Background

OSKVI (0053) was established in year 2000 and is the venture capital and private equity affiliate of OSK Holdings Berhad. OSKVI was listed on Malaysia Exchange of Securities Dealing and Automated Quotation Market (“MESDAQ Market”) (now known as the ACE Market) of Bursa Malaysia Securities Berhad (“Bursa Securities”) on 8 September 2004.

The OSKVI Group has an established presence in the private equity and venture capital industry in the region. Since inception, OSKVI has successfully invested, nurtured and divested several companies from various industries.

OSKVI provides equity capital to mid-late stage high growth companies with operating profit track records seeking expansion capital for restructuring purposes or to grow the company to the next level. The current investments held are focused mainly in the internet and network solutions, application software and systems, telecommunication services, consumer products as well as oil and gas industries.

Through OSK affiliate’s established regional networks in Singapore, Indonesia, Hong Kong, China, Cambodia and Thailand, OSKVI is well positioned to assist existing and potential investees in their regional expansion forays. To date, OSKVI has successfully nurtured more than fifteen (15) investee companies to initial public offering on Bursa Securities and the AIM market of the London Stock Exchange since inception.

1. Trading at Huge Discount

Tan Sri Ong Leong Huat offered to take offer OSKVI at RM0.58 and OSKVI-WA at RM0.15 on 27/12/2013. However, the offer was not successful due to the offered price is not attractive at all.

Affin Investment Bank Berhad advised shareholders to reject the offer as it is not fair and not reasonable. Obviously the offer price is at huge discount from net asset stands at RM0.96 as at 30/6/2014. 

99% assets of OSKVI are mainly cash and quoted shares listed in BURSA and other exchanges. In the event OSKVI were to liquidate the assets, shareholders will receive cash of around RM0.95 (which is 58% premium of the OSKVI market price at RM0.60).

The major Bursa shares investment are as follows:

      OSKVI has cash of RM45,213,000 as at 30/6/14 without any bank’s borrowing. Hence, OSKVI is a zero gearing company.

Conclusion

Invest in OSKVI just like buying Unit Trust Fund (which has net asset value of RM0.95) at huge discount price of RM0.60. The downside risk will limited to RM0.02 only as I believe Tan Sri Ong will support the share price of OSKVI at RM0.58. In fact, he has been buying OSKVI at RM0.58 in between Jan and Feb 2014.         

Compare to downside risk of RM0.02, I believe the potential gain is unlimited. The minimum return will be at least RM0.35.

2. Confident on Tan Sri Ong Leong Huat (Founder of OSK Holdings Berhad)

Tan Sri Ong offered to take over OSKPROP at RM0.87 in 2011. He offered to take over OSK in 2013 at RM1.68. Tan Sri Ong has been in broking industry for more than 30 years. Obviously he will only make a take over offers when the shares are trading at huge discount from actual value.

Below is the performance of shares price:

                Important Points 

OSKPROP up RM1.63 (up 187% compared to take over price)

OSK up RM0.72 (up 42% compared to take over price)

OSKVI only up RM0.02 (up 3% compared to take over price)

How much OSKVI can go up based on what investors gain on OSKPROP and OSK? I guess OSKVI at least will reach RM0.96. What do you think?

          Many of Tan Sri Ong’s shares have shoot up in this year. Below is the performance of

shares price.

Conclusion

Obviously OSKVI is under performed compared to Tan Sri Ong’s other shares. So, I would rather buy OSKVI since I have 100% confident on Tan Sri Ong. 

Target Price

Short Term : RM0.815 (15% discounts from Net Asset as at 30/6/13)

Medium Term : RM0.96

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