ANOTHER PERSPECTIVE

Insas OWNS Inari Amertron and the Carrying Book Value is at RM565million even though the share price value it at RM1,671million with UNREALISE GAINS RM1,106 million

Insas Balance sheet is UNDERVALUED as accountants don’t care about share market prices.

Thus, for Insas to say it has BV of RM2,467million but has HIDDEN GEMS with UNREALISED PROFITS ie haven’t sell Inari and others.

Smart for Insas to sell and realised some profits while looking for other opportunities. Still a lot to go for Inari because Semiconductors are growing at >20% per annum to 2030 (see my earlier posting)

The whole of Insas will be worth
30 Sept 2023 Net Assets RM2,467.08 MILLION

Add Profits on disposal Inari RM1,106million

Total RM3,573.08MILLION

Or NTA per share = RM5.15 per share.


Now, can you understand why experts believe that Insas is worth at least RM6/shares?

A lot of hidden gems in Insas Balance sheet with UNREALISED profits.

This means you

Debit Bank/ Cash RM1,671million
Credit Associate investment RM 565 million
Credit Profits on sale of asset RM1,106. million

Insas Profits will shoot past RM1BILLION for REALISING profits on Inari holdings.

What if Insas wants to sell all 528.5mil shares of associate Inari which now BV is at RM565million? Sell the shares in Bursa.

There are many buyers offering to buy Inari at RM3.18/share as at 31 Jan. 2024

The sale consideration is RM3.18 x 528.5mil shares = RM1,671million of cash receipts.

Insas will receive cash RM1,671million in its Balance Sheet.

Why Equity Prices (EQ) is different from Book value (BV)?

EQ means the current trading share prices in Bursa which fluctuate day to day

BV means the carrying value of ACTUAL valuation of Insas Associate company Inari comprising of Plant, Properties and Machineries.

Think of BV as the your house you purchased 10 years ago and EQ is the price you can sell today.

On 30 Sept 2023, Insas book value of Associate company reflected in Balance Sheet with approx 538.5mil shares is at RM576million.

on 24 Jan, 2024, Insas Sold 10mil shares to bring reduced balance at 528.5mil shares which means that the BV is RM565million.

Accounting principles doesn’t care if the EQ value as they follow the valuation based on BV.

I sincerely wish you have Good Profitable year , Messrs LammPah. Keep the good questions coming in. I always believed, no such thing as st&p)d questions because I asked a lot in class. Gambateh 😁

LammPah - made valid point. But Corporate Governance is key to expand company by managing investors confidence.

LammPah

Skin in the game (Naseem Taleb) meaning that will the managers gain and lose together with shareholders?

DS Thong owns on paper almost 33% of Insas which means at RM1.20, his worth is RM239million.

Will he not benefit the most when the share price goes to RM12.00 which means his Insas is now worth RM2,390 million?

Will you not want your share price to go up as you BENEFIT the most? SKin in the Game!

That is why YTL P , Sunway, IOI Group founders are happily adding value - profits, wealth to the listed businesses as they benefit the most.

DS Thong is suppose to be MULTI BILLIONAIRE, just that the market has discover him yet just like days BEFORE they found YTL P, Inari, OSK , Sunway and more

Someone in here will let you know during the Gloves Euphoria, the forum chats are explosive that runs to the thousands per day.
Now our chat here is paltry peanut 100+. The euphoria hasn’t come in yet. If it does, usually shares overshoot to RM60 (Leno, 2024) ? If it does, good and well for all of us.

In my humble opinion, when should we sell ? You can see my earlier posting.

But i learn from Warren Buy and quickly Sell Tesco (UK) for financial irregularities. He says, if you see a corkcroach in the kitchen, you know the other family members are lurking somewhere.

SSLEE already made fantastic kill on Insas assuming your costs is 60sen in 2020 (which was at 40 sen low), after 5 years, you sold at RM1.30, that is 116% over 5 years or 23% appreciation in wealth. Far superior than Maybank offering at 7% dividends but share price appreciated only 31% over 5 years or 6% pa.

If DS Thong is indeed the Warren of Malaysia, i am delighted to let him manage the fund and buy more businesses. It only increase values for Insas BHD.

I really hope he communicates with us more on how he identifies businesses and locks in gains in his Annual Report. Just like Warren does.

Smart way to attract potential sellers.

In 1974, Warren wrote in his Annual Letter that he is willing to buy any businesses with wonderful management, Net profits US$10million pa and easy to understand business.

Smart way to advertise, we are buying.

Howard Marks told a story of a student who was with his professor walking on London back street and said, “PRofessor, i saw a ten quid on the road.”

THe learned professor replied, “ if there is ten quid on the road, the probability is someone else will already taken it. If that is the case, there is no ten quid.”

The student turned back and pick up the money and promptly went to the eatery and got himself a beer.

Let us hope more guys think the market is an EMH

Lammpah is realistic in “Show me the money.” The beautiful thing is that Universities teach the the Theory of Efficient Market Hypothesis meaning you cannot beat the market as everybody already has the same information as you.

Why then we have Investor-Grandmasters that keep beating the market like Warren B, Peter Lynch, Howard Marks and the list goes on?

You can calculate how much Qtr 12/2023 Insas profits after they sold Inari and M&A PLUS marked to market the balance shares still in hand.

That i leave to experts in this forum to calculate.

Qtr 09/2023 has RM3.56 NTA but with shares at RM1.21, which is 67% discount to NTA.

HOw would you like to buy a shop house worth RM3.56million for RM1.21milion that generates average income RM0.2million every year. The tenants who rents your shop house are Tier 1 tenants like Huawei. No brainer decision.

Now the market is completely mispriced it.

Disclosure: I happily own part of Insas and Insas WC businesses and may continue to accumulate in next 72 hours.

Admire LENO for such successful long term hold of INSAS. Wish i found this earlier. But hey. Better late than never when INSAS is trading at 68% discount to its NTA

SSLEE is indeed insightful. Curious about the information source though that INSAS is looking to invest in some businesses. What are they? How much they investing?

market will go euphoric

Golden Question:

What will Insas earnings be like in next 5 years?

OF course, its track record is not determining the future but as Mark Twain says

"History may not repeat itself, but it often rhymes."

Probably shrewd to exit INSAS WC but it has 2 years expiry in running. Gearing of Insas : Insas WC is 1 : 2.9 - meaning for every RM1.00 upwards of Insas , Insas WC moves RM2.90, almost 300% increase.

Insas in 2024 is different Conglomerate Giant compared to 2021 as it is much more valuable having increased shareholders’ value over RM575,000,000.

I don’t know what the stocks price will be tomorrow. But if your business is keep increasing in value by 30% in Net Tangible Asset, and that the share price rose by 34% from say 90sen to now RM1.21, one is really selling at the price same as 2021 ie in proportions to its NTA value.

Caveat Emptor

Why Insas Business Division - M&A Price increased in share price last 26 Jan 2024?

Malaysian economy comprise of 98% small to Mid size (SMI) companies. Thus the ACE listing to raise capital is crucial for their expansion.

M&A, another pillar of business that Insas owns, is a major platform to assist such firms for ACE/LEAP listing.

2023 marked increased listing IPO which saw RM3,315 million value created on Bursa Exchange over 2022. M&A has been instrumental to many such IPOs.

With huge institutional investors appetite for listing, 2024 is expected to have record growth. This is Good news to M&A and definitely another piston firing up well for Insas.

Disclosure: I own Insas & WC and may continue to accumulate shares in next 72 hours of trading days.

Source: Asila Jalil (2023), BUSINESS TIMES, Dominant ACE Market as 21 companies listed from January to October, Article dated: November 16, 2023

Reposted: RISING TIDE LIFTS ALL BOATS TO 2028

semiconductors , DESIGN Chips and nano technology expected to Grow BY 20% per year.

Malaysia semiconductor producers are among the TOP 10 in the world. EXPECT More demand translating to stronger investments, revenues and profits.

Source :


IDC (2023) , The Semiconductor Market Will Recover in 2024 With an Annual Growth Rate of 20%, Says IDC, 21 Dec 2023.

Three Reasons you MUST Sell a stock:

1. When you found another but MORE ATTRACTIVE business. Eg. PE R of current stock is 3x but you found another at 2x.
2. WHen the economic ffundamentals have changed permanently. Eg. People read internet news and much less on Newspapers.

3. YOu are required by Regulations to sell down. Eg. Malaysian equities will not allow any individual to hold >75% equity of shares with poor spread amongs other shareholders.

Source: Roger Lowenstein (1995), Harvard Business Review, Warren Buffett: The Making of an American Capitalist, New York: Random House

Three reasons you SHOULDN’T Sell (Warren BUffett)
1. Just because teh price goes up.
2. To cut your losses
3. The price is flat.

Why?

The market doesn’t care what price you bought. It hasn’t got any feelings for you or me.

RISING TIDE LIFTS ALL BOATS TO 2028

semiconductors , DESIGN Chips and nano technology expected to Grow BY 20% per year.

Malaysia semiconductor producers are among the TOP 10 in the world. EXPECT More demand translating to stronger investments, revenues and profits.

Source :


IDC (2023) , The Semiconductor Market Will Recover in 2024 With an Annual Growth Rate of 20%, Says IDC, 21 Dec 2023.

MPI Is The oldest listed semiconductor maker in Bursa and rose 40 Sen to RM29.70.

Top 40 USA chips maker recorded gains in revenues and share prices.

world leaders ASML chip machines maker rose to 15 year high. The beginning of bull rise for semi conductor stocks.

Inari is just a droplet from the bucket. What if it too received increased major orders from China? USA? Germany?

When the stocks doubled by R 12 billion, imagine what happens to Insas stock? INSAS OWNS almost 15% inari. A cool RM1.8billion added valuation.

Some held Insas for years. Now is the reward time.

Why not ride the stock all the way up?

Source :
Max Juang (2024) , Q3 Earnings Roundup: Western Digital (NASDAQ:WDC) And The Rest Of The Semiconductors Segment.
Article dated January 23, 2024

MPI Is The oldest listed semiconductor maker in Bursa and rose 40 Sen to RM29.70.

Top 40 USA chips maker recorded gains in revenues and share prices.

world leaders ASML chip machines maker rose to 15 year high. The beginning of semi conductor stocks.

Inari is just a droplet from the bucket. What if it too received increased major orders from China? USA? Germany?

When the stocks doubled by R 12 billion, imagine what happens to Insas stock? INSAS OWNS almost 15% inari. A cool RM1.5billion added valuation.

Source :
Max Juang (2024) , Q3 Earnings Roundup: Western Digital (NASDAQ:WDC) And The Rest Of The Semiconductors Segment.
Article dated January 23, 2024

SS Lee, if you found out Jim Simon’s secret formula, I will be so delighted to Yam Cha with you. haha.

You are very analytical and love your arguments backed by facts. Superb, bro.

Jim Simon is Multi Billionaire. He gave away too much back to society. Still superb wealthy

Always there is an exception. A scientist specialised in Math is Jim Simons. He is the MOST Successful hedge fund manager in history that even Warren Buffett acknowledged.

Find his interviews on Youtube but warning, he won’t tell his secret Math Formula..

General statements like Reversion to Mean

Medic doctors are science students

Incidentally, research shows that Medical Doctors are the worse stock pickers on average.

SS Lee ,

This is powerful statement that I agree.

"Markets can stay irrational longer than you can stay solvent.”

Thus, please as far as possible, avoid margin financing ie borrow using your shares as collaterals.

Anyone can be a stock picker, need not be good in business. But you need to be good entrepreneur, if you want to be a stock picker. (Warren Buffett)

SSLee is right, Stocks are businesses - an art not a science.

Now, we reverse it.

Someone is selling THEIR business for RM1.23 for their business which includes RM1.34 cash included in total assets RM3.56. A 65% discount. why would that seller offer such ridiculous asking price? Well, maybe the thought that last time was 0.80 sen, I didn’t sell, now it is RM1.23, I better sell. Or maybe need the fund for marriage, education, buy a home...many reasons.

Are you interested to buy before other buyers realise the almost 70% discounted price to business assets?

Insas has Net assets increased from 2018 to 2023 from Net RM1,656 million to RM2,467million. That is 49% increase or 10% per annum increase.

Why will you sell Insas , the cash generating machine? What is the probability of assets value improving in 2025 and beyond?

Note: Caveat Emptor

Disclosure: I own Insas and INsas WC with intention to accumulate in near future.

WILL YOU SELL?

Someone offers to buy your business in 2018. The buyer offers you for RM0.80 for every RM2.49 assets you have in business. You replied this is ridiculous!

You held on it 2024. Now the buyer is offering you RM1.27 for your entire business which is now worth RM3.56. During the 5 years, your business DOUBLED cash reserves to RM1.34 included in the RM3.56 total net assets.

Will you sell your PROFITABLE business for at deep discount? You may say the offer price has increased but so did your business assets. Shouldn’t I Sell my business for PREMIUM of say 1.3times, thus the price should be RM4.6 for every RM3.56 assets I own?

Where can you find (except Banks & Insurance) to find a company with Cash per share at RM1.35, now it is trading at RM1.33 per share.

It is like you buy a X90 Proton RM115,000 but the Boot has a luggage of (clean) cash RM117,000. How many such cars you want to buy?

We haven’t even talk about other Crown Jewels asset that Insas owns.

Thong is indeed a shrewd businessman.

For years, I don’t see Top 30 Shareholders consist of Institutional funds until 2023.

Do you think the institutional fund will stop buying? The volume traded a day is not indicative of their presence as there are many short term traders. But the price forming base at RM1.12-RM1.30 definitely tells us the demand is there.

But how can one resist a stock fair valuation at 1.3x to Book value at 4.33 when the stock is 70% discount. Very rare opportunity.

The Elephant is the room is that Insas hinged 50% of its value on Inari. There are other baby Elephants such as M&A which is leader in ACE listing exercise. Tan Choon Peow, the ship captain, is competent with his coming to 30 years experience.

When Bursa rises, more companies go for listing especially ACE. With Malaysia economy growing at 4%-4.5% per annum, in 10 years, if you place your investment right, your stocks will be a multi-bagger.

Perfect Storm that ALL Insas 4 major businesses fires up, then sky is the limit.

Disclosure: I own Insas and Insas WC stocks and may continue to accumulate.

Money to be made is not in buying and selling but in waiting (for right price). (Charlie Munger)

Congratulations to all here who made both realised and paper profits.

We are all here to find good investments. I welcome constructive critiques on Insas weaknesses so to avoid Confirmation Bias.

Source: Intan Farhana Zainul / The Edge Malaysia (2024), Will early party on Bursa fuelled by foreign buying last?, Date: 22 Jan 2024

When it happens? I don’t know. Just that who can stand it when they see a home selling for RM850,000 but comes with house AND gold bars worth RM2.47million? that is buying the house at 67% discount!

Let me clarify :

Insas market cap is RM894million but have assets worth RM2,567million. share price is 67% discount to actual assets marked to market meaning at CURRENT market prices.

Stay alert, we must. Foreign funds are coming back in. Foreign ownership in Bursa including Carlberg, BAT, Heineken, Nestle are at 10 year low at 17% vs 27% (2014)

Bursa PE Ratio on average is 14.9x making it among the cheapest in South East Asia.

You benchmark to Insas projected PE Ratio at 7.8x (2024) , isn’t that a huge deep discount?

Remember, Insas is a conglomerate 150% larger than Blue Chip MBMR (king of Economy cars) in asset valuation

Yet, Insas is valued at RM894million whereas MBMR is valued at RM1,680 million. Remember, Insas assets is worth MORE than MBMR and sells at a deep discount.

It is like buying a Bungalow for a price of 1-storey Terrace house in the same neighbourhood like damansara, Petaling Jaya

if you know your business you own has large MOATS meaning rivals find it tough to imitate you due to your scale, expertise, costs advantages - why would you sell it for small profit margins?

Food for thought.

Disclaimer: Caveat Emptor. please do your research before investing.

Disclosure: Insas and Insas WC is my biggest portfolio holdings as todate and may continue to increase buying in next 72 hours.

Sources:
Adam Levy, 2023, Motley Fool, Semiconductors Could Be a $1 Trillion Opportunity by 2030 -- 3 Stocks You Can Buy to Take Advantage

Sources: MarketsandMarkets, 2023, Global Semiconductor Industry Outlook worth $616.5 billion by 2024 – Exclusive Report by MarketsandMarkets™, https://themalaysianreserve.com/2023/12/13/global-semiconductor-industry-outlook-worth-616-5-billion-by-2024-exclusive-report-by-marketsandmarkets/#:~:text=The%20global%20semiconductor%20market%20will,surge%20in%20overall%20market%20valuation.

Malaysia semiconductor players cornered 13% of WORLD market worth US$616 BILLION or RM2,895 BILLION which is RM376.4BILLION

By 2030, the Semiconductor industry is expected US$1 TRILLION (RM4.7 TRILLION) in which Malaysia semiconductors expected to corner 15% or US$150BILLION (RM705 BILLION)

That is increase of RM329 BILLION or 88% increase over 7 years or 26% simple average per year!!

Why not hold on to such World Leading Companies?

When it happens? I don’t know. Just that who can stand it when they see a home selling for RM850,000 but comes with house AND gold bars worth RM2.47million? that is buying the house at 67% discount!

Remember, Insas is a conglomerate 150% larger than Blue Chip MBMR (king of Economy cars) in asset valuation

For information, there is another forum who saying BYE BYE to those who sold Insas too early. Something is brewing. The moment EPF start investing, the stocks will shoot to the sky.

We see YTL Power increased in valuation RM26 BILLION to current valuation RM31BILLION in about 12 months. That is the power of Institutional investors including Tabung Haji, PNB and LTAT.

Why worried about Insas retreating? Isn’t that opportunity to buy.

Risks: Fall back to 90sen, falls 40sen
Rewards: Shoot to RM4.63 with PTBV at 1.3x. super reasonable compared to MPI at 2.8TIMES!! increase 3.33

Your downside is 40sen with upside RM3.33. Ratio of 1:8 vs downside:upside

according to AUDREY DERMAWAN (2023), Malaysia world market share of Semiconductor stands at 13%. this is projected to increase to 15% by 2030.

Bright future because we have good universities producing engineers, infrastructure, favourable energy costs relative to Singapore and (debatable) stable government pro-investment policies.

Inari is the largest semiconductor producer in the country listed in Bursa and stands to gain.

Brighter future.

Invest in Insas for exposure to Inari.

Disclosure: I own Inari and Inari WC and may continue to accumulate in next 3 days.