Ho Hup Construction Company Bhd

$FACBIND / 2984 (FACB INDUSTRIES INCORPORATED BERHAD)
$GENM / 4715 (GENTING MALAYSIA BERHAD)
$HOHUP / 5169 (HO HUP CONSTRUCTION COMPANY BHD)
$ANNJOO / 6556 (ANN JOO RESOURCES BERHAD)

$INSAS / 3379 (INSAS BERHAD): A Cigar Butt Opportunity or Value Trap?

1. Background
📌 Insas Berhad is an investment holding company engaged in diverse sectors including technology, property investment, project financing, stock broking, car rental, fashion retail, and food & beverages.

2. Business Segments
📌 Insas operates across five primary business segments:

(i) Stock Broking & Structured Finance
📌 Stock Broking: Holds a 60.825% stake in M&A.
📌 Structured Finance: Operates Insas Credit & Leasing, a boutique structured finance provider.

(ii) Investment
📌 Equity Holdings: Owns 14.36% of INARI, 9.96% of OMESTI, and 14.029% of HOHUP.

(iii) Technology & IT
📌 Technology Investments: Holds a 27% stake in DFX.

(iv) Manufacturing, Consumer Products & Car Rental
📌 Manufacturing: QBI Packaging manufactures ghee products and offers dry packaging services.
📌 Consumer Products: Melium Group, Malaysia's leading luxury fashion retail group, represents brands such as Aigner, Givenchy, Hackett London, Max Mara, MCM, Roger Vivier, and Tod's. It also operates in the F&B sector as a franchisee of Dome Cafe.
📌 Car Rental: Insas Pacific Rent-A-Car provides short-term and long-term car rental services and chauffeured limousine services.

(v) Property Development
📌 Property Portfolio: Insas Property manages a mix of landed and high-rise residential units, as well as shops and office spaces, aimed at generating rental income and resale.

3. Subsidiary, Associates & Investments (FY23)
📌 60.825% stake in $KLSE-M&A
📌 27% stake in $KLSE-DFX
📌 14.36% stake in $INARI / 0166 (INARI AMERTRON BERHAD)
📌 14.029% stake in $HOHUP / 5169 (HO HUP CONSTRUCTION COMPANY BHD)
📌 9.96% stake in $OMESTI / 9008 (OMESTI BERHAD), which itself holds 10.396% in HOHUP and 36.42% in $MICROLN / 0126 (MICROLINK SOLUTIONS BERHAD)

4. Financial Overview
📌 Revenue: The company recorded a revenue of RM216.84 million, reflecting a 0.2% increase compared to FY22. However, Profit After Tax (PAT) significantly decreased by 42.9%, totaling RM122.76 million.
📌 Cash Position: The company's total cash position reached a new high of RM1.05 billion, with borrowings at RM395.67 million, resulting in a net cash position of RM652.58 million.
📌 Net Cash per Share: In FY23, the net cash per share reached a new high of RM0.98.
📌 Gearing Ratio: The gearing ratio dropped to its lowest at 0.17, indicating very little debt.

5. Director's Remunerations vs Financial Performance (FY23)
📌 Director's Remunerations: Increased by 7.5% to RM15.66 million compared to FY22. Meanwhile, the company’s revenue saw a slight increase of 0.2%, and PAT decreased by 42.9%.

6. Dividend Paid
📌 Dividends: The dividend remains the same as FY22, with 2.5 sen for ordinary shares and 3.8 sen for preference shares, despite the decrease in PAT. This raises the question of why the company continues to issue preference shares despite its strong cash position.

7. Valuation
📌 Cash Position (Q3FY24)
The company has a cash position of RM1.16 billion. After deducting short-term and long-term borrowings, the net cash stands at RM926.49 million, translating to a net cash per share of RM1.24, indicating a 14.8% discount to the current share price.

📌 Book Value (Q3FY24)
Net Assets: The net assets per share are RM3.63, representing a 236% discount to the current share price.

📌 Cash & Equities
Net Cash: With a net cash position of RM926.49 million.
Equity Holdings:
INARI: Valued at RM1.88 billion.
HOHUP: Valued at RM10.54 million.
OMESTI: Valued at RM7 million.
Total Value: Combining net cash and equities, the total value is RM2.82 billion, representing a 276.9% discount to the current share price.

8. Conclusion
📌 Advantages
✅ Undervalued: Currently trading below its intrinsic value and even below its net cash position, offering investors a high margin of safety.

📌 Disadvantages
❎ One-off Cash Increase: Recent disposal of M&A equity for RM29 million may be a one-off boost to the company's cash position.
❎ Lack of Growth: The company shows limited growth prospects.
❎ Low Dividend Yield: Dividend yields are relatively low.
❎ Underperforming Equity Holdings: Holding stakes in poorly performing and some loss-making companies.
❎ Decreasing Stake in INARI: The stake in INARI has decreased significantly from 44.05% at listing to 14.36%. There is concern this trend may apply to M&A as well.
❎ Management Salaries: Increased management salaries despite poor performance.
❎ Preference Shares: Despite being cash-rich, the company continues to raise funds through the issuance of preference shares.

📌 Summary
The company needs a catalyst to boost its share price, such as privatization or increased dividends. Although it has acted like a private equity firm (e.g., pushing the listing of INARI and the RTO of M&A), it currently holds few high-performing equities or subsidiaries. To improve, the company should invest in promising businesses rather than merely holding cash. Without significant corporate action, the company is likely to continue trading below its intrinsic value.

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - LOW CHEE GROUP SDN BHD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - DATIN CHAN BEE LENG

Changes in Director's Interest (Section 219 of CA 2016) - LOW KHENG LUN

Changes in Director's Interest (Section 219 of CA 2016) - DATIN CHAN BEE LENG

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - LOW LAI YOONG

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - LOW KHENG LUN

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - DATO' LOW TUCK CHOY

$INSAS / 3379 (INSAS BERHAD): The Berkshire Hathaway of Malaysia?

When discussing INSAS, it's often overlooked, whereas $INARI / 0166 (INARI AMERTRON BERHAD) commands widespread recognition. As the largest tech entity on the Bursa Malaysia, with a market capitalization of approximately RM14.4B, INARI is a household name. Surprisingly, many are unaware that INSAS holds the majority stake in INARI.

In a previous post (https://cutt.ly/3eoPcmEQ), I touched upon the inception of $INARI / 0166 (INARI AMERTRON BERHAD) and its listing, emphasizing INSAS's pivotal role. Initially owning 44.05% of INARI, INSAS has since reduced its stake to 14.36%, yet remains the principal shareholder. Did you know that these 14.36% of INARI shares are valued at RM2.07B, a stark contrast to INSAS's market capitalization of only RM790.5M today?

Apart from INARI, INSAS holds a significant stake in $KLSE-M&A, and it facilitated the RTO of M&A, leveraging its major shareholding in SYF Resources. The listing of M&A aimed to unlock its inherent value. Additionally, INSAS has investments in diverse sectors, including tech with holdings in $KLSE-DFX and $OMESTI / 9008 (OMESTI BERHAD), as well as in the construction sector with $HOHUP / 5169 (HO HUP CONSTRUCTION COMPANY BHD).

In summary, INARI stands out as INSAS's most successful investment, with no other ventures matching its success. Investments in SYF, DFX, OMESTI, and HOHUP have not yielded the same level of success. While some liken INSAS to Malaysia's Berkshire Hathaway, I see it more as a private equity firm. INSAS plays a crucial role in unlocking the value of its subsidiaries, evident in its push for INARI and M&A Equity listings. However, the current portfolio lacks potential listings to realize further value. Could the Melium Group be the next opportunity for INSAS to unlock value?

Changes in Director's Interest (Section 219 of CA 2016) - LOW KHENG LUN

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - LOW KHENG LUN

Changes in Director's Interest (Section 219 of CA 2016) - DATIN CHAN BEE LENG

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - DATIN CHAN BEE LENG

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - LOW CHEE GROUP SDN BHD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - DATO' LOW TUCK CHOY

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - LOW LAI YOONG

General Meetings: Outcome of Meeting (Amended Announcement)

MATERIAL LITIGATIONHo Hup Construction Company Berhad ("Ho Hup" or "the Company")

Updates on Material Litigation: Notice of Adjudication Issued under the Construction Industry Payment and Adjudication Act 2012 (CIPAA) by Eko Bina Sdn Bhd (Formerly known as E&J Builders Sdn Bhd) to Golden Wave Sdn Bhd

MATERIAL LITIGATIONHO HUP CONSTRUCTION COMPANY BERHAD ("HO HUP" OR "THE COMPANY")

APPLICATION FOR JUDICIAL MANAGEMENT ORDER FOR GOLDEN WAVE SDN BHD, AN INDIRECT SUBSIDIARY OF HO HUP WHERE HO HUP HOLDS 52.5% EFFECTIVE EQUITY INTEREST

$HOHUP / 5169 (HO HUP CONSTRUCTION COMPANY BHD)

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : NON RELATED PARTY TRANSACTIONSHO HUP CONSTRUCTION COMPANY BERHAD ("HO HUP" OR "COMPANY")

PROPOSED DISPOSAL BY BUKIT JALIL DEVELOPMENT SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY, OF A PARCEL OF FREEHOLD COMMERCIAL DEVELOPMENT LAND FOR A CASH CONSIDERATION OF RM110,000,000

Annual Report & CG Report - 2023

CIRCULAR TO SHAREHOLDERS IN RELATION TO: (I)PROPOSED RENEWAL OF SHARE BUY-BACK OF UP TO TEN PERCENT (10%) OF THE TOTAL NUMBER OF ISSUED SHARES OF THE COMPANY; AND (II) PROPOSED RENEWAL OF EXISTING SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

General Meetings: Notice of Meeting

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Intention to Deal During Closed Period

NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS) : FUND RAISINGHO HUP CONSTRUCTION COMPANY BERHAD ("HO HUP" OR THE "COMPANY")

PRIVATE PLACEMENT OF UP TO 10% OF THE TOTAL ISSUED ORDINARY SHARES IN HO HUP ("PRIVATE PLACEMENT")

Change in Risk Committee - MR DANNY HOE KAM THONG