Please also bear in mind that although insas accounts for its share of inari ‘s profits as an associated company, this is only for accounting purposes and cash-wise, Insas only receives dividends

Especially as Mr Market values Insas ex inari at less than zero instead of over RM1 billion!

If you are an economist, you will be familiar with Joseph Schumpeter’s concept of “creative destruction”

Insas will always be judged by its inari stake (but alas adversely), and it will be better to shake this off

Insas should distribute its inari stake and start afresh - after all, it will still have assets in excess of RM1 billion even ex- inari and this is more than many other listed companies

Thankfully, in this case, the “destruction” will be profitable for us all as we will own inari shares directly and still maintain our stake in a hopefully rejuvenated Insas

Win-win, as they say

Cheah5555

As I said before, our fate lies with DS Thong

Just a simple 10 sen special cash dividend will move the share price back to RM1 levels

Philip

If I may ask, why are you in the forum if you are not a shareholder?

Philip

Your points are noted

We should therefore ask the directors why they are generating a measly 4.7%!

You say Insas is an investment holding company but one reason why the return is so low is because there is too much cash locked up in non-core activities such as investment in overseas quoted shares, which appears to be mere share dabbling

If you think Insas shouldn’t distribute the inari shares, it should alternatively return the excess cash as dividends because they are not using it in any meaningful way to create additional value

Insas owns about 620m inari shares so each of us owns about 0.9 inari share

The value destruction per share is therefore as follows

X + 0.9 (1.40) = 0.60

X = 0.66 negative

We are not even getting 1 sen for the rest of Insas!

Then the board should spin off inari and each of us will have one Insas share and one inari share to do as we think fit

At the moment there is value destruction as 1 plus 1 is not even I - let alone 2 or the proverbial 3

Philip

I am also a stock market veteran but without as much success as you

I bought Insas in anticipation of the mgo but was also cognisant that even if it did not materialise, the fundamentals will support at least RM1

The risk reward tradeoff was very favourable, or so I thought

I never expected that the share price would retrace to the present levels, which were last seen several years ago

I know you think otherwise but how can a shareholder tolerate a situation where one of the company’s assets is worth nearly twice the value of the whole company

It is not enough for the directors to just say that this is a
stock market freak occurrence

Actually, the directors have a fiduciary duty under the Companies Act to address this anomaly, which is very detrimental to all shareholders, especially the minority ones

Leno

You are a real foul mouth

I am not blaming anyone - sometimes it is good to just state one’s frustrations out loud

You should be more charitable in your postings

I will no longer respond to them- - they are non-constructive and mean-spirited

Philip and Leno

What you both say is correct but theoretical

Insas has been doing all this especially in the last few years (when inari grew from nothing into a huge company) but Mr Market didn’t want to know

So how?

SSLee

Thank you for your views

Actually, for Insas to buy back 10% each year, it must first cancel the treasury shares bought before it can embark on a fresh round of buyback

Otherwise, Insas cannot buy back anymore after reaching the 10% limit

It’s ancient history now of course but does anyone wish to explain why DS Thong did not convert his warrants and trigger the mgo to possibly gain majority control of Insas?

I thought it was a no-brainer decision given how much he could have made (I calculated it was in the hundreds of million RM)

Noted tq

Philip and i3lurker

Thank you but cutting loss is not an option at the moment

Insas may well be a value trap instead of deep value stock but I am still hoping that something will turn up to save the day

Thank you

Leno

Insas does not need cash so RPS is unlikely especially at 4%

Like SSlee, I think that warrants are dilutive and I don’t think DS Thong will consider it again after what happened in February

In any event, Insas as a 19% shareholder isn’t even allowed to provide financial assistance to inari as it is not a subsidiary

FYI all the global companies don’t have any “major” shareholders - they are mostly owned by funds who do not interfere in the management

Stockraider

I agreee with you that Insas as a corporate shareholder conttibutes nothing to inari

Post distribution, nothing will change as the same individuals (DS Thong, Dato Dr Tan etc) will still lead inari

Furthermore, DS Thong will end up as biggest shareholder of inari

SS lee

You mentioned that at last year’s AGM, Dato Wong said that the board was not recommending the inari in specie distribution because there were over 20,000 Insas shareholders and their mass sale of inari shares could depress the market price

Actually that should not be the board’s concern because it must look after the interest of the Insas shareholders, and not the inari shareholders

They need not worry about what happens to the inari share price after Insas distributes the inari shares

SS lee

It never hurts to hear from all sides

I3lurker

An activist fund can just buy shares and become a nuisance - that is the modus operandi

Philip

Ex inari, Insas will still have the stockbroking operation and the credit/leading arm, which can be grown

This can be the new business model

If all else fails, just liquidate the company, which is very cash rich

I3lurker

Noted

Maybe Slater Walker is not the best example to quote but there are many activist funds today who will not tolerate the undervaluation in Insas

Insas is an asset stripper’s wet dream

Can you imagine what Slater Walker, a famous name from yesteryear, would do if it gained control of Insas?

Actually, if I were a really independent Insas director, I would simply distribute all its assets and call it a day

Philip

Thank you - your points are noted.

It is precisely because Insas is a company with assets that it should distribute its inari shares, because Mr Market is not giving Insas due credit (he is completely discounting the value that inari brings to Insas)

It will be very difficult to change Mr Market’s mind, and I think it would be better for Insas to go it alone without
Inari. Even if ex-inari, Insas is valued at say 10 sen, everyone is better off because they will have got almost 1 inari share per Insas share

Don’t forget, the book NTA of Insas ex- inari will still be in excess of RM2, and the new challenge of the Insas board will be be bridge the gap between the adjusted market price (10 sen) and the >RM2 NTA

Otherwise, it will always be (inadequately) valued by its inari stake and nothing else, which is a shame as the rest of Insas is still very valuable

SSlee

I know the Insas financials by heart now

I am sure the board also knows how to unlock value but what the directors actually do will very much depend on the generosity of DS Thong

I hope you will engage with Dato Wong as soon as possible (maybe even now since everyone is on lockdown) so that he cannot repeat his excuse about shortage of time

Gohku

It moved to above 90 sen in anticipation of a mgo which did not happen because DS Thong did not convert his warrants (which he was expected to)

Leno

What is your advice for someone who is already caught in Insas?

Selling is not an option as it would result in too much loss

A serious answer would be appreciated

Leno

Thank you but your advice is not applicable because I am already caught and am trying to salvage the situation

Noted

This is possible if your time horizon is long enough

Some of us are not so fortunate

Gohku

True but this has been the case for at least the last few years

There is nothing much we can do if DS Thong refuses to unlock value other than the following:

a) ask the company to declare an increased dividend preferably quarterly

b) pressurise the company to table a mgo waiver resolution at this year’s AGM to allow share buyback

Leno

Please be more constructive in your postings

Philip

I wish to return to the inari issue

You talk about dumping the inari shares in the market but I am talking about distributing them as in-specie dividends to the Insas shareholders, some of whom may wish to retain the inari shares (especially DSThong who will get one third thereof or over 6% of inari)

Even if say half of the 19% are sold, the market will be able to absorb

Furthermore, Insas need not distribute them at one go, and can do so gradually

Stockraider

Noted but it has nothing to do with pride or prostitution

We have rights as shareholders and should exercise them at the only forum available i.e. the AGM

Stockraider

We are playing poker with someone who has the better cards

We just have to accept the situation and work for the best outcome possible

You are suggesting that we buy more shares and then what - wait for some magical unlocking to happen?

Some of us do not have the luxury of time

Stockraider

Noted

Although not guaranteed, share buyback should improve the share price

It will definitely improve the NTA per share

Anyway, what is there to lose?

Remember when Insas buys, all of us benefit from both the better share price as well as the improved Insas NTA

Buying something worth RM2.65 for 56 sen will improve the NTA

In fact all of us can buy

Stockraider

Both you and Insas can buy

Leno

Insas will be buying, not DS Thong

SS Lee

Thank you very much - most appreciated

Pending further generosity from DS Thong, I think this is the best we can expect for now

At the risk of repeating myself ad nauseum, all Dato Wong has to do is to “ask “ DS Thong to apply for a mgo waiver, and I am sure all of us will approve such a resolution at this year’s AGM as a compromise win-win solution

SS Lee

I am satisfied that Insas is a deep value stock

Question remains - how to realise the value?

Patience may not be a virtue in this situation

Remember in the long run, we are all dead

Insas also has lots of free cash

Stockraider

FYI based on the last Q report, Insas had more than RM200m in quoted securities , and I think most of them are foreign

They are equally non-core, and can be used for share buyback purposes (although selling them may realise some loss)

Thank you

However, I am reminded by what SS Lee said:

Markets can stay inefficient longer than you can stay patient

Stockraider

What is your advice then?

If DS Thong doesn’t play ball, it looks like we will be stuck with our Insas shares for a long time

What they should now do is to “ask” DS Thong to apply to the SC for a mgo waiver to allow Insas to buyback its shares, and table the resolution for our approval at this year’s AGM

I think this is the best compromise for now