Sslee blog

INSAS: Questions for Insas’ 61th AGM

Sslee
Publish date: Sun, 05 Nov 2023, 06:17 PM
Sslee
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This is my blog
Dear Dato’ Wong and company secretary,
Below is my submitted in advance questions for the upcoming INSAS 61th AGM:
 
First and foremost my congratulation to INSAS’s BOD and Management team for a job well done in generating sustainable earnings (FY 2023 EPS: RM 0.185) supported by positive cash flows and maintain a positive/healthy financial position (FY 2023 NAPS: RM 3.53 Vs FY 2022 NAPS: RM 3.31)
 
AR 2023: Page 12 to 16: Operational and Financial Review:
Stock broking and provision of corporate finance & advisory services
During FY 2023, M & A Securities has acted as principal adviser and successfully listed 6 (FY 2022: 7) companies on the ACE Market. M & A Securities has continuously been ranked as one of the top principal advisers in the IPO market for ACE and LEAP Markets. M & A Securities will continue its niche in the stock broking and corporate finance advisory role in promoting SME and growth companies to list on the ACE and LEAP Markets.
M & A Securities recorded a slightly lower pre-tax profit of RM19.8 million in FY 2023 as compared to RM22.8 million in FY 2022, mainly due to lower revenue generated by M & A Securities.
 
Referring to EGM key matters discussed:
M&A Securities will continue to focus on the financial services industry, and intend to expand and strengthen its corporate finance, stock-broking and margin financing businesses. Its future plans include potential investment in asset management businesses and the setting up of a Labuan investment bank to become a diversified financial services group with primary objective to increase the long-term business sustainability and enhance shareholders’ value
Question 1: What is the planned timeline for M&A Securities to become a diversified financial services group?
Question 2: Any plans to expand M&A Securities corporate finance advisory role in promoting SME and growth companies to list on the Main Markets?
 
Retail trading
During the financial year, Melium Group’s sales have improved considerably to almost pre-Covid level for many of the brands Melium carries. In FY 2023, Melium Group posted a net profit of RM15.4 million as compared to RM2.5 million in FY 2022 as its business continued to improve basing on the numbers of inbound tourists from China are encouraging.
Question 3: Any planned timeline to list Melium in Bursa?
 
Manufacturing and distribution of consumer products and services
The manufacturing and distribution of consumer products and services was a new segment in the 4th quarter of FY 2022, reported revenue of RM4 million (FY 2022: RM0.8 million) and a higher pre-tax loss of -RM2.3 million in FY 2023 (FY 2022: -RM0.6 million) mainly due to intangible assets written off of RM0.7 million and higher operating expenses incurred in FY 2023.
The Group will be evaluating its options for the food manufacturing business in FY 2024.
Question 4: What are the options under evaluation and what is the planned timeline to turnaround this new segment?
 
Property investment and development
The unit suffered pre-tax loss of -RM3.7 million in FY 2023 (FY 2022: pre-tax loss -RM6.9 million), primarily due to the continual loss contribution from Ho Hup Group
The performance of Ho Hup has improved mainly due to increase in property development activities contributed by newly launched project Flex @ Bukit Jalil in 4th Quarter of FY 2023 and current on-going projects ie. The Crown Suites project in Kota Kinabalu and Laman Iskandaria, Kulai.
Question 5: What is the projected net development value of Flex @ Bukit Jalil?
Question 6: What are the total units Crown Suites project in Kota Kinabalu and Laman Iskandaria, Kulai for sales and how many units already confirmed sold?
 
On newly acquired 2 properties for rental income: AR 2023 Page: 226-228
1: No. 8A, Jalan Utarid U5/16, Seksyen U5, 40150 Shah Alam, Selango: 3 storey office premise cum factory for lease. Carrying amount: RM 7,603,000
2: No. 8A, Jalan Utarid U5/16, Seksyen U5, 40150 Shah Alam, Selangor: 3 storey office premise cum factory for lease: Carrying amount: RM 16,500,000
Question 7: What are the rental incomes for above two properties?
 
On Singapore Properties:
1: 8A, Orange Grove Road #11-03, D'Grove Villas Singapore Apartment for lease. Carrying amount: RM 20,721,000
2: 5, Draycott Drive #15-02, The Arc at Draycott Singapore: Apartment for lease. Carrying amount: RM 11,051,000
3: 21 Claymore Road #07-02, The Tate Residences Singapore: Apartment for lease. Carrying amount: RM 18,995,000
4: 38, Jalan Pemimpin #07-08 M38 Singapore 577178 1 unit factory/office: premise for lease Carrying amount: RM 8,979,000
5: 38, Jalan Pemimpin #07-09 M38 Singapore 577178 1 unit factory/ office premise for own use as operational premise: Carrying amount: RM 7,212,000
Question 8: Are properties 1 to 4 all leased out and what are the rental incomes?
Question 9: Properties 5 is used by which subsidiary company of INSAS as operational premise?
 
Dividend:
In many of previous AGM BOD reason to keep the earning in financial assets is to support M&A Securities financial need of stock broking, share margin financing, collaterised trading, corporate finance advisory, underwriting and placement of securities (IPO, PP and M&A activities)
 
Referring to Insas EGM key matters discussed: The rationale for the RTO exercise is to unlock the value of Insas’ investment in M&A Securities by monetizing and securitizing the shares in M&A Securities via SYF. This will enable M&A Securities as a separate listed entity under SYF:
(a) to raise its future funding requirement through the capital market independently from Insas.
Question 10: My congratulations to BOD for successful listing of M&A Securities thro’ RTO and M&A Securities is now a separate listed entity that can raise its future funding requirement through the capital market independently from Insas.
Will BOD kindly reward Insas shareholders with a fairer, equitable and better yearly dividend since the reason to provide financial support to M&A securities is now solved?
 
AR 2023 Page: 10
FIVE YEARS GROUP FINANCIAL HIGHLIGHTS
Equity Attributable to Owners of the Company had growth from RM 1,739,358,000 FY 2019 to RM 2,342,233,000 FY 2023 with retained earnings RM 1,419,807,000.
As at 30/6/2023 AR2023 Page: 204
FINANCIAL INSTRUMENTS
Financial assets RM’000
Financial assets at fair value through other comprehensive income: 34,529
Trade receivables: 485,504
Amount due from associate companies: 58,315
Amount due from jointly controlled entities: 660
Other receivables and deposits paid: 57,710
Financial assets at fair value through profit or loss: 222,832
Deposits with licensed banks and financial institutions: 943,505
Cash and bank balances: 104,747
Total: 1,907,802
 
Financial liabilities
Derivative financial liabilities: 3,634
Trade payables: 74,537
Other payables, deposits received and accruals: 39,627
Loans and borrowings: 242,961
Redeemable preference shares: 128,622
Total: 489,381
Net Financial assets: 1,418,421
 
With Equity Attributable to Owners of the Company RM 2,342,233,000 of which retained earnings is RM 1,419,807,000 and of the retained earnings the Net Financial assets is RM 1,418,421,000.
Question 11: Return of Equity (%): FY2023 a poor 5.2% is not the fault of Insas Management Team but mainly due to BOD keep too much retained earnings (Equity keep growing) and hence will BOD kindly rectify the imbalance by distribute portion of the retained earnings to shareholders in the form of special dividend?
 
Dividend Policy
Referring:
KUALA LUMPUR: icapital.biz Bhd (ICAP) is introducing a dividend policy to proactively narrow the gap between share price and net asset value (NAV) and possibly bring its share price back to trade at a premium, just as it did during the first three years as a listed company
The dividend policy, subject to market and economic conditions and ICAP's value, will be on a base rate of one percent of the NAV per share plus eight per cent of the difference between ICAP's share price and the NAV.
 
Question 12: ICAP is introducing a dividend policy to proactively narrow the gap between share price and net asset value (NAV). May I know the reasons why Insas BOD had yet to implement a dividend policy to proactively narrow the gap between Insas share price and Insas Net Assets Per-Share of RM 3.53 as at 30/6/2023?
 
Review of Insas’ 60th AGM key matters discussed:
The renewal of authority will provide flexibility to the Company for any possible share buy-back activities and to avoid any delay and costs involved in convening general meeting to approve such share buy-back authority in the event:
(i) the shareholdings of Dato’ Sri Thong and PAC reduce to a level which allows such Share Buy-Back scheme to be undertaken; or
(ii) Dato’ Sri Thong and PAC seek and obtain waiver of MGO from the shareholders and relevant regulatory authorities
Question 13: Is Dato’ Sri Thong and PAC in the process to seek and obtain waiver of MGO from the shareholders and relevant regulatory authorities in the coming AGM?
 
Y.A.M. Tengku Aishah, Dato’ Wong and Dato’ Dr Tan have declared that they are not persons acting in concert with Dato’ Sri Thong Kok Khee
Question 14: Since Y.A.M. Tengku Aishah, Dato’ Wong and Dato’ Dr Tan have declared that they are not persons acting in concert with Dato’ Sri Thong Kok Khee.  Will Y.A.M. Tengku Aishah, Dato’ Wong and Dato’ Dr Tan please kindly give support to Insas by buying more Insas shares from the open market?
 
 
Thank you
Have a good day
 
Best Regards
Lee Soon Sheng

 

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Be the first to like this. Showing 11 of 11 comments

Sslee

Please feel free to comment before I send out the above email?

2023-11-05 18:23

Sslee

Any comment?

2023-11-06 08:35

Sslee

Send

2023-11-06 12:37

Sslee

Received a short reply from Dato' Wong:
Hi Mr Lee

Received & acknowledged your email

Regards
wgk

2023-11-07 08:20

ocbc

good job

2023-11-07 11:35

Jonathan39199

Hi Soon Sheng, I read through your questions and the answers from the BOD. May I ask your insights to deal with the unwillingness of management to distribute sufficient dividends?

2 months ago

Sslee

https://www.insas.net/ar-gm.html
Good morning Jonathan39199,
THE AGM key matter discussed and MSWG Q&A are in above Insas website link.

2 months ago

Sslee

Leno who hold multi-million WC also do not want company distribute good dividend because dividend give out will dilute the net worth of WC.

The BOD is working hard to give a better dividend but the old man controlling shareholder Dato' Sri Thong object, may be he also see giving out dividend is reducing the net worth of Insas.

By next year BOD will not have any more excuse for not giving better dividend if we the minority shareholders keep pressuring BOD for better dividend.

2 months ago

Sslee

Many people rebut me for asking a better dividend by quoting Berkshire Hathaway does not pay dividends to its investors. Instead, the company chooses to reinvest retained earnings into new projects, investments, and acquisitions.

They forget Insas just keep cash and poor return on cash keep in bank account. Only lately transfer cash in current account to FD to earn better interest income.

2 months ago

ahbah

I always welcome div. The more, the merrier lah even though the co. got no moni !

2 months ago

ahbah

I no mind the co. borrows tons of moni from the banks and pay me tons of div.

2 months ago

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