Your way of thinking is still very immature. If it were that simple you can buy any of the above "undervalue" share and keep the billions of unrealised value.

The answer to that is the same reason why you would rather buy shares in ICAP fund than the ICAP business itself.

If you hold inari shares you get the dividends directly.

If you hold INSAS shares, you get the possibility of getting inari dividends, and no collective right.

If INSAS management decided to waste that money by giving it to a Mongolian company to start a vigsys business and burn/piss/waste all of the dividend money from inari, there is nothing you can do about it.

REMEMBER, YOU ARE A MINORITY SHAREHOLDER.

EVEN IF YOU DO NOT AFTER WITH THE BUSINESS DECISIONS OF INSAS MANAGEMENT, THERE IS ZERO CHANGES YOU CAN DO TO THEM.

THAT IS WHY INSAS IS VALUED AT 80 CENTS.

Not for whatever reasons you highlighted.

In same vein

If you were put money into ICAP, you would get zero returns, unless tan teng boo decided to do share buybacks or declare dividends.

Your logic is not flawed, but it is incomplete.

YOU REFUSE TO SEE THE FULL PICTURE, BUT ONLY WHAT YOU CHOOSE TO BELIEVE.




>>>>>>>

Am I right to say, I need to sell 2 Insas shares (2x 80 sen) to buy 1 Inari (RM 1.60). I just prefer to hold 2 insas share thus indirectly owned 1.8 Inari share, all the cash and cash equivalent and all the other Insas business rather than holding directly 1 Inari share?

How I value INSAS? At 80 cents I am still not buying a single share of INSAS. Meaning I value INSAS far below your NTA of 1.7 billion.

Why? I can never fire current management 33% ownership who make stupid decisions after 1 good decision in inari to put money into sengenics, vigcash, hohup, omesti, dgsb, fintec etc ( things which not even sslee will buy).

I can never get a ever growing dividend from INSAS ( where is growing earnings and profits future coming from? After you kill golden goose inari from 40% to 20% to 0% transfer out cash into cash burning business line sengenics and vigcash and numoni and tribecar( JV with frauds to transfer money out from public to private hands), where will you get future revenue and earnings? No clarity on future earnings and profit meaning no future growth prospects.

At what stage will I buy INSAS?

1. After change of new management, trigger MIGO to show financial capability, then start selling non performing business units like melium, sengenics and numoni.

2. Use earnings and dividends to grow m&a business, revamp website and operational software, increase team to grow investing and IPO arm.

3. Stop investing in startups and instead target on taking over cash generating profitable business run by well run management seeking a good home for their business.

4. Reduce their revenues and profits from one off sources and increase revenues and earnings from consistent cash flow sources with a huge moat

Examples of value traps for investors who only use NTA as a single metric to buy a stock instead of understanding the business and its competitive advantage:

Company name share value / net worth
1. Parkson Holdings 279 million / 2,113 million
2. AsianPac holdings 140 million / 1,501 million
3. Protasco Bhd 136 million / 334 million
4. Talam Transform 172 million / 380 million
5. Nami holdings 462 million / 1,250 million
6. Sapura Energy 4,893 million / 13,865 million
7. Bumi Armada 1,352 million / 3,346 million
8. INSAS Bhd 551 million / 1,717 million

The first thing to notice is that
a) I spent 5 minutes on the internet to find some very good deals. All seem very undervalued, by simple metrics.
b) The second question you ask your self is all the NTA the same thing? Each business is subtly different, and its assets are classified differently (which surprisingly is valued by the company and friendly valuers, and audited robustly). IT is not an exact science, and judgement call needs to be made by the prospective investor on the INTRINSIC VALUE OF THE ASSET.
c) In case of any incongruity of the intrinsic value, one must rely on cash flow generation and estimation in the years to come instead of relying merely on the accounting numbers of the "net assets", as evidenced from item 6 and item 7, where the value of the assets are valued at 13bilion and 3 billion, however they can't find anybody to buy their assets. If that is the case, what is the REAL INTRINSIC VALUE?
d) For INSAS, if stated value if 551 million, and the gap is 1.7 billion, and this "temporary difference in INTRINSIC VALUE" has been going on for a very long time, one must make a good judgment call and understand the difference between a value trap and undervalued stock to see if the price will rise to meet the difference in the future.
e) Only one true way has been shown to work: a company that uses the minimum amount of debt and produces a good amount of cash flow and earnings will have their share price guaranteed to increase. Not via stated value of the assets (versus real world demand for those assets). This way has been shown to work for a very long time, and why asianpac cannot be valued (in fact ALL property developers) at NTA alone.

Hope you learned something.

>>>>>

What is a Value Trap
A value trap is a stock that appears to be cheap because the stock has been trading at low valuation metrics such as multiples of earnings, cash flow or book value for an extended time period. Such a stock attracts investors who are looking for a bargain because they seem inexpensive relative to historical valuation multiples of the stock or relative to the prevailing overall market multiple. The trap springs when investors buy into the company at low prices and the stock continues to languish or drop further.


BREAKING DOWN Value Trap
Successful in prior years with rising profits and a healthy share price, a company can fall into a situation where it is unable to generate revenue and profit growth due to shifts in competitive dynamics, lack of new products or services, rising production and operating costs, or ineffective management. For the investor who is used to seeing a certain valuation of the stock, a seemingly "cheap" price becomes interesting. However, it becomes a value trap to the investor if no material improvements are made in the company's competitive stance, its ability to innovate, its ability to contain costs, and management by the executives.

As with any investment decision, thorough research and evaluation is recommended before investing in any company that appears cheap on the basis of conventional valuation metrics.

I have been averaging down by a huge amount so far, in the long run all I can say is PCHEM business will be OK. if it goes down to RM6 I will be getting 5% returns on dividends, 32 cents and growing dividends.

Just enjoy the discount day while it lasts. Chase now and not when the share price climbs to RM10

>>>>>>>>>

lazycat this stupid pc ham zzz i bought 3 times , cut loss 3 times this year , luckily i don't play hero and keep avrg down
18/07/2019 9:58 AM

Yup, exciting isn't it. Discount day. Am currently discussing for margin facility on PCHEM to purchase even more. Most likely will go on margin and purchase a huge block.


>>>>>>>>>>

Posted by KNM Sailang Margin All In > Jul 18, 2019 10:28 AM | Report Abuse

philip lost just a few millions

I have been holding yinson since 2012 and keeping until today. I know the business inside out. I know how much their revenues are growing, how much their interest payments are and exactly how much debt they have..

Remind me again how much armada you hold and when you bought it? You suddenly become expert after buying the stock these last few weeks?

Small kids trying to act as if professional investors but are actually driving myvi and making fun of other investors.

When you get a few more years of investing under your belt then you can b say other people so hai ok?

My yinson go from rm1.15 and buy more are rights issue until today is worth 7.15. you know nothing a be presume to know everything.

Malu la office despatch boy.

I realized that stockraider really doesn't know how to value stocks, that is probably why he values hengyuan at RM35 before it crashed so spectacularly.

The important figures are the same in real life just as in a balance sheet.

What matters is how much revenue and profits you generate versus how much loan interest and the principal amount you need to pay back (or reloan) to continue as an ongoing business.

It doesn't matter how much you owe, first you need to know when you need to pay back the principal amount, then you need to know how much you need to cover the interest payments every year.

The reason why armada is worth 1 billion and yinson 7 billion:

SHORT TERM DEBT. OR HOW MUCH THE BARBARIANS AT THE GATE WANT, AND HOW EASY IT IS TO GET A EXTENSION ON THE LOAN.

Armada had a reprieve when the loan was extended to october 2019, but... IT IS STILL SHORT TERM LOAN. IF THEY DO NOT PERFORM, THEY WILL EXPLODE.

The other main reason,

INTEREST LOAN COVERAGE, or how much is their revenue generation to service existing debt (the reverse of cash flow in, this is cash flow out).

If got gangsters everyday calling you chasing for money, it is very hard to concentrate on making money and doing proper business. On the other hand, if investors are clamouring to give you money that doesnt need to be returned, you can go quite a long time before needing to worry.

DO NOT COMPARE HYFLUX AND YINSON, HYFLUX HAD PROBLEMS WITH ENERGY GENERATION AND PRODUCTION COSTS (SAME LIKE KRAKEN) WHICH RUINED CASH FLOW AND MADE IT NEGATIVE.

YINSON STICKS TO SIMPLE THINGS THAT THEY ARE GOOD AT.

LIKE OIL FERRY AND BUS BUSINESS. VERY CONSISTENT CASH FLOW, VERY CLEAR RETURNS ON EQUITY.

too bad stockraider only sees the trees and miss the forest.

maybe he should sell his myvi and walk around instead? servicing debt can be very hard for an office boy.

if cannot pay for the car, dont gamble with stocks, my sad friend.

Bought a huge block of pchem at 7.91

In the short term it is a beauty contest.

In the long term it is a weighing machine.

Do not be confused. If Armada is good it will perform, if not good share price up and down in the short term won't make a difference.



>>>>>>>>
Posted by pang72 > Jul 16, 2019 7:34 PM | Report Abuse

Why Armada rise from 15c to 25c if no good....?
So, what is good then?

I am confused!

What is the purpose of this?

>>>>>>

stingray_ea(
100% Candlestick,simple,fast,high accuratecy
No Trendline, UpDown,Z,M,N,W Reverse lines, U,F,O turns.
No Indicator
No News
No FA / TA
Go deep into operator mind and read their steps
Go deep into retailer mind and read their steps after operator actions
)

“There will be an initial judgement [on the claim] in the fourth quarter of 2019. Then there will be a period for appeals, as we understand the legal process,” said Christenson, hinting of a longer timeline before Bumi Armada can receive the compensation even if it wins in court.

>>>>>>>>>>

Confident, aren't we?

For a better understanding of the business fundamentals of YINSON.

https://www.insage.com.my/ir/cmn/loadpdf.aspx?sCompanyCode=YINSON&sFileName=19191000032582

Technically.... A loan that I do not have to pay in my lifetime or my children's children's lifetime is not considered a loan, in my lifetime of I do not need to pay back any principal amount of the loan, I consider it equity.

Why you keep fighting this fact?

Accounting rules already accept this as equity.

Banks and INSTITUTIONS consider this equity.

You are the only idiot who keep fighting this fact.

Never mind la let little kids win.

OK YOU WON, PERPETUAL BOND IS DEBT AND A LOAN. HAPPY? NOW WHAT? GOT MONEY TO EARN?

meanwhile my share price has increased from 4 billion to 7.6 billion.

Still want to fight?

>>>>>>>>>>>>>>

tockraider TECHNICALLY PERPETUAL LOAN IS LOAN AND NOT EQUITY LOH...!!

I'm sure the office boy who drives a myvi is very capable. Please do hold your INSAS for as long as you like while yinson becomes a 8 BILLION DOLLAR COMPANY.

Good luck with your investment and your concert of debt, while others are maximizing their returns over a long long long long term debt. So long in fact that accounting rules treat it as equity.

But yeah, hope you make small money and live a happy life.



>>>>>>>>>

Posted by stockraider > Jul 14, 2019 10:49 AM | Report Abuse

Don be sochai, let face reality mah....!!

Ask yourself honestly Perpetual bond is a debt loan or not mah ?
Yes it is a long term loan and legally it is a debt.
A debt always ranked ahead of equity in the pecking order in terms of repayment loh...!!

Forget about accounting rules, it serve a commercial purpose, as it is trying to encourage hybrid financial products, not understand by simple layman like Philip loh...!!

In Calvin tan defence kps released 2 dividends, a special dividend of 32.6 cents due to the splash sale and 4.25 cents final year dividend. However the share price crash to 99.5 cents from rm1.65 shows a huge -ve 30 cents drop post dividend. So much for Calvin tan predictions.

Updated my holdings in PCHEM.

It would be rare.... If they have announced share dilution earlier.

Nothing happens without a reason.

The Company has proposes to undertake the following corporate proposals:
a) a proposed bonus issue of up to 16,432,082 new ordinary shares to be credited as
fully paid-up together with up to 49,296,248 free detachable warrants, on the basis of
1 bonus share together with 3 warrants for every 5 existing ordinary shares held on an
entitlement date to be determined and announced later.
b) a proposed establishment of a long-term incentive plan of up to 15% of the total
number of issued shares of the Company (excluding treasury shares, if any) for
eligible directors and employees of the Company and its subsidiaries during the tenure
of the proposed long-term incentive plan following the termination of the previous
Employees Share Option Scheme.

Accounting rules say you are wrong. Understand the business first itself then look to the debt.

If you understand this better you will understand why foreign investors and major institutions have been buying yinson from 4.09 to 7.20 today.

And you will probably understand better what they don't touch Armada.

Already written, haven't published. Will do it this week

Poor Herbert. Kyy is bringing down his favorite stock.

It's ok. Let stockraider compare, he seems to think that he can influence institutions and large investors with his thinking. To bad I'm still holding and will not touch a single share of armada.

Here is the difference between qualitative and quantitative analysis.

If you have a bank loan where you have to pay back the principal in 999 years, is this considered borrowings or equity?

When you have short term debt, long term debt and 999 years debt you need to call a spade a spade. Yinson is excellent in their financial raising capability.

>>>>>>>>>
I invite you to read first before commenting the SC document on the property bond raised in SGX and BURSA.

No such thing loh....all loans got a callable element or clause in the agreement whether short or long term or even perpetual loh...!!

Wrong. They will raise perpetual bonds with maturity tenure of 999 years. No dilution of SHAREHOLDINGS and no default risk from payment if matured bonds unlike armada and sapura.


>>>>>>>>>

The new FPSO will result in YINSON borrowing even exceeding Armada on an absolute basis, that means Yinson gearing will be very high loh...!!

Please check your details, yinson is the only tenderer left for 3 FPSO jobs where the total order book will be huge, Brazil Marlim 1 they are the only reference left, 709k usd day rate 25 year contract, whale park sgp was disqualified so only yinson left 22 year contract 650k, Ghana contact 15 years 650k contract they are 2 left but only one tenderer gas job experience in Ghana ( yinson). I leave you to calculate order book and why valuation for YINSON now at rm10.



>>>>>>>>>
Yinson mkt Cap Rm 7.2b order books Rm 4b loh.......!!

Einstein says we must make every effort to make something as easy as possible, but not simple.

In this case, this is the easiest way I can explain my selection of YINSON, QL and TOPGLOV through the years.

Easy, but not simple.

If following PE alone works, it would be simple.

If following NTA alone works, it would be simple.

If following golden rule growing earnings alone works, it would be simple.

But if it was simple, how come kyy lose money? Calvin tan lose money? Icon8888 lose money? Qqq3 lose money? Philip lose money?

The answer is: investing is not simple.

Sslee,

If you look beyond( pardon my pun) past financials and try to understand the long term economics of the business, you may have a better understanding of it.

https://youtu.be/4R-xu9OmrQM

Or you can let Dr. Oz tell you all about it.

https://youtu.be/PqVBInU0A8s

This is something that I saw before in understanding the economies of plant based meat.

A very strong metric, plant based food grew by 24% yoy, while the meat industry grew by 2%.

In the long run the 10 years future economics will favor plant based meat.

Mental Models I use:

Lowest cost differentiator.
( It takes 308 gallons of water to process 1 lb of beef. Not to mention feed and killing, skinning and processing). Plant based food will win in the end, if everything else stays the same ( price, flavor, demand)

1st mover advantage.
Only impossible foods and beyond meat are going the extra mile to make plants cook and taste like near ( blood is from beet juice). With enough demand and r&d, they will have an unedible unassailable lead in the plant based food future.

Supply versus demand.
Similar to how chicken is popular in Malaysia because it is the only meat that Indians and Muslims have no issue with, vegans and health organic people ( getting more every day) will be provided with an alternative option when previously there was none. Before vegetables burgers were dry and not tasty. But the new burgers from beyond meat had the same amount of fat as a real beef Patty. Oven carnivores are buying beyond meat.

Economies of scale.
Currently I believe the losses are due to r&d, marketing and growing costs. But once they achieve a tipping point, it is a business model where industrialization and ramp up of production is far easier to process than growing beef. As long as revenues grow, the profits will definitely come.

I'm not familiar with beyond meat, but let me put into play another similar business that is losing money, but if now valued at 170 billion.

Waymo.

The King of self driving technology is a loss making company for the last 13 years since 2006. Google has plowed more than 5 billion USD into the company that has never made a profit for 13 years. The revenues are growing exponentially while there is no profits.

However, here are qualitative facts.

Waymo had bought 62,500 minivans from GM. It is all driverless in California ( best testing ground flat land, easy climate). Their driverless tech has beaten every single other company from Apple to Uber to facebook in total by a huge factor. It has driven more miles safely than all of them combined.

Now it is set to make huge profits, as their LIDAR technology is so far ahead of everyone else it is like introducing the Apple iPhone into a world of Nokia flip phones.

They are finally selling their finished tech to end users and partners. Costco is using their LIDAR sensors to do robotic self fulfillment of shelves and storage. The California county is purchasing the tech for use in their garbage disposal truck and bin removal. John deere is using their tech for the crop detection, collection farm equipment. Not to mention the future of driverless taxis and lorries.

The mental model you need to understand is MARKET DISRUPTION and TOTAL ADDRESSIBLE MARKET.

If you went back 150 years ago and you told them we could call someone in Europe from Asia with no delay they would call you nuts. If you showed them a smartphone, they would fall down on their knees and worship you.

For beyond meat, the qualitative analysis is amazing.

3 questions that for thousands of years have been inescapable:

1. How does vegetables taste, smell and sounds and feel like meat? All are organic carbon based lifeform.
2. What is the cost of this vegetable "meat" vs real meat?
3. What are the future economics of beef vs vegetables?

Once you realized that meat technology is as efficient as it will ever be, you will realize that the only possible disruptor is for making vegetables taste, feel,look and smell like meat.

If you could buy a burger at half the price of real meat at nearly the same flavor? The market is endless.

The contention is the word "nearly". I've seen the beyond meat commercials, but have yet to try. My daughter in California has tried it and she says it tastes amazing. It even has blood and crackle when you cook it. Juice dripping from the meat.

I believe if the revenue has increase that much they must be doing something good.

If profit is still not there, they need time to master to recipe.

How long before Facebook, Amazon, Google and Netflix turned a good profit?

Anyway, I'll tell you more once I get a taste.



>>>>>>>>>>>

Posted by Sslee > Jul 12, 2019 9:06 PM | Report Abuse

Dear Philip,
https://investors.beyondmeat.com/news-releases/news-release-details/be...
• Net revenues were $40.2 million, an increase of 215%;
• Net loss was $6.6 million, or a loss of $0.95 per common share, compared to net loss of $5.7 million, or a loss of $0.98 per common share in the year-ago period; Pro forma basic and diluted net loss per common share, which is a non-GAAP financial measure, was $0.14 per common share in the first quarter of 2019 compared to $0.13 per common share in the year-ago period; and
• Adjusted EBITDA, which is a non-GAAP financial measure, was a loss of $2.1 million compared to a loss of $4.3 million in the year-ago period

Tell me base on all your different mental models of human behavior what are at play in valuation of Beyond Meat?

Thank you

I believe when the opportunity and cash presents itself ( when future value of 1.5 billion is worth 1.2 billion in tomorrow's inflated money), yinson can easily retire debt at far lower interest rates 2% over 5 years.

https://www.thestar.com.my/business/business-news/2019/07/04/cgs-cimb-research-upgrades-yinson-back-to-add-from-hold/

In the meanwhile, yinson needs cash to win projects and grow their business. With 3 FPSO technically won worth 709k usd day rate for a charter of 25 years for marlim 1, 650k usd day rate for whale park 22 years and Ghana 15 years, the projections are very easy to calculate and firm contracts with penalties on both side for noon conformance.

Repayment is definitely not an issue.

Technical performance of their international Norway team is also very good.

I can pretty much guarantee a good economic future for YINSON as all these deals are done when the pool prices are low. When o& g industry recovers, and the pe multiples return to mean, YINSON will definitely be rerated on good fundamentals.

Hi sslee. No offense reserved.

It is definitely cheaper to do so, but you need to know the full structure of the bond. My recommendation is to understand the underlying security of the bond structure.
2-4% sounds like a treasury bond, which is guaranteed and covered by government.

There main issue is still maturity period and coupon rate ( the bond value at buyback also makes sense).

Another example is topglove bonds recently. The bond rates are very low, 200 million usd@ 2% per annum 5 year period, which is used to pare down their existing loans which is paid at 4% per year. This sounds very good. However they have to give up a few things namely introducing a convertible bond ( they can convert the 200 million usd into 131 million shares@conversion price of rm6.2), and also allow bondholders to borrow 2.1% of owners shareholdings or 5.1 million shares to be used for short selling. This sweetens the deal enough ( and protects bondholders in case the stock price tanks), that the bonds were snapped up immediately on the SGX and BURSA markets.

So in other words, nothing is got free. There is a cost to everything.

For YINSON case, 7.5% with no maturity period ( estimate 14 years to break get back your principal amount, balance perpetual). Ship charter risk if client non-payment ( penalty clause, low risk, i think rated bba+).

Or indo government bonds
Indo Gov Bond: INDON49
Coupon: 5.35%
Maturity: 11-Feb -2049

It all falls to your estimate of trust for the company (or government) ability to pay.

Thank you

Sapura and Armada share price crash is because debt generation and interest repayments has increased, while their profit margins and revenues has be dropped tremendously. With looming maturity of borrowings to be repaid in the very near future, and no one willing to buy their bonds, it extend loans, their only option is to do rights issue, warrant or cash call.

Yinson borrowings had no maturity period, thus classified as equity. Very very good arrangement for strong growing companies.

>>>>>>>>>>

Posted by Sslee > Jul 12, 2019 2:20 PM | Report Abuse

Dear Philip,
Mean no offend, my HSBC account manager do recommend me to buy USD bond with bond yield rate 2% - 4% depend on Bond issuer hence 7.5% sound a lot. Will it be cheaper to borrow long term loan and then keep refinance with new loan when the old loan is due to expire?
Thank you

Efficient market analysis?

Haha qqq3 I would have thought people have given up on it by now. Still have believers?

Oh... Warren buffet must be the most foolish human in Earth. Market keep rewarding him.

yawn.

This is probably the most important concepts in my life which changed my investing methods and made me a millionaire. Sad to be you.


>>>>>>>>>>>>>

Posted by SPMstudent > Jul 12, 2019 3:32 PM | Report Abuse
tldr

yes, it is common issue in psychology.

I love applying all the mental models that I gain in analyzing a stock qualitatively and not only quantitatively.

The biggest question to answer in stocks is not whether the share price is going up or down.

The most important question to answer in stocks is to answer the question: what is the economics of the business 5 - 10 years from now?

A quantitative analysis can only get you so far. It shows a snapshot of the NOW: how much debt is accrued, what the business makes the last few years, how the revenues are trending, the dividend payout etc.

But this will not tell you how the business will do in the future.

For that you need to understand the economics of the business, its business fundamentals (qualitative, not quantitative), and how able it is in meeting challenges and growth.

That is the difficult path, and it involves removing as many unknowns and assumptions as possible.

only when the assumptions are minimized, can the mental models come to work in projecting the business and its real world capabilities compared to its competitors long term.

Find the moat. Understand the knight.

As a engineer one of the popular mental models I use is the law of motion.

In stock picking this is how I relate with it.

Force= mass x acceleration.

Therefore a object in motion trends to stay in motion, while an object at rest trends to stay at rest.

In other words triggers! A bad business will usually tend to stay a bad business, unless certain triggers that are enough to counteract the motion and push it the other way around happens.

At the same time a good business will have a lot of benefits like low interest rates, reputation and good management that will keep it moving forward.

Only when triggers occur that allow down velocity will business status change.

My mental model then is to find the triggers in economies that change a business fundamentals.

That is probably why I rarely buy net asset companies ( like property developers), because the triggers required to turn it to profitability have nothing to do with mass of the company ( assets), but they need a huge amount of acceleration to make it improve.

I believe the acceleration triggers will be very clear and concise before I jump into those kind of businesses.

Most of us, however, are specialists. Instead of a latticework of mental models, we have a few from our discipline. Each specialist sees something different. By default, a typical Engineer will think in systems. A psychologist will think in terms of incentives. A biologist will think in terms of evolution. By putting these disciplines together in our head, we can walk around a problem in a three dimensional way. If we’re only looking at the problem one way, we’ve got a blind spot. And blind spots can kill you.

Can you name any negligence on yinson part in interest repayments? On return hand, each contract they sign comes with a clause where the chartering party has to pay a penalty for any contract cancellation ( which turns out to be the cost of ship conversion). This pays for all the returns of the bond if needed to close.

There is nothing to contend if YINSON does not have any bad debt history and an exemplary history of producing ahead of schedule, good track record of results and a wonderful paymaster.

I have owned YINSON since 2012 and I have yet to find any fault in their business practise.

In any case the bonds are not available for retail investors like you. Minimum outlay is 1m usd for the bond takeup.

Major institutions have greedily picked up as the repayments are clockwork and the business contracts solid.

Imagine a bank taking your fixed deposit and epf submissions and paying you 4% or 6.3% per annum. Where would they go to get the returns? Buy stocks in sapura? Sumatec? Insas? Those are totally risky investments. Instead they buy the issued bonds from YINSON which pays 6.8% and 7.85% which is very stable and profitable. Most of all those bonds are backed by assets in use and on site, drawing cash flow.

It is a positive cycle, the better the contracts they more profit they have. The better the profit the more institutions want to lend to them.

The only problem you need to look at now is their ability to perform, how will they will do in their first project in Brazil waters.

The payments are very clear cut and consistent ( you stop paying, I stop delivering oil barrels). The debt is also very clear cut ( no maturity on bonds, only interest payments to worry about). The biggest risk is execution.

But YINSON has shown their ability to execute, with Japan institutions rushing to buy a piece of their action.

I feel confident as a shareholder.

>>>>>>>>>>>

DickyMe The contention is not about the return but the tenure and negligence of constraints.
12/07/2019 12:10 PM

To be honest, I hope it doesn't go through. The assets and synergy is definitely undervalued and is a perfect target for takeover due to evious ezion economic problems.

But those same economic problems will also cause YINSON to be overstretched and headaches in the future.

In the wake of these long term contracts with Brazil and Ghana high possibilities, I believe YINSON will do the right thing and not stretch their resources and just do the simpler things and get the orders and expedite ship conversion and profit raising.

I have a clear view of where YINSON cash flow and earnings growth will come from 10 years from now. Ezion gives me a big headache.


>>>>>>

Posted by W205 > Jul 12, 2019 12:57 PM | Report Abuse

Philips, how do you view the Ezion acquisition? How does that fit with the business of Yinson? It seems the deal might not go through

I don't know how many companies in Bursa can raise funds via bonds with payback maturity period of 999 years in the principal capital.

I noticed this in 2015 when cimb helped raised perpetual bonds for YINSON at 120 million usd. In my kind, at 7.85% rates they can just pay off the interest payments until one day when the Malaysian ringgit recovers up to 3 or 3.2, and the use dollar shrinks again, and clear it up the maturity.

This may come in 10 years, 20 years or 30 years.

They may even renegotiate new facility at better rates and reset the whole thing at their leisure.

I realized then that yinson will not have liquidity problems for a very very long time, if ever.

>>>>>>>>>

Posted by Sslee > Jul 12, 2019 12:53 PM | Report Abuse

Hahajaha,
Qqq3 7.5% intetest is not a cheap way to raise fund. Need to learn from JAKS ALP how to raise cheap funds.

There are managing perpetual bonds around, this is not the first one. This is the first one for an oil & gas industry.

Although I don't term YINSON as an oil and gas company, more as a ferry charter company where instead of humans they transport oil barrels at a fixed rate.

Advanced investors buy perpetual bonds only in industries which are very stable and predictable.

What can be more predictable than a highway concession and a ferry charter?

Yinson brazil fpso contract will be 22 years with an option of extension at a day rate of 650k usd.

In addition the penalty for cancellation is exactly the amount raised for perpetual bond. So they will be able to pay the full bond maturity if needed.

What more can you wish for in terms of clarity?

At 6.8%, their interest coverage will be 105 million a year with no need to pay any original principal sum of 1.5 billion.

As long as you can calculate the profit margins every year from ship charter (o&m is a separate contract) and minus of the interest coverage used for ship conversion, that is a very clear line of profit for YINSON.

More importantly, in terms of inflation, 1.5 billion today and 15 years from now 1.5 billion will be worth far far less. Meaning the value of repayments will be worth much less by then.

Very few companies get access to cheap and efficient source of credit.

As long as yinson has access to the markets, I am sure they will be able to get many many more projects in the future.

That's why it is the best deal for YINSON.

In fact it is fully taken up, and even the latest usd200 million had been fully taken up.

I don't understand the point you are trying to make. This is good for YINSON, that is why it is treated as equity, not debt.

And for some people who want dividends, 7.85% forever is a good deal too.

It is an analogy, not an exact explanation.

How else would you explain a bond with a 999 year tenure on maturity?

>>>>>>>


In stock market, investors are not your father and the company is not son.

A qualitative understanding of INSAS coupled with quantitative reassess can shows 2 different scenarios. There is a scenario in which they got the mother load and find another inari and have big increase in profit from there. There is however a more likely scenario: INSAS continues on in using it's inari resources and trading profits to pay for company activities which will need a long time, if ever to mature.

A company that invests in vigcash, and vigpay leaves me with a far more likely scenario.

The activities of the new CEO will spend resources in even more aggressive and risky activities which is either win big or lose big.

In either case, the only most likely solution for INSAS to increase its share price above rm1 level is clear:

A. The management or a competing company decides to invest heavily with share purchase, triggering MGO, causing share price to go up for takeover resolution.

B. The management decides to do a heavy dividend increase to reward all shareholders.

Both of these solutions are unlikely. A will not happen because the only party interested in increasing their shareholdings do not have the financial strength to do so, and B will not happen because at 33% ownership, it is to the management group benefit to minimise profit dilution, maintain control, and find other way to get money out via purchasing of other related companies, paying higher director salaries and doing startups of companies in various locations out of Malaysia ( Hong Kong, Brunei, Mongolia, Singapore) which local auditors are unable to verify.

Of course, INSAS management may also be doing the right thing in trying to grow the business but still in the process of growing startups. In either case, many assumptions need to be made.

No problem, ijm saw profit that is why unhappy, meaning profit returns to gkent/mrcb is more than previous 6%.

In this case no problem with termination, if ijm want the job so bad, renegotiate contract and give them new terms on price revision. If you can do the new price by all means.

Most likely they will not agree on revised price

4. Retail and car rental:
Melium Group is one of Malaysia’s leading retail group on international luxury fashion brands such as Aigner, Emilio Pucci, Farah Khan, Givenchy, Hackett London, Lanvin, Max Mara, MCM, Roger Vivier, Stuart Weitzman and Tod’s. Melium Group also operates a multi brands store “M” Pavilion which presents fashion trend from more than 50 international brands. Besides luxury fashion, Melium Group also owns and operates the Seminyak Village, a boutique mall in Bali that offers international brands along with the best of Bali’s home-grown labels.
Melium Group also holds the Malaysian franchise chain of Dome Café. Dome Café in Malaysia operates in over 20 outlets in Klang Valley, Genting Highland, Johor and Penang. It also operates its own café known as “Aseana Café” which is a home-grown unit with an Asean touch.

Let me be honest, lets all be honest. When was the last time you drank at a Dome Café, and bought clothes from all their retail lables? You compare the explosive growth of well run businesses like Old Town coffee, starbucks and tealive, and you know that dome café is a loss making operation. IF it was making money, it would have more than 20 branches by now. 5-10 years later? I wouldn't be surprised if they sold it or built just another 2 new branches. (the branch in Kota kinabalu sabah are all closed and dead)

3. Technology

The Group’s technology’s core activity is investment in high growth technology companies in three broad technology sectors namely electronics manufacturing services (“EMS”), financial transaction processing (“Fintech’) and bio-technology. The major investee companies in the respective tech sectors are Inari Amertron Berhad (“Inari”), Numoni Pte. Ltd. (“Numoni’) and Sengenics Corporation Pte. Ltd (“Sengenics”).
Inari is involved in the Outsourced Semiconductor Assembly and Test (“OSAT”) industry for RF products and tailored EMS contract manufacturing to the semiconductor optoelectronic industry. As at 30 June 2018, Inari operates 12 plants situated in Malaysia, Philippines and China with total production floor space of over 1 million square feet. In FY 2018, Inari reported revenue of RM1,376 million, a 17% increase as compared to RM1,177 million in FY 2017, and its earnings improved from RM229 million in FY 2017 to RM260 million in FY 2018.
Numoni was originally formed to bring financial inclusion to the under-banked with its Cash-in Cash-out solutions. Numoni’s timing also coincided with rapid changes in the financial payment industry with the onset of mobile enabled financial technology (“Fintech”) during the last few years. Unfortunately, Numoni is not been able to gain traction in the Fintech industry in the face of new deep pocketed Chinese players as Alipay and Wechat Pay in the region and also incremental regulatory changes in the countries Numoni operates in, which gives time to and thereby favoring entrenched legacy industry players. Numoni is continuing in its efforts to seek traction in the Fintech industry. Numoni’s subsidiary in Malaysia, Numoni DFS Sdn Bhd is licensed by Bank Negara Malaysia to conduct e-wallet and remittance businesses ie. remittance and payment solutions to its customers via mobile applications & other electronic channels.
Sengenics is a functional proteomics company that was originally spun out from research that was originally carried out at Cambridge University in the UK. The company has a patented technology called KREX and has made good progress engaging world renowned customers and collaborators that include top pharma, biotech companies and ivy league-class academic institutions in the USA, Europe and Asia as it expands its footprint in the biomarker industry.
The Group’s Technology segment, as in the past financial years, remains a key contributor to the Group’s profits and cash flows. The Technology segment continues to maintain a significant equity holding in Inari to generate recurring dividend income. From capital gains and income returns from mature investments such Inari, the Group’s Technology segment is able to generate cash flow at the same time seek growth from new and promising investments in the Technology segment.

I will just be quick about it. It all sounds very nice, but other than inari (which is paying for everything), their efforts in technology are all horrible ideas and unproven and loss making. Inari was a lucky throw where they met the right team, and had the cash to support and watched it grow exponentially. Will inari continue to grow exponentially in the future? My humble opinion is the smarphone market is over saturated, the rate of phone replacements will definitely slow in the future and the will definitely impact inari in the long term 5-10 years from now.

2. Investment holding and trading,

The Group’s investment strategies encompass stringent asset allocation and diversification to manage risk of the portfolio investments of the Group. To that, the Group acquires fixed and variable income investments typically money market funds, debt securities and high yield growth stocks and listed equities and options. These investments are held on a medium to long term investment horizon of 1 to 5 years. 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.

By far, this is their biggest earning business model. Can you judge the competitive business advantage of their management in picking stocks and their investments profile.

By taking the average results of the last 2 years (100m profit in 2017, 3m profit in 2018), you realize that they are not holding fixed income securities, but a mixture of highly volatile investments and inconsistent companies. In short, the question you should ask yourself, how many stocks in their portfolio is in YOUR portfolio, and would you buy them? What is the last 5 years results of the stocks that they are holding (the calvin tan question) and would they continue to keep it?

AS it is virtually impossible to predict with any accuracy how this division will do 5-10 years from now, I declare sslee a veritable genius as I have no idea how to value the intrinsic value of this division, using 3 million? or 100 million? I am far too stupid to invest in INSAS.

How I go about solving this question. Lets do this again qualitatively, not using quantitative results (which is from annual reports and must be done in tandem with qualitative research, not standalone, for that is the path to destruction).

1. https://www.mnaonline.com.my/, or M&A Securities Sdn Bhd is INSAS stock broking and share listing services, corporate finance & advisory services. They also have a lending arm, Insas credit & leasing Sdn Bhd.

As of 30 June 2018, ICL has outstanding loans portfolio in excess of RM200 million which are fully collateralized and generating interest income to the Group.

What does this mean, how stringent is their application process, how many branches do they have to collect, process and sell loan products. What is the credit profile of their borrowers. How easy is it to use their online system, how many people use their platform, is it growing? is it taking market share from encumbents? Who is the encumbent? (I would assume it is the major banks in Malaysia) Is it more efficient and easy to use, are the trading margins better? are the sales growing?

Comparing with quantitative results (see above), you get the opinion that financial services due to internet generalisation has caused rates to be so generic, that only the most easiest and comfortable to use will get volume, but at the cost of ever reducing income.


https://klse.i3investor.com/jsp/hti/brokers.jsp

These are the rates given in i3 community of all the stock broking facilities.

Now the qualititative analysis. M&A securities has 5 branches in malaysia. Is it growing? Is it competitive, will users in sarawak and sabah be able to take part? for the last 5 years from 2014-2019, has this business unit been growing? Is management taking any initiative to grow this business? If given the chance, would you use their platform for trading or online stocks settlement? How many people do you know are currently using this service?