Public Mutual holds 7.32% and Samarang LLP holds 5.05% in Daibochi.

These two funds are key to blocking the mandatory takeover by Scientex at such an unfair price.

Minority shareholders like us can only hope Scientex does not get acceptance of over 60m shares in Daiboci in these 21 days of offer period for Scientex to increase its stakes to 90% and delist Daibochi.

Only if Scientex gets acceptance to increase its stakes in Daibochi above 90% then only Scientex can delist Daibochi, otherwise it has to maintain its listing status though holding over 75% stakes.

If scientex gets acceptance to increase its stakes in Daibochi to over 97.2% then it can compulsorily force all remaining minority shareholders of Daibochi to sell all shares to it.

The offer is not fair but reasonable.

Why cannot fight? Why do we have to accept the offer if not fair?

Daibochi is the largest flexible plastic packaging company in Malaysia for the F&B industry and has expanded business to Australia and Myanmar. Its earnings are at the edge of flying off after spending over RM50m capex to expand capacity by 60% in past one year. Scientex knows it very well that Daibochi has tremendous potential to scale new highs in new market reach and earnings base, hence the offer to increase its stakes from 61%. Scientex is trying to reap all the benefits of exponential earnings growth of Daibochi by taking it private, as it is eyeing all the projected free cash flows of over RM130m a year from Daibochi by spending RM345m to take it private, getting back all its money within 2.5 years.

should not sell even at RM3.00 to Scientex and don't let Scientex to get over 90% stakes. Hold on for higher offer price above RM3.00 or stay on to reap long term benefits from this great company. In time, it should trade up to CIMB's target price of RM3.83.

This round to RM1.00 easily!!

The offer price of RM2.70 is too low for Daibochi minority shareholders to accept, but it is a bargain price to Scientex to raise its stakes in Daibochi.

Offer price should be raised to at least RM3.30 - 3.50 to get more shares in Daibochi to get to 90% stakes.

Scientex got a controlling stake in Daibochi at rock bottom price of RM1.60 in 2019. Now 2 years on, it is trying to sapu all remaining shares at another bargain price of RM2.70.

The fact that Scientex is willing to offer 68% higher price than its original take over price in just 2 years clearly shows that Scientex sees great value and potential of Daibochi.

But it should offer a price with at least 50% premium to 5-day average market price or RM3.30 per share for Daibochi and RM0.80 per wb to show its sincerity, like what KLK offered to buy over IJM Plantation.

Daibochi is at the tail end of its expansion program to increase capacity by 60%. If it manages to secure enough customers for 80% of the additional capacity, its earnings will increase by 50% within 2 years to 25 sen per share. Operational cash flows will be even stronger at close to 40 sen per share. It would be able to declare dividends up to 25 sen per share every year.

For a dividend yield of 7%, Daibochi should trade above RM3.50.
For a dividend yield of 5%, Daibochi should be worth RM5.00!!

Scientex's offer of RM2.70 per share is way too low. I do not expect many minorities shareholders of Daibochi will accept it.

Samchem has gone past accumulation phase in the past 2 weeks since 19th August with close to 100m shares traded. Some funds or parties have accumulated around 50-60m shares of over 10% stakes just in past 2 weeks. Its share price will fly off from now on.

I think it may test 0.90 with volume around 10m, no need 25m like on 19th Aug, as more investors find it undervalued and will not sell below 0.90.

The reported loss after tax was due to a large deferred taxation item recognised for UK Wessex for the increased corporate tax rate to be effective from 2023. The actual cash tax paid was around RM65m only. In fact, the operational cash flows for the financial year was so strong that YTLPower was able to give out total 4.5 sen of dividends. Once the capex for the new Jordan power plant is over by end of this year, YTLPower will have over RM1.3 billion of free cash flows a year or over 15 sen per share for debt repayment or dividends for the next 15-20 years.

It is hard for Insas share price to stand above RM1.00 unless it can consistently declare dividends of 5.0 sen or above every year. Actually the company can just distribute out the dividends it receives from Inari, which may be more than 5 sen per share of Insas.

If the company chooses to just give out 1 or 2 sen dividend only, then minorities shareholders are not getting any much reward in holding on the share. It will be a value trap forever with the cash it receives being channeled to other subsidiary companies like M&A, Omesti or even Ho Hup as working capitals. Worse still would be when Insas cash is used to bail out other ailing companies owned by major shareholders or associates.

Instead of rewarding shareholders with more dividends, the company even got more money from minority shareholders by issuing the preference shares PA and will get more money when minority shareholders convert their warrants WC to ordinary shares over next 5 years. What is the point of holding onto this stock without much tangible benefit?

Genting will have over RM7.0 billion of operating cash flows per year once things get normalised from 2022. As major capex for Las Vegas and Genting Highlands outdoor themed park is over, and the likelihood of getting Yokohama IR licence has diminished, so the capex for Genting going forward will drop significantly to below RM1.5 billion. Assuming it will pare down debts by RM1.5-1.8 billion every year, it will still have close to RM4.0 billion of free cash flows or over RM1.00 per share every year. Things are looking up for Genting and its share price will likely go up back to its glory days of RM9.00-10.00 level in 2 years.

Nice closing for Samchem today, same for DKSH, Media, Ambank and MHB.

MHB is also cash rich but temporarily set back by operational disruption. Its earnings and cash flows will catch up once its heavy engineering division starts to execute its secured contracts smoothly.

You are probably right. I am sure Johari will find other ways of distributing out the cash in the company which will increase by 12-15 sen every year.


Posted by LuckyStorm > Sep 3, 2021 3:52 PM | Report Abuse

Media prima is not possible to declare dividend until they proposed capital reduction.
Accumulated losses around 900m in their balance sheet.
Share capital is 1500m, if proposed capital reduction of 70% of share capital will eliminate their accumulated losses and also won’t fall into PN17.
Correct me if i am wrong. Thanks

Buying back corporate office building is to save rental costs of RM7-8 million a year. Operating cash flows will be increased by the same amount after the acquisition.

Anyway this vaccine distribution is just extra income to DKSH in this year and next. From its existing businesses, DKSH may already get about RM160-200m free cash flows or over RM1.00 per share a year. Assuming dividend payouts of 50% of free cash flows or 80% of net profit, that would be 50 sen dividend steadily every year.

For a 7.0% dividend yield, this stock should trade at RM7.00.
For a 5.0% dividend yield, it should trade at RM10.00.

Typically DKSH would try to get a gross margin of around 7% from distribution. Assuming a cost of RM150 per dose of CanSino vaccine, the company may get a gross margin of RM10.50 from distributing 1 dose of vaccine. For 1 million dose, the gross margin would be over RM10 million.

There is a possibility for Media to declare an interim dividend in next few weeks but it will be more likely so at Q4 announcement. The company needs to complete the buy back of its corporate office building in Bangsar first.

Short term share price fluctuations are unavoidable. Not many investors appreciate the value and potential of Samchem yet as no research house covers this stock. By the time Samchem shows its ability to use strong operating cash flows to reduce borrowings by RM50m or more in next quarter, its share price will fly and you cannot catch it below RM1.00 anymore, like in the case of DKSH.

In the case of DKSH which is a big distributor of F&B products, it carried huge borrowings totalled RM567m in early this year with cash only RM50m. But within half a year, its operating cash flow was so strong that it could utilise it to pare down RM101m of debts to RM466m. It would be able to pay off all borrowings within 3 years. Same goes for Samchem with annual free cash flows of over RM100m that may be used to pay off all debts within 3 years.

You can never go wrong picking up stocks with strong cash flows, not only looking at accounting profits. You can check my recent comments on Media Prima, Ambank and DKSH, all have surged up after good quarterly results that confirmed strong operating cash flows.

Samchem is a big distributor of hundreds of industrial chemicals. There are times when the company sees opportunities to build up inventory stocks at bargain prices, it will load up by taking up short term borrowings. Otherwise, there is always time difference in collection from customers and payments made to suppliers, especially when the company revenue was up by 65%. It will need to draw down money from working capital facilities.

Short term borrowing increased by RM86m due to working capital changes, not a bad issue lah. The important thing is that operational cash flows before working capital changes were very strong at RM69.6m for 1H. As a result, cash balance increased by RM64m.

PER just 5.7x. Annual free cash flows close to 20 sen per share. After listing of its Vietnamese subsidiary company, easily another RM300 million will add into its cash coffer.

This is only the first day of strong rebound. Media is still extremely cheap with nett cash of 18 sen and annual free cash flows of 15 sen. When it starts declaring dividends possibly at Q4 this year, this stock will be over 80 sen.

Cheapest bank stock in terms of PER or price to book value. The worst is over, Ambank trading near year low will catch up with other bank stocks like CIMB or RHB which are trading near year high.

Overbought. will correct soon

Unbelievably cheap for the most profitable chemicals company in Bursa with PER of 5.5x and free cash flows of 20 sen per year

Excellent quarterly results!! This is a cash cow company with half year operational cash flows of RM98 million. It is already in nett cash position, just imagine how much cash this company will have with free cash flows of 15 sen every year!!

Superb results with half year free cash flows of RM100 million which was used to reduce debts. In 2 years, this company will be debt free and annual free cash flows shall be over RM160 million or RM1.00 per share!!!

Dividend 20 sen then share price should be close to RM4.00

Correct. High NTA is just a paper figure. Minority shareholders are not getting any good reward in holding this stock, just a petty 2-3 sen dividend per year. Even if Inari continues to distribute the bulk of its earnings as dividends, Insas will use such dividend money on other businesses or just keep in the company. Share price will not move past 90 sen if there is no consistent higher dividend above 5.0 sen or a corporate exercise that rewards minority shareholders.

JAG's average cost of purchase for his 222m shares of Media should be around RM0.38-0.42. He may be looking at ways to increase stakes below RM0.45.

Morgan Stanley started selling from 12 April where prices were around 0.65 and the last date it announced to have sold Media shares was 1st June when the lowest price was 0.52.

Thereafter, there has been over 20m shares traded. Who was selling? and why pushing down the share price so hard?

We shall know very soon.

Nett cash of almost 20 sen and free cash flows of over 10 sen every year make it a good privatisation target. Morgan Stanley will not sell much below 50 sen. So much undervalued!

It does not matter how much value of Inari shares Insas has if it does not sell it to realise the value. It does not matter how much dividend Insas receive from Inari if it does not distribute higher dividends. It is a value trap. What do minority shareholders of Insas get? Is there any good reason for investors to buy Insas above RM0.80?