Sslee blog

Author: Sslee   |   Latest post: Sat, 15 Jun 2019, 11:40 PM


INSAS 56th AGM Part (I): Board answered to my email written questions.

Author:   |    Publish date:

Dear all,

My questions send to the Board by email with answers given by the Board in PowerPoint during the AGM (in RED)

Good morning everyone. My name is Lee Soon Sheng and please allow me to express my gratitude to the CEO, BOD and Management team of INSAS for continues making profitable financial year ended June 2018 with quarterly EPS of (5.95, 5.46, 1.20 and 1.04) a total of 13.65 cents as compare to financial year end June 2017 EPS of 27.30 cents and NTA increase from RM 2.34 to RM 2.49.  I can understand the poor performance of Q3 and Q4 as investment environment deteriorated due to egotist, dotard and big bully USA President Donald Trump waging trade war with almost every other countries and Malaysia political uncertainty before GE14 follow by policy uncertainty with new PH’s government after GE14 in May 2018.

For today Q&A sessions, I had grouped my questions under 2 subjects.

  • Subject A: Review of INSAS 55th AGM minutes.
  • Subject B: Financial Year 2018 report and Business outlook
  1. Review of INSAS 55th AGM official minutes:


I. Items 10 and 11: Dividend
Official minutes clearly implied that INSAS.

1.      Business generated enough positive cash flow to pay a better dividend.

2.      Has enough cash reserve to pay a better dividend.

3.      Do not have cash flow problems if INSAS pay out 25% of 2017 EPS as dividend about 7 cents to the shareholders.

4.      The Board has taken note of the shareholders’ comments and will seriously consider paying additional/special dividend and to formulate a formal dividend policy in FY 2018.

Q A1. Dato’ Sri Thong can you give factual reasons why INSAS did not carried out what is clearly stated in the 55th AGM official minutes “seriously consider paying additional/special dividend and to formulate a formal dividend policy in FY 2018.”

Answer A1: The Board has considered the level of dividends to be paid to shareholders for the FY 2018 but in view of the current depressed market conditions due to numerous external and internal events, the board has exercised a conservative and prudent management to retain adequate cash reserves in order to weather any potential unforeseen deterioration in the market conditions, and to position the group for future growth and any good investment opportunities which may arise during this downturn. The Board will evaluate and if appropriate, formulate a dividend policy when the markets recover.

II. Items 14: Share Market Price

Quote “Dato’ Dr Tan Seng Chuan added that the market sees the intrinsic value of the Company at RM3.00 but the market price is trading at +/-RM0.90. He is of the opinion that share prices and the Company’s performance have no direct relationship and the Directors’ primary responsibility is to make sure the Company runs well and not about making share price perform.

DWGK further informed the shareholders that the CEO as a major shareholder of the Company cannot acquire more Insas shares from the market, and the Company cannot continue with its proposed share buyback as such share acquisition and/or buybacks may result in the CEO and persons acting in concert (“PACs”) holding more than 33.0% of Insas shares which will then trigger a mandatory takeover offer (“MGO”) on the remaining Insas shares not owned by the CEO and PACs, unless a waiver of such MGO is granted by the Securities Commission and the shareholders of Insas under the Malaysian Code on Take-overs and Mergers.” Unquote

Note: At 30th June 2018 INSAS NTA RM 2.49 and refer page 107: ASSOCIATE COMPANIES book value RM 357,628,000 and market value of quoted share in Malaysia RM 1,376,569,000. This is about a fair value gain of RM 1,018,941,000 or another RM 1.54 per share. Thus total Intrinsic value of INSAS as on 30th June 2018 is (RM 2.49 + RM 1.54) = RM 4.03 per share.

Q A2. Dato’ Sri Thong has worked very long and hard to accumulate so much wealth into INSAS. With market closing price of RM 0.695 on 9th Nov 2018 versus Value (Mostly liquid assets: Quoted share, bank deposit, money lending &etc) of RM 4+ and growing. A day will come where big shark will tempted to make a hostile take-over the control of INSAS and distribute the wealth to all the shareholders. Dato’ Sri Thong and PACs only hold less than 33% INSAS share, if such hostile take-over do occur does Dato’ Sri Thong and PACs have the resources and supports of friendly minority shareholders to fend off such hostile take-over attempt?

Answer A2: The Board cannot comment on the hypothetical question of potential “hostile take-over” and the resource of Dato’ Sri Thong and PAC, but in the event there is “hostile take-over” in the future, the board of Directors have fiduciary duties to act in the best interest of the Company as a whole, exercise due care, diligence and skill as required by the Companies Act 2016 and Malaysia code on Take-Over and Mergers 2016.

Q A3. When will Dato’ Sri Thong and PACs intends to move over the 33% threshold and make a mandatory takeover offer (“MGO”) or seek a waiver of such MGO from the Securities Commission and the shareholders of INSAS under the Malaysian Code on Take-over and Mergers so that the company cans buyback INSAS share again.

Answer A3: So far the Board has not received any notices of MGO from Dato’ Sri Thong and PAC, and in the event such notice is received, the Board will announce the offer to the Bursa immediately.

The Board will continue to look into the “Whitewash” situation in relation to the application to the SC for an exemption from a mandatory offer obligation arising from the exercise of any conversion rights of options into new voting shares and/or as a result of a share buy-back scheme by the company. Any such application for exemption will require the approval from independent/ non-interest shareholders of the Company at a general meeting to waive their rights to receive mandatory offer.

Q A4. 265,202,536 WARRANTS 2015/2020 and 132,601,268 REDEEMABLE PREFERENCE SHARES expired and due on 25 February 2020. Knowing the intrinsic value of INSAS and if INSAS market share price still remain below RM 1.00 on 25th Feb 2020 will Dato’ Sri Thong and PACs convert the Warrants to INSAS share?

Answers A4: Dato’ Sri Thong and PAC have the similar rights, but not the obligations. Just like any warrant holders to decide whether to convert or not to convert their warrants into new Insas shares at any time before expiry of the warrant exercise period, which is due to expire in February 2020. Accordingly, the Board cannot comment whether Dato’ Sri  Thong and PAC will convert their warrants into Insas shares.

Q A5. I intend to mobilize not less than 50 shareholders to send in REQUISITION TO MOVE AND VOTE ON RESOLUTION REQUIRING SPECIAL NOTICE UNDER SECTION 322 OF THE COMPANIES ACT 2016 AT THE 57TH INSAS AGM: To approve share distribution on the basis of ONE (1) INARI BERHAD (Company No. 1000809-U) share for every TWO (2) existing ordinary INSAS share of RM 1.00 held in the Company.

My reasons for doing so are:

  1.  To boost the INSAS share market price above RM 1.00 so that warrant holders have the opportunity to convert their warrant with payment of RM 1.00 into INSAS share and at the same time receive the INARI share distribution rather than total losses if warrant expired on 25/2/2020 out of money. By so doing INSAS will receive RM 265,202,536 and can utilize half of the sum to redeem the RPS.
  2. Reward the existing shareholders by distributing the INARI share to them and make it less tempting for big shark to make a hostile take-over.

Will the Board support the resolution? If NO what are the reasons for rejecting the resolution?

Answer A5: Based on the current depressed market conditions, the Board will not support such resolution as the Board believes that the distribution of Inari shares by way of dividend in specie or otherwise to all Insas shareholders is not in the best interest of the company.

Reasons (amongst others):

  1. For prudent management, Insas needs to retain reserves to weather any potential unforeseen deterioration in the market conditions, and to position the Group for future growth and any good investment opportunities which may arise during this downturn;
  2. Pursuant to the company Act 2016, a company may only make a distribution to the shareholders out of profits on the company available. Asof 30 june 2018, the available profit of the company is RM 22.0 million only; and the priority of the Board is to retain sufficient available profit to redeem the RM 132.6 million redeemable Preference Share which are due to mature in February 2020:
  3. Insas has more than 26,000 registered shareholders and the share distribution will create a large free float of Inari shares in the market, and the increased liquidity will likely depress further the market price of Inari; and
  4. Inari contributes a significant equity profit and cash dividends to Insas.

B. Financial Year 2018 report and Business outlook

Page 9: Technology and IT related services

I. Sengenics is a functional proteomics company: https://www.sengenics.com/

Q B1. What is the Sengenics Company paid up capital, equity structure, revenue and Profit/Loss for the last financial year?

Answer B1:  The issued and paid up share capital of Sengenics Corporation Pte Ltd is USD 953,000 and its unaudited shareholders’ funds as at 30 September 2018 is USD 4,498,000.

The gross revenue for the 9 months period ended 30 September 2018 is USD 1,600,000 and it incurred a loss of USD 1,700,000.

Sengenic has a patented proteomics technology and it has signed licensing and collaboration agreements with some of the top pharmaceutical companies in the world.

The equity structure of Sengenics includes:

  • Dr Arif, Dr Jonathan Blackburn, Mr Johan Iskandar (Promoters) 60.6%
  • Insas 17.4 %
  • SBI Islamic Funds (Brunei) 13%
  • Hanns Ventures 9%

II. Numoni financial technology (“Fintech”)

Q B2. What is Numoni group revenue and Profit/Loss for the last financial year?

Answer B2: The gross revenue of Numoni for the FY 31th December 2017 is S$ 1.3 million and it incurred a loss of S$ 3.3 million

III. INARI outsourced Semiconductor Assembly and Test (“OSAT”) industry for RF products and tailored EMS contract manufacturing to the semiconductor optoelectronic industry.

Page 17: Inari is targeting to grow its light emitting diode (“LED”) and fiber and sensor product portfolio to offset possible lag in radio frequency (RF) demand due to bearish near-term smart-phone outlook. Inari is working with its German customer to develop several new products being fine pitch LED used in billboards and other public display panels and also health sensors as well as vertical cavity surface emitting laser (VCSEL) components for both 2D and 3D sensing applications. This will add new potential customers for the new 600,000 sq ft Inari P34 plant presently under construction in Batu Kawan, Penang. Inari is also in the midst of qualification for a new mini LED line and health sensor for wearable applications, which is expected to spur new revenue growth towards end of FY 2019.

From Inari annual report: The construction of Plant 13 phase 2 was completed in May 2018 and we expect the RF tester capacity to exceed 1,000 units upon full utilisation of the newly added shop floor space.

Q B3 (I). Plant13 RF testers, what is the current capacity? Are over 1,000 units target achievable in view of near term bearish demand for RF?

Answer B3 (I): Currently, Inari has about 1,000 RF testers installed in Plant 13. These RF testers are consigned by one of our major customers. Inari provides outsourced services & our risk on equipment investment is low. RF & other semiconductor business are cyclical in nature, and 5G is just around the corner.

Q B3 (II). Is P34 first building of 240,000 square feet progress on target for qualification by new customers and production of new LED & VCSEL business by mid 2019?

Answers B3 (II): Yes.

Q B3 (III). Any plan to relocate some of the smaller Plants to P13 and P34? Any comment on below posting in i3forum “I just pass by inari p8 at ftz phase4, look like closing down no car, no motorcycle and no security guard seem like already impacted production close down and next quarter would impact minimum salary plus Indon and Bangla high tax.”

Answers B3 (III) Inari is ending the rental of P8 in Nov 2018 and have moved the operations back to its own P13 building. For information, P8 is owned by one of the major customers of Inari and is located in the FTZ Phase 3 in a secured area, and cannot be seen from public roads.

Q B3 (IV).  Please provide the top 5 Inari customers in % revenue without naming the customers.

Answer B3 (IV): For FY2018 the top 3 customers accounted for 99% of Inari gross revenue in ratio of 65%, 27% and 7 % respectively.

Q B3 (V). Any BOD or top management in Inari a childhood or personal friend of Penang born Broadcom CEO Mr. Tan Hock Eng?

Answer B3 (V): No.

IV. Page 13: Structured finance:

For FY 2018, ICL reported revenue of RM33.3 million, an increase of 43% as compared to RM23.3 million reported in the preceding financial year. The higher revenue was achieved due to disposal of marketable securities and the granting of RM40 million new loans to several new clients during FY2018. However, the pre-tax profit reduced by 77% from RM12.2 million in FY 2017 to RM2.8 million in FY 2018 mainly due to unrealized loss on fair value changes of financial assets at fair value through profit or loss of RM8.2 million in FY 2018 (2017: RM2.0 million).

Money lending subsidiary company: Insas Credit & Leasing Sdn Bhd


Paragraph 8.23(2) (e) Appendix 8D (4) - Top 5 loans (with aggregation of loans given to same person or connected persons) for the Fourth Quarter ended 30 June 2018




Loan 1

Loan 2

Loan 3

Loan 4

Loan 5


Facility type

Term loans

Term loans

Term loans

Term loans

Term loans


Principal limit







in RM'000







Total amount














(including interest)







in RM'000






(c )

Security provided







Value of security







provided in RM'000







Is recipient of loan







a related party







Terms of repayment in respect of the above loan receivables are as follows :


ii) Principal is repayable upon demand; and




ii) Interest is payable on monthly basis.





Q C1. What are the interest charge and total interest income from lending activities of Insas Credit & Leasing?

Answer C1: The interest rate charged by Insas credit & Leasing (“ICL”) is in accordance with the Money lending Act, which is not more than 12% p.a for secured loans and not more than 18% p.a for unsecured loans. The total interest income earned by ICL from the money lending business for FY2018 is RM 23.0 million.

Q C2. The unrealized loss on fair value changes of financial assets at fair value through profit or loss of RM8.2 million in FY 2018. Is this unrealized loss related to Loan 4 above and is this loss recoverable?

Answer C2: The RM 8.2 million unrealized loss on fair value change of financial asset at fair value through profit or loss refers to the unrealized mark-to-market losses on the listed securities owned by ICL at 30th June 2018. It is not related to Loan 4.

Q C3. Is Loan 4 new customer or old customer and why Security provided is RM 7.422 million lower than amount outstanding?

Answer C3: Loan 4 is an old customer. The security value of RM 8.9 million does not include the security value of cross-collaterisation against 3rd party assets, and the loan is also guaranteed by the directors of the borrower.

V. Page 13: Investment holding and trading

Page 9: The Group’s investment objectives are to maximise capital growth with recurring income and cash flows above the cost of funds.

As of 30 June 2018, the Group’s investments in listed equities are primarily in the properties, technology, consumer products and financial services sectors in both local and overseas stock exchanges, and the key equity investments include, amongst others, IGB REITS, Ho Hup Construction Company Berhad, Omesti Berhad, SYF Resources Berhad and Oversea-Chinese Banking Corporation Limited.

Q D1. Omesti Berhad and SYF Resources Berhad recently undergone kitchen-sinking and business restructure. What are the business outlooks for this two companies moving forward?

Answer D1: Omesti is in the process of restructuring its business into an information services provider that will provide recurring and sustainable income instead of revenue generated from project to project basis. These projects, which include the SSM and e-Court projects, will form the foundation of Omesti’s future growth.

Based on SYF’s latest quarterly report, SYF is cautious and will streamline its furniture manufacturing facilities to achieve cost saving and improve efficiency. The on-going property development projects are at the final stage of completion and it will hold back the acquisition of further land bank until the property market condition inproves.

Q D2. With Malaysia equity market in severe correction or Bear market opportunity are plentiful for Dato’ Sri Thong to reallocate part of bank deposit for equity investment to maximize capital growth with recurring income. So is Dato’ Sri Thong in the market to pick up these value stocks?

Answer D2: The Group will continues with its investment strategies to look out for value and growth stock that generate recurring income and capital gain, but the management remains cautious in view of the global volatility and uncertainties in the equity and forex market outlook.

VI. Food and beverages café/restaurant.

  • Dome Cafe Sdn. Bhd. Equity 43.4%
  • Island Cafe Sdn. Bhd. Equity 30.3%
  • Lifestyle Inspirations Sdn. Bhd. Equity 43.4%
  • Inshoku Ten Sdn. Bhd. Equity 20%

Lifestyle change had seen many Malaysians patronize Food and Beverage Café/restaurant chain for their breakfast, lunch, dinner, coffee, bakery, cake, ice-cream, desserts and etc. Originate from self services fast food chain the industry had evolved into self services or full services Café/restaurant chain serving western, Japan, Korean, Thai, Vietnam, Taiwan, China, Indonesia and Local (Chinese, Malay, India, Nyonya and lain-lain) food, beverage, desserts, bakery, coffee, ice-cream, cake and etc.

Q E1. In the crowded field of F&B, many had tried and failed but some are very successful. Does the board has a clear business plan, strategy, unique selling point, menu, marketing, operation efficiency, right (leadership, staffs, pricing and services) to be successful in F&B café/restaurant business?

Answer E1: The retail and F&B business are currently operating in a very difficult and challenging environment, primarily due to the general slowdown in economy. This division is operated fairly independent by our partners, mainly the Melium Group.

To be continued Part (II)




Share this
Labels: INSAS

Related Stocks

Chart Stock Name Last Change Volume 
INSAS 0.725 0.00 (0.00%)

  5 people like this.
probability even in bull market you ask them...answers will be the same...just that that color will be in blue perhaps...

sslee, your hardwork is mind boggling.

thank you
30/11/2018 7:36 PM
probability You should indeed spend more time on evaluating Inari's business and stay invested there instead of Insas.
30/11/2018 7:41 PM
abang_misai Too long bro. Yawning
30/11/2018 8:11 PM
Ricky Yeo Sslee, maybe you have other objective doing all these, but my laymen view point is the effort far outstrip the benefit. How much time did you spend doing the resolution for Hengyuan? And luckily Insas is being upfront that they are not going to support the resolution, otherwise you'll be wasting your time gathering 50 signatures.

If you want a company that pays dividend, then find one that pays good dividend. But you seems to be attracted to complex situations that require a hands on activist approach. Maybe it turns you on I don't know, but just looks crazy to me. Crazy that even if the resolution go through and special dividend gets paid, you're far from guaranteeing a satisfactory return. Your ROT (return on time) and ROS (return on stress) will be so low.
30/11/2018 8:13 PM
brushsoo Hi SsLee, I admire and thanks for your efforts and infor posted here! Bravo!
30/11/2018 9:17 PM
king36 Posted by lizi > Nov 30, 2018 09:13 PM | Report Abuse

for stock investment i suggest u follow the wisdom of datuk cheah who said: Focus is not on bad guy, focus on good guy with whom you can travel along into a prosperous future.

The problem is "How to know the good guy?"
Welcome any suggestion. Where to find them in BURSA?
30/11/2018 9:20 PM
Choivo Capital Thank you. This was useful.

I stand with ricky abit. But its very admirable how you take things into your own hands. the market needs people like you.
30/11/2018 9:44 PM
lizi forget about the market, the society need people like sslee even more..lol
30/11/2018 9:45 PM
jellyfish thank you , appreciate your efforts..
30/11/2018 10:12 PM
Sslee Dear Probability and Ricky Yeo,
I cannot really know how to describe it but deep inside me I have this inner calling to fight for justices, to voice for voiceless, to stand up for the weak and oppressed. At the same time I believe in the goodness of people and everybody deserves a second chance, because life is too complicated to get it right the first time.
My heart does not have hatred nor were my actions motivated by my anger or wants of revenge. I feel the pains and at time the helplessness as what the elder man at the INSAS 56th AGM felt. I believe our actions, inactions or omissions today will have a consequent in the future thus I just do what I can today without expecting any immediate result but deep inside me hoping my action today will somehow have an impact to make a different in influencing the future in a positive way.
By the way I am working oversea and I have the whole weekend to myself to do something useful and I consider reading and writing are very stimulating and fulfilling activities that I enjoy.

Dear king36,
Good question, “How to know or find the good guy or bad guy in Bursa?”
The answer is very simple just attend company AGM yourself and ask the tough questions and make your own judgment is the top man running the company trustworthiness.

The tough question will be are we good or bad?
We all inherit both the good and bad inside us. Some have a better self control over the bad thus they become good. Some succumb to the temptation of the bad thus they become bad. Some constantly battling the good and bad inside them hence they are neither bad nor good. But for sure everybody needs a little help, support, encouragement, faith and motivation from others to pull themselves up and become good. Will we then unconditionally support each other to be good?

Thank you
Now as a man is like this or like that,
according as he acts and according as he behaves, so will he be;
a man of good acts will become good, a man of bad acts, bad;
he becomes pure by pure deeds, bad by bad deeds;

And here they say that a person consists of desires,
and as is his desire, so is his will;
and as is his will, so is his deed;
and whatever deed he does, that he will reap.
— Brihadaranyaka Upanishad, 7th Century BCE
30/11/2018 10:28 PM
TheContrarian Dear Mr Sslee, the thing about Insas the Company having only RM22 million to distribute as dividends is pure bullshit. You see the wholly owned subsidiaries that hold the huge profits can at anytime declare as much dividends as possible to Insas to increase Insas' current small pool of RM22 million and thus enable much greater amount of dividends to be distributed to shareholders of Insas. There are too many intermediate holding companies in between. For instance I think Inari shares are held via wholly owned Insas Technology Sdn. Bhd., so the dividends from Inari go to this subsidiary rather than directly to Insas. Therefore Insas Technology Sdn Bhd. should be declaring and paying dividends to Insas and dividends are tax exempt meaning no income tax payable.
30/11/2018 10:34 PM
sense maker Directors take home rm10m a year remuneration. A big portion of that goes to the controlling shareholder who treats the company as his. The other 26,000 shareholders share rm7m dividend a year.
A company absolutely doesn’t need profitability to redeem preference shares. It only needs cash which it has aplenty from past profits.
The 2 sen dividend this year is a good start. But Insas is a typical case of self-serving controlling shareholder. A value trap. You see its value but you won’t get to receive it as minority shareholders. It has been so for 10 years.
01/12/2018 11:49 AM
TheContrarian Absolutely correct no need profits to redeem preference shares. Directors just trying to bullshit.
01/12/2018 3:37 PM
Jarklp Thanks SSLee. Somehow I feel the management and BOD are too conservative. The same group of people give the same answers and resolutions every year. There is no push factor for them to do their job better. Sad to say rewarding shareholders is not in their agenda.
04/12/2018 11:16 PM
lykong Dividend policy should not be related to market sentiment, company is trying to relate company performance with stock market thus shareholders rewards....
06/12/2018 12:12 PM



Top 10 Active Counters
 SCOMNET 0.880.00 
 KOTRA 1.770.00 
 UCREST 0.2150.00 
 PINEAPP 0.280.00 
 PUC 0.070.00 
 WILLOW 0.4550.00 
 IRIS 0.160.00 
 BTECH 0.230.00 
 3A 0.810.00 
 TENAGA-C57 0.1250.00 
Partners & Brokers