if you argue that dividend does not increase value to shareholders, yes there's a long standing academic argument on that. but if you wanna argue that dividend reinvested is not dividend, you are thinking in the wrong direction

if you took the shares, you can always sell it to get cash, thereby getting your 'cash dividend'. if following your logic, all the companies after paying cash dividend, the share price will be adjusted after ex-date, so technically the shareholders didn't benefit as well. you are just receiving cash for selling a tiny portion of your shares. so in your confused world, there is no dividend...

看东西确实该深入点。难道拿了股就不算股息吗？要真的了解股息有没有那么高，做个试验就知道了。举个例子，由五年前算起，每年的股息若全用换股（无稀释）或全拿现金（每年%稀释），这五年平均股息到底有多高？换股也可假设拿了股即刻卖或保存至今的价格。有思考是很好的，但别停留在表面和钻牛角尖

by the way, if anyone wanna complain why I only write this now. fyi I only started this blog 3 days ago and these are my first 2 articles. better late than never

@Mat Cendana fully agree. that's why I am open to constructive criticism. anyone can post your opinion on what's wrong with the article or maybe areas that I have missed. my main motivation for writing this 2-part article is not to belittle those who bought the warrant but to highlight the danger of SPAC warrants to those that are thinking of buying

@914601117 now may be a bit late. but previously i only spent about an hour on the guideline, check the amount of cash in the SPAC trust accounts then project them. After buying, no need to worry, if dip then buy more. Gave me about 10-15% return now. It is a rare investment which you know for almost 90% certainty of its fair value regardless of how the market move. Best investment for me so far taking into account the time and effort needed

I'm not that smart, but should be smarter than those who can't string 2 paragraphs of constructive opinion of their own while dismissing others' efforts. disagree? then for once maybe write an article or some actual comments which can help others. that way everybody benefits

914601117 it is not really complicated, just stick to the basics. those interested to know more should read the relevant chapters in SC's Equity Guideline. it's not long but you will understand better after that

thanks everyone for the views and comments. it is my first article here. for now, i will try to write an article a week, topics could range from individual stocks, industry to wider economic/social/political issues. so if you are interested, stay tune

curious2 In general I would not recommend to buy the SPAC warrant, mainly because there is no way of estimating how much is it worth until QA is announced and also because of all the dilution effects. but I do think F&B is actually better biz for SPAC investors than O&G because F&B biz is generally less capital intensive and could generate higher ROE. it is more likely to generate free cash flow sooner as well but still too much uncertainty at this juncture

更简单的方法，只买母股。在egm vote no 不管QA成功与否都拿回47.5c。简单稳妥的多

it is an interesting stock (diluted NA vs market price) but not without risk.

1) the timeline in the announcement is grossly inaccurate. I am almost quite certain it won't be completed by 2Q 2016. My estimate would be circular out by end Apr, EGM end May, high court approval by july, set entitlement/payment date probably aug/sept, then you can get back the 43c

2)after that delisting. the danger of holding unlisted shares, they could change their mind of winding up then you could be stuck forever. even if they do carry out, it hinges on whether can they realise the arbitrage 17-18c per share in full probably in 2017. Notice their latest results they revalued downwards their investment property. Maybe it's not as valuable as they think. The longer it drags, the more dangerous. By then, cash has been distributed and there is no interest income. Expenses will still be incurred, directors and management probably still getting their fees.

Below 50c maybe worth a look but I would cash out if the return is reasonable, in any case before entitlement date. The danger of being stuck is all too real

just to clarify, the outcome in the article which I mentioned getting your cash back by 3Q2016, it's based on my estimate that if QA fail, the management would proceed gracefully with liquidation instead of delaying until 30 July deadline. And the 6 months timeline is the estimation I got from my administrator/liquidator friend. Companies with minimal creditor and little assets to liquidate could be liquidated in shorter timeframe, according to him.

bcllct, your idea is certainly interesting but it could be difficult to implement.

Firstly, they will need to know roughly how to split between YES and NO to get QA through, yet protecting their investment. Making it back through WA is again possible but risky.

Secondly, if QA is through, WA may go up (due to the discount) but the mother may not. it could easily go down, as now EGM is over, if you did not vote No, there is no avenue available for you to get back your cash anymore. So the cash 'floor' on the mother would be gone. who knows how much the market would value such junior O&G company?

It is the institutions' choice whether they want to go long term and short term. Long term I have detailed the risks. Short term the options are to vote No or attempt what you suggested. Comparing the risks and returns I would still go for the former any other day. But hey it's not me who's voting, so let's see what actually happens. Thanks for sharing though.

smrt, ifca etc. what's their TP? even my analyst friends nowadays don't really trust cimb anymore, unless they know the analyst is reliable. just read d report carefully. for the benefit of everyone, i will repeat my findings again. Tenderbook RM1.8b misrepresented as order book and assume another RM2b new contract win when actual unbilled orderbook now stands at about RM400m after acquisition n d recent new award(according to CEO himself). Revenue now less than RM100m, assume 2017 revenue RM3bil (even if you really win contracts worth RM1.8b+2b, do u really think u can recognise so much in 1 year). that's how your genius cimb analyst derive the TP. now your job is to decide whether to believe cimb or not. now that you are informed, if u still invest/punt in this counter, don't blame cimb anymore

fyi this is not a redflag, it's the same for private placement for all companies

the company needs money so if share price lower, they will just issue more shares, more dilution of EPS in the future. that's why private placement shares is never a fixed sum, they always ask for approval to issue up to certain amount of shares, for flexibility's sake

pls read the listing requirement or at least d announcement. price-fixing will only happen after bursa approval. if by then d price is 25c, placees can still get max 10% discount, same thing for any price. placees will still get discount and can flip it to make profit, can u?

n i previously also highlighted that despite instacom being fundamentally much stronger than other penny counters, this does not hide the fact that it is grossly overvalued as people drove up d price. i fear this is beginning of the end, it may bounce back a few rounds but with lower highs and lower lows in the process before settling around 15-20c. for those who have made money congrats, for those who don't, seriously have to consider cut loss.....invest/punt at your own risk

never realise I will be back here so soon. previously I already highlighted all the cimb research report's flaws and their record in helping to goreng stock, i.e. SMRT, IFCA etc. with super bullish TP. so far instacom's research report is one of the worst ones. no matter what stock, there will always be people who profit from it, but d question is without insider info or being a good trader, can u profit from such punting stock? so pls do not use d report or other people's profit as a sorry excuse for yourself to get burned

haha since you don't mind, I'll share a bit more.

for those trying to convince yourself that the new management, especially dr yeoh, is a "renowned expert", there was a classic case of another Dr, Dr Tan of asiaEP. it was like the alibaba in the early 2000s and the Dr Tan even received awards from Mahathir and other entrepreneurship awards. Now? asiaEP gone downhill and was PN17 and suspended since 2011/2012.

I don't care whether a management is a Dr or expert, I only care if he can deliver. To be clear, I do think Dr Yeoh can deliver, Neata was and is still profitable, just not at the level people are now paying.

I really need to stop now. fingers just getting itchy hoping to save some poor souls out there. i will revisit this page in the future. hopefully by then not many people got burnt.

not to sound cocky but for those who are still adamant to enter now, do yourselves a favor. set a reminder to re-read these comments after 3-6 months, maybe then you can notice some things you don't notice now.

I experienced these the painful way because no one guided me, if you still prefer the painful way to learn something so be it

~hindsight is a dick~

i can only say this much, instaco was not and will not be my counter so I will not waste more time highlighting the risk of this counter, especially after it shot up so much.

i have done my part and hopefully less people contribute to the shark's fancy sports car or holiday trips

yes it is possible that the co did not announce smaller projects but now the focus is on neata or vivocom (since instacom was loss-making anyway). for neata, no matter how small, they should dislose the total orderbook (maybe not the breakdown) in the circular, failure to do so is an offence. If people are paying huge premium for 2016/2017 POSSIBLE projects (there is not even indication but mere words), then they are buying a story, not the counter itself.

last time i checked similar stories are like SMRT, IFCA etc. If you bought both at around 10, 20c it's still great returns after they crash. but if you bought at the peak based on CIMB's target price of RM1+ for SMRT and RM2+ for IFCA, then your tears would have run dried by now.

see a similar pattern? loss-making companies making a turnaround, showing some small profits, story of a great future ahead, top active counters, plus CIMB analyst report...

both counters have crashed after earnings disappointment. by the time investors realise earnings are simply not coming, then it's truly game over. before that, big sharks have long left the field with their handsome profits

3) Profit guarantee

When instaco bought Neata (35% then 43.6%), the vendors provided profit guarantee of RM17m p.a. for FY15 and 16

Looking at Neata financial statements, it made around RM7m a year for 2013 and 2014. 6 months 2015 around RM4.5m. i don't think you need to be genius to figure out that they are not going to achieve RM17m by year end 2015 (2016 is a major doubt as well).

But vendors will reimburse the shortfall right? isn't that the purpose of profit guarantee?
Bad news, although profit guarantee is provided for FY15 and Fy16. For FY15, instaco only own 35% so the previous vendors will reimburse 35% x Rm17m. The recent acquisition just completed, so profit recognition about 2 months, new vendor the most will reimburse 43.6% x RM17m x 2/12 months. Total work out to be less than Rm7.5m

Even for 2016, 73.6% x Rm17m is only around RM12.5m. That works out to be 0.5 sen eps without conversion of warrants.

but these r historical isn't it? isn't instaco a different animal now?

Order book currently is RM400m, let's be generous and assume they double it to RM800m and fully recognised between FY16 and 17. Rm400m per year, 10% PAT margin. That's 40m a year or 1.7 sen EPS (before dilution by warrants). Based on current price 32c, around 19 times PE. Is it a great deal, you be the judge. but will these generous assumptions hold? I highly doubt it, especially when the management past execution records have been scrappy (both instaco and neata)

I believe by now I have made my case. i do not own instaco shares nor do i have a vendetta against it. for those of you who made money with this counter, to sell or not is at your own discretion because I always believe there is no TP for goreng counters. Sky is the limit just as 0.5 sen is your floor. For those of you who read CIMB report and want to enter now, my advice is please read d report again, scrutinise against instaco circular and news articles. if you still believe that 72c TP, good luck.

All things equal, circular is always much more reliable over analyst report. Investment banks, lawyers, accountants, company as well as Bursa went through the circular. If the company misstate its facts, they committed an offence under CMSA , but I don't see the likes of Marcus Chan and Sharizan subject to that kind of scrutiny. I dislike naming names, but in this case, I think the CIMB analysts have simply crossed the line but stuffing their report with grossly misleading statements. They either have a lower IQ (combined) than Forest Gump or it's simply intentional.

Sorry I couldn't make this comment shorter. Have a nice day and weekend ahead.

i only noticed instaco when my friends bought its warrants when mother was around 20c.i have read the cimb report and i felt obligated to share the glaring weaknesses of the report with instaco shareholders or people looking to buy it.

1) the report assumes 9 times PE on FY 2017 earnings. 9 times is not cheap for small-cap construction company but not too excessive, i can live with that, the problem is how it assumes the FY 2017 EPS

Current order book is only around RM400 million based on the circular to shareholders and recent statements made by Dr Yeoh himself (http://www.stockhut.com.my/news/81164). If you read carefully cimb report it shows order book of around RM1.8b but shows commencement date mostly in 2016 and 2017.

It's either the analyst cannot differentiate between order book and tender book or he is intentionally trying to mislead investors.

If you scrutinise CRCC contracts listed in the report there are further flaws. The 15.7b it mentioned, gemas-jb contract is rumoured to be awarded to CRCC and partners (not confirmed). penang undersea tunnel since it was awarded to zenith, no news and construction yet to commence. Will three roads and 1 undersea tunnel be completed by 2017/2018, I highly doubt it. Take these 2 out, CRCC is left with RM2b contract.

The CRCC south east asia and other contracts (other than CRCC) of about RM32b stated in the report I did not scrutinise them because if the secured ones (according to the report) is already rubbish, I don't want to waste further time to dig more rubbish. Out of these billions worth of contracts, how much will instaco win? it's anyone's guess.

The report further assumes revenue increases from Rm150m for FY15 to RM380m (FY16) to RM3bil (FY17). Even if you have RM3b order book I think it's stretching the point to assume all will be billed by 2017. Furthermore as highlighted above, the orderbook assumptions are not flawed but almost total garbage.

2) CRCC in-house contractor/higher than sector margins

It claims that instaco enjoys higher margin because of strong relationships (especially CRCC). Think about it, you are a sub-contractor and it is a zero sum game. You will only earn higher margin if CRCC accept lower margin for itself (highly doubt it). who is instaco or vivocom to be in such strong bargaining position against a Fortune 500 company?