That means for an expected claim of RM100, premium is capped at RM125. The remaining RM25 (at max) needs to pay off commissions and management fees. Then not much will be left!

In comparison, the general insurance at least offers Allianz a combined ratio of 86%, i.e. underwriting margin is 14%.

Central medical claims data platform (Clause 12.2) – Does it benefit insurance IT service providers like Rexit?

Coincidentally, Rexit share price has a run-up right after the policy is published on 29-Feb.

Clause 8.20(a) mentions “The loading shall not exceed 25% of the premium/takaful contribution or COI/tabarru’ rate prior to the claims”.

Does it mean if COI (cost of insurance) including expected claims, management fee, and commissions add up to RM100, the maximum chargeable premium is RM125? In other words, profit before tax margin is capped at 20%.

The effect is on one hand BNM discourage unhealthy competitions, but on the other hand it also prevents insurers from reaping excessive profit.

However, PBT margin capped at 20%, or net margin capped at 15% should be acceptable as historically ALIM PBT margin is in the range of 5% to 10% only?

@wsb_investor, good sharing on the medical and health insurance policy document.

Before this new policy, are insurers already allowed to market products with co-payment feature? However, as BNM now mandates 5% co-payment (clause 9.4) in new products, it will prevent unhealthy competitions as insurers can no longer entice customers with 100% claim products. By discouraging avoidable claims BNM hopes to lower future premiums.

Similarly, commission limits (Clause 11.1) may have the effect of preventing new insurers from gaining market shares through aggressive sales and marketing.

Therefore the regulations are beneficial to existing players as they discourage cutthroat competitions.

Is this the right understanding?

Does El Nino affect UP?

Maybe you can study changes in yield per mature hectare for its Indonesian and Malaysian plantations respectively during the historical El Nino years.

The questions are
1. How does El Nino affect Peninsular Malaysia and Kalimantan?
2. Do we have strong or normal El Nino in 2024?
3. How does it affect CPO price?
4. What is the net result if there is declining yield but higher prices?

What about the prices and outputs of other competing oil crops?

I suspect even professional traders find it difficult to answer confidently.

First INED is not a director.
Next asked me if Bursa queried them.
Now suggest me to sell in protest???
Yeoh Chong Keng would be touched for the rock solid support he received.

Someone asked about China competition before. Up to now they still manage to hold their market as can be seen from their revenue and operating margin. The brothers believe that with their multiple brands occupying different market segments, and also through their own and 3rd party distribution channels, they have an edge over Chinese competitors. Despite running its own factory, they also get OEM supply from China.

I don’t know how sustainable it is. But deploying some of its net cash to expand their Singapore presence makes sense.

But the key attraction to me then (not now) was being cheap, with good downside protection given its dividend records. FCF over 5 years averaged at RM25m-RM30m per year. After recovery from Covid (with operational risk receded), for quite a while the share price hovered around RM1, pricing it at 15% to 20% FCF yield.

It’s harder to judge now. Historically such illiquid stock with no analyst coverage doesn’t command a high valuation. Yeoh Chong Keng was probably unsure too, as he disposed near RM1.9 shortly after the acquisition but bought back later.

So are we now in agreement that that INED is also a director subject to the disclosure requirement?

I’m not an insider so I won’t know if Bursa has asked for an explanation.

I would expect that any self-interested minority shareholders, who are not privy to the discussion during board meetings, will like these insiders to comply with the listing rules. Insiders’ buying and selling of company shares should be made public in a timely manner. Otherwise insiders will have even more unfair advantage.

Why would a shareholder try defending the director who has lapsed in his obligation? Mmm…

If a "non-independent and non- executive director" is not bound by the disclosure rule, why even bother to disclose after 5 months? He may as well just keep quiet. :)

If "non-independent and non- executive director" is NOT a "director", what is he? :)

All directors attend board meetings where confidential matters are discussed. Disclosure requirement applies to all directors, including non-independent and non-executive.

Refer to Bursa Guidance to Directors on Dealings in Securities, para 5.3a
"the directors and principal officers must, within 3 market days after the dealings has occurred, give notice of the dealing in writing by submitting Appendix DS-2 to the Company Secretary. The Company Secretary shall
make an immediate announcement through Bursa LINK of such dealing"

This disclosure is late by 5 months!

Director disposed shares in Nov 2023 but only made announcement in Mar 2024???

According to Furniture Today, the top furniture exporting countries to the US are
1. Vietnam, US$9.7b,
2. China, US$8.5b
3. Mexico, US$2.3b
4. Malaysia,US$1.571b
5. Canada, US$1.546b
6. Indonesia
7. Italy
8. India
9. Thailand, US$593m
10. Poland

Pohuat has factories in Vietnam. But in recent years it has not been doing as well as Liihen which is solely located in Malaysia

Very impressive analysis!

BTW you may want to update Diagram 3, which was wrongly pasted as duplicate of Diagram 2.

I have a few questions.
1. Could Statista’s data which shows 44% of global furniture market is in US be flawed? Even focusing on just developed world, US population of 330m is still less than 30% of the developed world population of 1.2 billion.
2. Could some Malaysian exporters have heavier exposure to US than indicated? Liihen used to classify some customers as Asia but they were resellers to the US end market.
3. Do you follow up on US furniture sales and inventory situation? If yes what is the company/ industry data that you rely on as leading indicators of furniture demand? What is the current situation?

Farm Fresh sales is over 80% Malaysia and remaining mostly Australia & Singapore. Dutch Lady focuses on Malaysia.

However, 80% of Able Global dairy products are exported, to countries in America, Africa and South East Asia. They don’t compete heads on.

Not to mention Able Global is also into tin can manufacturing and lately property development.

Could anyone trust Tan Teng Boo’s prediction?

This guy has parked half of iCAP’s fund as FDs. Not for one year. Not for two or three years. But for over a decade! He has been waiting for the market crash for as long as I can remember.

During this long period, we had 1MDB, the collapse of oil price in 2015 and in 2020, five prime ministers since 2018, and the Covid pandemic. Yet he picked up no bargain.

During those intervening years, on dividend adjusted basis,
1. QL was up from RM1 in 2011 in almost RM6 today
2. Allianz was up from RM3 to RM19
3. United Plantation was up from RM3 to RM21 (yes, iCAP did buy into UP lately, currently a tiny 2% of its portfolio)

Even Maybank was up from RM3.7 to RM9.5 during the period.

How much did iCAP’s earn from the cash that it locked in bank FD’s? Not to mentioned 1.5% was handed over as management fee every year.

TTB is also a big fan of China. What is China stock market return over these years?

With such track records, I’m actually worried that now he has a U-turn and starts predicting Bursa's bull run!

@Fabien, may I know where did you get the announcement that they abandoned the Guocera expansion plan?

If you have insight into the Israel-Hamas War, you can trade in many far better ways outside the Malaysian market. Just open a US stock trading account. Promote your view in Reddit.

Don’t waste time on BJFood, which has other problems besides on the on-going boycott. Unless you’re stuck with its shares bought at high prices.

Echo the other comment. Don’t bring race and religion into this forum.

The Board deserves praise for returning unused capital to shareholders through special dividend of 50 sen.

The total amount of special dividend is about RM157m, which is greater than the proceeds from disposal of HLIT (~RM36m) and HCB (~RM80m). But RM157m is only a small fraction of the latest company net cash at RM1.7b

As I’ve commented earlier, the share price will re-rate upwards if the Board returns more cash to shareholders. Today share price movement has just confirmed the point.

To reiterate my earlier comments, let’s compare against Bermaz Auto, which is probably the best run automotive local company. BAuto trailing twelve month revenue was about RM4b, supported by a net cash position of about RM400m, or about 10% of annual revenue.

Applying the same standard, HLI’s annual revenue of about RM3b needs only about RM300m of net cash as working capital. It could safely return RM1.7b - RM300m = RM1.4b of cash to shareholders without affecting its business operations. That works out to be about RM4.5 cash per share.

According to Kenanga, the passenger vehicle sector’s average forward PE is about 11 times. Applying this average, the share price is still worth 11 x RM0.927 (Kenanga’s 2024F EPS) = RM10.2.

In other words, if the Board is willing to put cash to better use, conservatively the share price could be RM10.2 plus special dividends of RM4.5! This has not even taken into account of HLI’s dominant market position. Besides, by showing it cares about minority shareholders' interest, it could enjoys an even higher PE multiple.

Moving forward, I hope the Board could give greater clarity to shareholders and the market how it would best utilise its cash.

For most people, the string of resignations is sufficient to raise an alarm bell. For those who choose to look the other way, no amount of evidence will be sufficient.

I’m not so naive as to expect I can get a straight answer from AGMs, regardless of whether I hold one share or > 20% of shares.

As said before, I continue to stay away from value traps. No, not even a single share.

Good luck to whoever hoping to sell close to or even higher than NAV.

This time round, will more directors leave due to “other commitments” or “personal health issues”?

What happened in 2020, besides Covid?

Could it be the innocuous single sentence mentioning RM6.68m dual listing expenses slipped into page 14 of 2020 Q4 report?

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3073067

On Nov-24 of the same year, it was the turn for the Chairman Datuk Ng to resign, initially giving no reason.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3107685

But interestingly, an amended announcement was published a week later on Dec-1, with Datuk Ng’s resignation reason updated as “difference in opinion”.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3110297

This was followed by the resignation of Darin Siah Li Mei on 3-Aug 2020, citing “health issue” too. Datin Siah joined the board only a year ago.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3074128

Was serving the ICAP board not conducive to personal health? :)

The previous round of INED resignation happened in 2020.

On 24-Feb 2020 Madam Leong So Seh resigned citing “personal and health issue”

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3026283

Another independent director resigned.

Datuk Mohd Nasir, after serving merely 28 months, tendered resignation “due to his other commitments which require his attention and time”

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3419228

Really? Such a busy person?

@Patient investor, well, everyone is free to air his opinion. You may continue to promote yours, and hopefully it could boost confidence and sustaining the price.

I enjoy reading this forum, but I shall continue to stay away from value traps and keeping my investment on more solid ground. Good luck to anyone wishing to sell at above NAV!

Haha, indeed. The brand value has been cultivated over many years through newsletters and annual events. Unfortunately, it's non-transferable. If COL musters enough votes to shake up ICAP, the "Fan Club" goodwill will evaporate overnight.

Why will COL pay a premium for ICAP if the maximum value it could extract is merely the NAV per share, minus expenses?

@Patient investor, maybe many small cap companies have been knocking at ICAP doors of many years. Yet ICAP was still sold at a discount for at least a decade.

You may also argue that COL does not want to liquidate ICAP. COL is willing to pay a premium over ICAP’s NAV as it sees so much potential (although COL’s purchase records over a decade show otherwise)

Some businesses do sell at a premium over its book value. Think of Heineken, Carlsberg, Nestle. The businesses have competitive advantages in the form of brands, product portfolios, distribution network and so on.

But for a fund like ICAP, what competitive advantages does it have? It’s just a collection of other company shares and bank FDs.

Of course TTB may say he IS the competitive advantage. He is THE REASON of the premium.

But if COL treasures TTB so much, they would have handed their money for TTB to manage in a separate fund instead of engaging in a decade old feud.

COL will never pay premium for ICAP shares

“For iCap shareholders who want to sell, take advantage of the situation by queuing at high price as close as possible to NAV, or even at a premium.”

Such opinion assumes COL is willing to pay a price up to, or even exceeding NAV per share.

But what is the maximum value that COL can realise if, a very big IF, that it gains control of ICAP?

Unfortunately, the maximum value per share in liquidating the fund will be no larger than NAV per share.

In fact, given that ICAP's portfolio contains some pretty illiquid stocks, any disorderly disposal will cause share price to collapse. So in practice, the liquidation value is less than NAV per share.

If COL is rational, why should it incur losses by buying above NAV per share?

Anyone can place their sales order at or above NAV. Just that the orders will not be fulfilled.

The fund manager wrote in the latest quarterly report
“As I wrote in the iconic i Capital publication …”
“… I gave a rare presentation on Malaysia’s longer term investment outlook”

Iconic! Rare! He put Warren Buffett to shame.

AIG got into trouble because it recklessly sold “insurance” to other hedge funds betting against the housing market. Such situation does not exist in Malaysia.

Check the types of investments owned by Allianz Malaysia in Note 8 of Annual Report.

“Active shareholders may attempt to realise the full value of the CEF by proposing a share repurchase, conversion to an open-end structure, takeover or liquidation.”

Well said.

Story of Benjamin Graham shaked up Northern Pipeline
https://www.businessinsider.com/benjamin-graham-was-the-first-shareholder-activist-2016-6

I hope Malaysia could emulate US investing scene. We should have activist investors to shake up complacent and self interested management for the benefits of all shareholders.

The father of value investing, Benjamin Graham, famously asked in 1932 “Is American Business Worth More Dead than Alive?”

The same question applies to ICAP today.

observatory, 
you got the rights to challenge the board as long you are shareholder, looking towards it. Ain't the discount happens before the 6.6 million charges?

__________________________

I don’t have the right to vote and challenge the board as I’m not a shareholder. Anyway I have no intention to be a shareholder in this value trap.

But I do have the right to air my opinion here and point out the inactions and failures of the board. And I look forward anyone showing me, with facts and logic, why I’m wrong.

The failure of the board to stop him from charging the RM6.6m was even more outrageous. The board should have asked themselves who pay their salary, the fundholders or the fund manager?

Shortly after this incident, several board members did resign, including the Chairman, and a newly elected board member, though they invariably cited “personal reasons”. What could you infer from their actions?

If I have the votes in AGMs, I would definitely vote against these pliant board members. I would be more than happy to vote in any new faces to shake up the place, be it Lo Kok Lee or any others. Not to mention from internet I can see Lo Kok Lee has a good rack records and background.

The only attractive thing about ICAP is some of the good comments here. The only reason I continue to pay attention to this value trap.

I was once attracted by ICAP seemingly deep NAV discount.

But the RM6.6m dual listing expenses charged to ICAP fund holders shows why it was justified to trade at huge discount.

First, no shareholders’ approval. Second, anyone with some foreign stocks experience knows dual listing does not narrow NAV discount as claimed. Many stocks traded at a discount in their secondary market as investors there are not familiar with the stock. Is the ICAP fund manager ignorant? Or is it a diversionary tactic in the face of criticism on the widening discount?

Why it took him so many years to “study”? And after all those wasted years with widening discount gap, he had the cheek to pass the bill to the fundholders!

Intelligence? Integrity? Haha.

Global asset managers are investing in infrastructure funds
https://www.reuters.com/business/finance/blackrock-quarterly-profit-rises-strong-assets-under-management-2024-01-12/

What is the implication for AGIC if it eventually win or lose its case against MyCC?
https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3415175

Good sharing. As a principle, a person should not be able to claim more than his actual expenses from his medical insurance policies. Any extra benefits should come from other types like critical illness policies. Isn't that how it should work?

Thanks for the explanation. Your point that medical inflation is not projected by actuaries and not reflected in CSM is important one.

@wsb, how big is the medical business contribution in terms of premium and profit? How might MOH policies affect it?

https://www.bnm.gov.my/insurance-takaful

I'm not familiar with banks. But I don't think banks can freely define their non performing loans, which are classified as those overdue for >90 days. Remember banks are heavily regulated by the Bank Negara.

The LLC mentioned here excludes regulatory reserve. Otherwise it would be even higher.
Besides, since RHB management claimed their loans are well collateralized, they don't need so much provision.
However, bad loans are not static figures. When economy turns sour, it could rise fast, and the coverage ratio will drop. Heavy provisions will be needed which hit earnings. Maybe this is why some other banks are prudent by maintaining their LLC at high level.
But this is just one of the many variables. Among local banks RHB has the highest CET-1 ratio.
Honestly I find it hard to understand banks' earnings. They have many levers to adjust and smooth their earnings through provision, write back and so on. Unless one can understand how the different pieces work together, otherwise it's hard to compare the profitability of one bank with another over a short term basis.

RHB management said they were comfortable with lower LLC because their problematic loans are well collagenized.
However, there are only two banks where LLC as of 3Q23 is lower than the pre-pandemic 4Q19. For RHB it's 75% vs 86%. The other is BIMB which is 127% vs 174%.
Public Bank, for example, has increased to 187% from 124%.

All is relative. Assuming RHB management is right, and the economy continues to improve, RHB will not need to do extra provision. Profits will not be hit.
Meanwhile other well provisioned banks will have the option to write back their earlier provision, giving their profits extra boosts. This option is no not available to RHB.

Anyway, there are many factors to consider besides LLC and dividend yields. It's unclear to me which banks will outperform. The simpler approach is to distribute the bets.