact is done so far. 

On the other hand, if we assume that all of the revenue from 2009 to now is from the contract with total of RM345.7million, compared to the amount of contract of RM359 million, this variation order will not bring any great positive surprise compared to the first assumption.

Anyway, as a long term investors, let's us wait and see the impact of this variation order in the quarter end September 2012. (Note: the coming and the next coming quarter reports will not show the effect of this variation order. We should refer to the quarter report end of September 2012, which will be announced in Dec 2012)

That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage.

Written by: Xaivier Chia

Related announce from Bursa Malaysia website:
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Description	:	Variation Order to the Contract from Telekom Malaysia Berhad
Announcement Details/Table Section : Introduction On 22 April 2009, the Board of Directors of Opcom Holdings Berhad ("Opcom" or "the Company") announced the Letter of Award of RM359 million received by a subsidiary of the Company, Opcom Cables Sdn. Bhd. ("OCSB") from Telekom Malaysia Berhad ("Telekom") for the Supply, Delivery, Training and Support Services of Passive FTTH System ("Contract"). Subsequently, the Company announced the two (2) years extension of the Contract from 20 April 2011 to 19 April 2013 on 23 May 2011. The Board of Directors of Opcom wishes to announce that OCSB has signed a RM82 million variation order to the Contract with Telekom on 2 May 2012 ("Variation Order"). Financial Effects The Variation Order is expected to contribute positively towards Opcom's group earnings and net assets for the remaining period of the Contract which is expiring on 19 April 2013. Risks The risk factors which may affect the Variation Order include but not limited to ordinary business risks, competition risks, operation risks, economic risks and regulatory risks. Directors' and Substantial Shareholders' Interest None of the directors and substantial shareholders of the Company and/or its subsidiaries or any person connected to them has any interest, direct or indirect, in the Variation Order. This announcement is dated 2 May 2012.

" From BursaMalaysia.com


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Date Announced

:

23/05/2011

Description	:	Variation Order to the Contract from Telekom Malaysia Berhad
Announcement Details/Table Section : Introduction On 22 April 2009, the Board of Directors of Opcom Holdings Berhad ("Opcom" or "the Company") announced the Letter of Award of RM359 million received by a subsidiary of the Company, Opcom Cables Sdn. Bhd. ("OCSB") from Telekom Malaysia Berhad ("Telekom") for the Supply, Delivery, Training and Support Services of Passive FTTH System ("Contract"). The Board of Directors of Opcom wishes to announce that OCSB has on 23 May 2011 signed a Variation Order to the Contract with Telekom ("Variation Order"). Telekom has extended the Contract by a further period of two (2) years from 20 April 2011 until 19 April 2013 through the signing of the Variation Order. The Contract value remains unchanged. Financial Effects The Variation Order is expected to contribute positively towards Opcom's group earnings and net assets for the period of the Variation Order. Directors' and Substantial Shareholders' Interest None of the directors and substantial shareholders of the Company and/or its subsidiaries or any person connected to them has any interest, direct or indirect, in the Variation Order. This announcement is dated 23 May 2011.

"
"

Date Announced

:

22/04/2009

Subject	:	Letter of Award for the Supply, Delivery, Training and Support Services of Passive FTTH System to Telekom Malaysia Berhad
Contents	:	Introduction The Board of Directors of Opcom Holdings Berhad ("the Company") wishes to announce that its subsidiary, Opcom Cables Sdn Bhd has on 21st April 2009 received a Letter of Award amounting to RM359 million from Telekom Malaysia Berhad ("Telekom") for the supply, delivery, training and support services of Passive FTTH System to Telekom for a period of two (2) years ("Award"). Financial Effects The Award is expected to contribute positively towards the Group's earnings and the net tangible assets for the period of the Award. Directors' and Substantial Shareholders' Interest None the directors and substantial shareholders of the Company and/or its subsidiaries or any persons connected to them has any interest, direct or indirect in the Award. This announcement is dated 22nd April 2009

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