Insas Berhad

Additional Listing Announcement /Subdivision of Shares

$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.

What contributed to the rise in $INSAS / 3379 (INSAS BERHAD)'s share price: An analysis of the performance of $INSAS / 3379 (INSAS BERHAD)'s holdings

On June 11, INSAS's share price broke its resistance level of RM1.12, reaching a high of RM1.15, and closed at RM1.13. In the following days, the price remained strong at the support level of RM1.12 until June 19, when it broke the support and closed at RM1.08. This seems like profit-taking, but what caused INSAS's share price to suddenly spike? Although the increase wasn't significant, for a company with low trading volume, it was considerable.

To understand the reason behind the sudden rise in INSAS's share price, we should examine its major subsidiaries and holdings.

Starting with its most prominent investment, $INARI / 0166 (INARI AMERTRON BERHAD). On June 11, INARI's share price was already trending upwards. However, on June 12, the price surged from RM3.51 to a high of RM3.96 and closed at RM3.80, breaking a 52-week high. Following this, there were some profit-taking activities. As long as it trades above RM3.54, there is potential to return to RM3.96. The increase in INARI's share price might be linked to the introduction of Apple Intelligence by Apple Inc.

If not INARI, what about $KLSE-M&A? M&A's performance was much worse. On June 11, its share price dropped and continued in a downtrend, showing a significant increase only on June 14. This also appeared to be followed by profit-taking actions.

Another tech stock that INSAS holds in significant quantities, even increasing its position recently, is $KLSE-DFX. DFX provides tele or data communication solutions, media advertising and vending solutions, and food technology solutions. Its share price had increased considerably, even reaching a 52-week high of RM0.24. The sudden increase on June 12, despite low trading volumes and no significant news, remains unexplained, as the company is not well-known publicly.

In conclusion, the sudden rise in INSAS's share price is likely due to movements in its subsidiaries or investment holdings, appearing to precede these movements by one trading day.

$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?

Did you know that $INARI / 0166 (INARI AMERTRON BERHAD) came into existence through the merger of Inari Berhad and Amertron Inc (Global) Limited?

Inari Berhad, initially listed on the ACE Market of Bursa Malaysia in 2011, successfully transitioned its listing to the Main Market of Bursa Malaysia in 2014. Its listing was facilitated by $INSAS / 3379 (INSAS BERHAD), which holds a 44.05% stake in the company as its associate. At the time of listing, Inari primarily operated as an Electronics Manufacturing Services (EMS) company, specializing in semiconductor packaging, encompassing back-end wafer processing, package assembly, and final testing for wireless microwave telecommunication semiconductor products.

The $INARI / 0166 (INARI AMERTRON BERHAD) we see today has evolved significantly following the acquisition of Amertron. In 2013, Inari finalized its acquisition of Opto-Electronics Manufacturer Amertron Inc (Global) Limited. The acquisition, valued at US$32 million (RM102.87 million), enabled Inari to diversify its EMS business, incorporating opto-electronics and fiber-optics products. This transformation elevated Inari from being solely a downstream manufacturer to encompassing mid and downstream operations within the semiconductor industry.

Presently, $INARI / 0166 (INARI AMERTRON BERHAD) stands as the largest tech company in Malaysia by market capitalization. Its core operations revolve around Outsourced Semiconductor Assembly and Test (OSAT) as well as EMS industries.

Top 10 Highest Net Cash per Market Cap Companies.

In times of economic uncertainty, a company's cash reserves become ever more vital. Nevertheless, simply having large cash reserves doesn't always equate to financial strength. Today, we screened for 10 stocks ranked solely by their net cash divided by market cap, with market cap of at least RM 230mil. A percentage of more than 100% implies the company has more net cash than their market cap.

Did any of your favourite companies make it into the list? It's important to remember that a cash balance surpassing market cap doesn't necessarily signify a bargain, and Stockbitors should remember to do their due diligence in evaluating the company from multiple angles before making any decisions.

How would you improve this screener? Let’s discuss more in the comment section below!

$STAR / 6084 (STAR MEDIA GROUP BERHAD) $DUTALND / 3948 (DUTALAND BERHAD) $INSAS / 3379 (INSAS BERHAD) $MAYBULK / 5077 (MALAYSIAN BULK CARRIERS BERHAD) $KLUANG / 2453 (KLUANG RUBBER COMPANY (MALAYA) BERHAD)

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

OTHERSRENAME OF RISK MANAGEMENT COMMITTEE TO SUSTAINABILITY AND RISK MANAGEMENT COMMITTEE

Changes in Director's Interest (Section 219 of CA 2016) - DATO' WONG GIAN KUI

Additional Listing Announcement /Subdivision of Shares

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

PROVISION OF FINANCIAL ASSISTANCE

Additional Listing Announcement /Subdivision of Shares

WINDING UP / RECEIVER & MANAGER / RESTRAINING ORDER / SPECIAL ADMINISTRATORINSAS BERHAD
- Members' Voluntary Winding-Up of a dormant subsidiary

Additional Listing Announcement /Subdivision of Shares

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

Titan Weekend Chart Reviews

$INSAS / 3379 (INSAS BERHAD)

Had been retracing over the past week here since breaking out towards the RM 1.35 regions, forming a support around the RM 1.12+ levels.

For now seems to be holding quite well above this region here and if able to hold, could breakout from its RM 1.18+ immediate downtrend resistance soon for an uptrend continuation pattern.

Support: RM 1.12, RM 1.10 areas
Resistance: RM 1.18, RM 1.20, RM 1.25, RM 1.30 areas

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

PROVISION OF FINANCIAL ASSISTANCE

@portoftheyear
$INSAS / 3379 (INSAS BERHAD) -20%
$3A / 0012 (THREE-A RESOURCES BERHAD) - 20%
$TGUAN / 7034 (THONG GUAN INDUSTRIES BERHAD) - 20%
$ABLEGLOB / 7167 (ABLE GLOBAL BERHAD) - 20%
$PWROOT / 7237 (POWER ROOT BERHAD) -20%

INSAS - Notice of Book Closure

Interim Dividend

General Meetings: Outcome of Meeting

OTHERSInsas Berhad
- Interim Dividend

Quarterly rpt on consolidated results for the financial period ended 30/09/2023

Annual Report & CG Report - 2023

General Meetings: Notice of Meeting

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

PROVISION OF FINANCIAL ASSISTANCE

OTHERSINSAS BERHAD ("INSAS" OR "THE COMPANY")
- PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES