Insas main jewel is its 16.4% stake or RM1.92bn tag in Inari, which already exceeded Insas marketcap of RM634m, implying its other divisions such as Financial service and credit & leasing division; Property investment and development division; Investment holding and trading division; Retail trading and car rental division businesses are “free”. Valuation is undemanding as the share price is trading at 0.33x P/B (vs 10Y average 0.4x) and 61% discount to revised SOP of RM2.36 (despite imputing a large 40% holding discount). We think such valuations have provided a sufficient “buffer” and will cushion further slide in share price, thanks to strong earnings visibility from financial serives (stockbroking and credit/leasing arm) and IT-related manufacturing businesses particularly from Inari (+30% EPS CAGR from FY20-23). Also, it has a solid balance sheet with NCPS of 89 sen (~97% to share price).

Potential downtrend reversal following the three white soldiers candlesticks. The three white soldiers formation yesterday was accompanied by a higher-than-expected volume of 4.66m shares (2.1x higher than 90D average) could indicate an end of a downtrend and marks a clear indication in the balance shift from sellers to buyers. A successful breakout above RM0.955 (61.8% FR) will lift share prices higher towards RM1.02 (52-week high on 29 Jan) and our LT target at RM1.10 (150% FR). Meanwhile, key supports are situated at RM0.89 (10D SMA) and RM0.85 (9 Feb low). Cut loss at RM0.84

Source: Hong Leong Investment Bank Research - 16 Feb 2021