Asiafile currently owns 20% holdings is Muda Holdings Berhad which I recommend that Asiafle sell all the stake in it if they want to realize higher valuation. Muda holdings is profit making and generate cash flow for their stockholders - So why is muda a bad investment? Because Muda is not making even close to their cost of capital. Muda's cost of capital is about 9.53% and its ROIC is only 1.9-2.0%. This is close to -7.53% of Loss of Capital for its shareholders! The evidence is in its extremely poor 2.8% operating margin and average of 4.1% operating margin. Intrinsic value of Muda is -RM121mil (yes! negative) with the following assumptions: 2% Revenue Growth, 4.1% operating margin, 32% effective tax rate, 1.00% terminal growth rate and 9.53% WACC. Out of -RM121mil valuation 20% belongs to our dear Asiafle.

Asiafle's valuation considering their 20% holdings in Muda is only at RM3.00/share with the following assumptions: 4.97% Revenue growth rate, 16.3% operating margin, 21%-22% effective tax rate, 17.5% ROIC, 2.48% terminal growth rate at 9.44% WACC. At the current price level of RM3.34/share it is about 10% overvalued.

I therefore cannot recommend a buy from a value point of view.