What will be the face value of the RPS and warrants when they are listed? Theoretically the warrants will worth only RM0.10. Why? Because exercise price of RM1.00 plus RM0.10 for the warrants, the premium over mother share is 37.5% which is fair IMHO. Now what will be the value of RPS? Everyone knows it won't worth RM1 during listing date. Let's assume you do a NPV with annual dividend of 4sen, theoretically the RPS should worth RM0.80. So the Sum of Part should be around RM1 or RM1.10 max! So right should not worth more than RM0.10. Don't forget those that buy the rights have to wait until March before they can get the securities. A lot of thing can happen then. So it should be further discount.

To me, as an original investors, if I can realized the gain in RPS and warrants by selling the rights, then I will sell now. But if the rights price is not worth it, then I will subscribe to the rights cause my cost for mother is low anyway. And I have longer term view where I think eventually the SOP of the warrants and RPS, will give me decent return. But for those that by the rights from market is not advisable.

My 2 cents

Buyer beware on PR, theoretically it should worth not more than RM0.10. For those that inherited it, please sell if, it is above RM0.10.

But if not keen to sell just subscribe to the rights.

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1850717

Noob: Insas just announce the ex-date for the rights issue.

The company just announce the ex-date of the rights. Time to prepare money first before we talk about making more money!

Actually what's so bad about one cent dividend? If this is not a dividend yielding stock then it is not a dividend yielding stock. The company may be a growth stock. The company probably has policy to hoards cash for future acquisition. There could be hundred of reasons. There are many dividend yielding stocks and Insas is not. So why complain?

Also bear in mind, cash you see in their balance sheet probably is at their associate level and it is not at the holding company. So they can't dish out dividend...

bcllct: I thought there are two camps here. One support and another against the rights issue, isn't it? So the one that is opposing will be happy. I am not directing to anyone here.

To me, I prefer to have rights issue going cause I think there will be 1) inefficiency in the market where I can exploit 2) I think the sum of parts of the RPS+warrants+mother share will be more than ex-date. So in my opinion, if what my source mention is correct, then I will miss out.

That said I have mentioned before, with rights issue it will be good for the stock. But without it, business as usual... This counter is already undervalued to begin with. You can refer to felicity's blog. Inari will definitely annouce record profit this year, not to mentioned SYF and Ho Hup (look at the share price). Coupled with stronger USD, Insas will be the greatest beneficiary after the individual stocks. So it will still be good and remove any potential "over-hanging" from the rights issue.

I have also mentioned, if you take 3 years stock price for Inari and Insas, and plot it using excel and get the correlation formula from the excel, you will find out that if Inari share price remains above RM2.70, Insas share should worth RM1.10.

So, I guess I will have to see they will carry on with the rights issue or if they postpone it, then just wait for the re-rating to come based on fundamental.

That's my 2 cent.

That said... The recent rumors I heard from my reliable source is the company may postpone the rights issue. Oh well, if that is true then it's a good news for certain party. We will wait and see whether what my source mentioned is true.

noob: company only do share buyback when there is weakness on the share price. Not when it is going up. That is why you will most likely see the announcement of buyback during share price weakness.

noob: I think what oregami was referring are, who trades thru those brokers i.e. HDBS, K&N and Jupiter. I guess he is able to ask his remisier who are the selling brokers. There is no way we know who are the sellers. You can only know who are the brokers.

My guess are those are retailers' brokers.

Jim: Not announce yet.

Lollipot: If you are to take Inari and Insas share price for 5 years and plot a graph and get the correlation formula from the excel, then you will find that if Inari share price sustain at RM2.70, Insas share should trade up to RM1.10.

What kcc mentioned is correct. Values for RPS + Warrants + Mother Share = should remains the same theoretically after the corporate exercise. Value don't dissipate into the thin air. This is the calculation:-

RPS = RM1, Warrants = RM0, Mother Share = RM0.80

Since the exercise is 5 Mother Shares for 1 RPS + 2 Warrants. then total investment is RM5.00, before it is traded in the market. When it is traded in the market, theoretical, the sum of part (SOP) will remains the same, so we have to make an assumption for RPS traded value:-

RPS = RM0.90. Warrants = RM??. Mother Share = RM0.80

In this case, Warrants will act as balancing securities. In this case using the above assumption, warrants will have to trade at RM0.05/each. There is where I am coming from, using the above assumption (and you gotta know why I think RPS is worth RM0.90, read my earlier comment), there is no way warrant trades at RM0.05/each.

That is why I have been saying the SOP, will be greater than the total investment you make before ex-date.

---------------------------------------!!-------------------------------------------------

On the other note, it is worth to mentioned Inari shares moved. Not surprising but if the share price remains/sustain at RM2.70, by right, using "pair trade methodology" Insas should worth RM1.10. From current price to RM1.10, there is enough safety margin. But I have to put a disclaimer here, Inari share price has to be able to sustain above RM2.70.

SS661M: Each option has its advantage abd its drawback.

On the other hand, the company may postpone the corporate exercise if they deem the timing is not right. That's the 3rd option.

To me all three options are favorable options at this price. You will likely make money. However, if it is at RM1.20 then option 1 is favorable, option 2 won't happen, option 3 is bad for investors.

It's a game theory. So keep calm and stay Invest if you believe in this counter.

Sorry. My mistake. EGM has been called. So the only option is before announcement of the ex-date. We will have to wait and see. Thanks Teik Bee.

If one cannot understand why there is no adjustment on the share price after ex-date, then you will not appreciate why Insas will go back up to above RM 1. But I have to put disclaimer, it has HIGH POSSIBILITY to go back above RM1. Not a certainty.

1. No adjustment because there is no rights to own another share at a discount. There is only rights to own a RPS with dividend.

2. Warrants are not included in Theoretical ex Rights Price because warrants are not a mother share. Formula for TERP = {(price x # shares) + (rights price x # rights share)}/(# shares + # rights share). Warrants and RPS aren't included. Only additional mother share will be included.

3. Just as right shares always offer at a discount to entice existing share holders to subscribe in addition of free warrants this corporate exercise by Insas should have carrot to entice existing shareholders to participate. But since there aren't any discounts then where is the carrot?

- the carrot is when the mother share traded above RM1, then the warrants will be in the money! Then existing will be incentivized to subscribe. So, it's just a matter of time before the share price will go above RM1. All these will happen before announcement of the EGM and announcement of the ex-date.

But what if the "magic hands" or the market are unable to push the share price up?

- then they have to "re-create" the carrot. Insas may, the keyword is MAY adjust down the exercise price of the warrants. Then again, you are able to make your warrants IN THE MONEY. Setting the exercise price of the warrants are at the discretion of the company.

Bear in mind, EGM has not been called yet. All this will happen before EGM for the approval of this corporate exercise.

I have shared all my knowledge. And I don't wish to have anymore disagreement. I'm more than happy to share but not arguing. Good luck.

cfoong: Thanks. I know we are all in the same boat despite all the disagreement.
kcc888: Not convenient to reveal because I am still accumulating slowly each day. But my initial cost is close to recent share buyback price.

Good luck all.

Kevin5059: Not keen on side bet. Thanks. I just give my view based on my experience and understanding.

kevin5059 and cfoong: I stand by my statement the mother share will not be adjusted.

In other cash call, the mother share is adjusted because you have RIGHT SHARE. In this case, you don't have RIGHT SHARE. You only have the RIGHT TO RPS. In another word, in other cash call, if lets say it is 1 for 4 rights issue, then from 4 shares originally, now you have 5 shares, then of course there is adjustment. But in this case, there is NO ADDITIONAL SHARE. Then why should you adjust the share price for the mother. What you get is an RPS and it is traded independently!

You don't adjust the share price because of warrants. Just because all the other cash call involves right share + sweetener (ie warrants), doesn't mean the mother share adjustment is due to warrants. Its due to the ADDITIONAL share you receive.

bcllct: I never imply the RPS will trade more than RM1.00. All I am implying is:-
1. The ability as a conversion currency helps to preserve the value.

2. Secondly, there are more warrants than RPS. If I am original holder of RPS, I pay RM1.00, there is no way I will sell below RM1.00. Might as well I use it to convert my warrant later.
- That said, I may sell below face value if I'm able to liquidate my warrants at HUGE GAIN. That will be likely scenario for this exercise. And that present the opportunity for warrants holder to buy RPS at a discount if they want.

My point is if this exercise continues... You give your RM1.00 for the RPS (trade anything between 95sen to RM1 based on above arguments), you get 2 warrants and no adjustment on mother share and at the end of the day, the sum of all parts, you will make GOOD MONEY! From where, you are going to make good money? Most probably from the warrants and the capital appreciation from mother share.

But there is also a reason why Inari rights issue go ahead first before Insas. I am a strong believer, before this corporate will go ahead, Insas will go up to RM1.00 and above, most likely above RM1.00. Why? Because management would want the warrants to be already IN THE MONEY before the corporate exercise, so that people will be more than happy to subscribe to the RPS.

In a normal cash call, normally the rights share is given at a substantial discount as a reward to shareholders or to entice people to subscribe. In this case, the only "enticement" comes from making the warrants to be IN THE MONEY FIRST! Think about it. Even at RM1.00 is not good enough...

That said, if it didn't go up more than RM1.00.. that itself is decent enough. Dato. Thong are in the same boat at the end of the day.

That's my 2 cent.

kevin5059 is correct, the ultimate beneficiary should be Dato. Thong. There is doubt about it. But let's get the fact right, none of us in this i3 are as rich as Dato. Thong I presume. Unless you are so rich, you can't do whatever he is doing. But as an investors, we have two choice despite not having as much money. You can choose to be at Dato. Thong side, swim with him or you choose to leave him. We cannot do as much as him but our RM1 is as big as his RM1. If you have holding power and you have the time especially during this time, the winner is for those that chose to swim with Dato. Thong.

I believe many people that are holding to this stock doesn't have holding power or they plow all their money in this stock and when it didn't work, you start to panic, curse and sell. That is not how this game is play... Rule No 1. Understand how this game is play and if you are up to it and think there is safety margin then take the chance.

If Dato. Thong is going to be the winner from this corporate exercise. Swim with him. Don't be scare from short term jittery. If you think he is a con-man, then run away from him.

Also bear in mind, Insas share price is closely related to Inari. And you should know during this period, why Inari share is weak. So its temporary, once the exercise for Inari is done, Inari will re-rate up and what do you think Insas' share will do?

The key to this game is Stay Calm Keep the Faith. That's my 2cent.

- Insas warrant will not be RM0.05. That is just too undervalued for a 5 years warrant especially the mother share is at the bottom.
- 4% yield RPS is not fantastic yield but the face value is compensated from the its ability to convert warrants without cash outlay.
- Dato Thong won't privatised Insas for obvious reason. You got to know why a company is listed. It is not all about privatising it when it is undervalued. Keywords - funding!
- Its impossible substantial foreign shareholders in Insas 1) No local institutional in Insas yet. Yes the key word is yet. 2) Look at the size of the shareholdings by size.. if you strip Dato Thong and related parties holding, the balance is only 6-8% which is not possible accounted by foreigners. 3) A proper foreign institutional investors will have their name appear eventhough it is under nominees.

There are no foreign shareholders in the Top 30 as shown in the annual report. That is one. And secondly with market capitalization of just RM500mil, it is just not big enough for foreign investors. All these sellings come from fearful retail.

cfoong... Sounds very wise initially but it wasn't. Sorry to be a bit nasty...

1. You cannot compare warrants with mother share. Warrants is a leveraged securities. Take your scenario for instance, at RM1.10, how much do you think the warrant is worth? Let's just say the most bearish scenario, at 0% premium.. Warrants is worth RM0.10. And because warrants is already free, you have already gain 10%. Why would you want to convert your warrant using RPS? In more logical scenario if at 30% premium of mother share price at RM1.10 then the warrant is worth RM0.33. You make RM0.33 from warrants and continue to ride on mother share but you would rather use RPS to convert to mother share and make RM0.10. Is it even logical? Don't forget warrants has instrinsic value!!

2. Secondly at RM1.10 and assuming 1sen dividend (historical trend) your dividend yield is less than 1%. But holding RPS at your cost of RM1, you will get RM0.04 annually. That's 4% yield. Why the hell you use your RPS to convert the warrant and get less dividend yield? Is it even logical?

3. Thirdly, I repeat the ratio of RPS to warrant is 1:2. So if RPS is shortage compare to warrants if you want to use your RPS to convert your warrants at hand. Do you think if mother share is at RM1.10, your RPS will worth RM1.00 and much lesser?!!! No..

4. You may think Insas fellow is stupid and never think thru your scenario. For the corporate exercise they just want RM1 from you and in return they give you free warrants and 4% interest. But you have 2 warrants and 1 RPS, if you use 1 RPS to convert one warrant they don't have the RM1 from you anymore cause you surrendered the RPS plus one of your warrant. But wait... You still have 1 warrant and the exercise price is RM1. So now they will get back RM1 from you and save on the 4sen dividend!!

5. Lastly, imagine yourself as Dato. Thong's shoes. Would you intentionally surpress the share price because they don't want you to surrender the RPS to the company and suffer from 40% capital loss from their shareholding?!! Is that even logical? I if I am him, I would want my share to go up because I and my related party owned 55% of this company and I don't want to intentionally surpress the share price for the next 5 years (at my loss) just because I don't want people to convert their RPS. And yet, I'm also the RPS holder. And balance minority not happy and may not subscribe and I have to underwritten most of the RPS. Must be some really stupid idea.. Save one but at greater loss to yourself!

Think about it!

They would want the share price to go up and not down.

Too many panic investors. Don't keep looking at the share price of Insas. Expand your horizon and you will notice broad market is coming off. If one believe in the stock, you buy. If one don't believe in the stock either sell if you own it or stay away from this stock. Yes, share price drop despite being a good fundamental company. Yes, share price drop despite share buy back. Then it's too bad!

If you still believe buy more. If you don't believe stay away or sell. I'm the believer. I'm the buyer. Stay calm Don't be Easily Influence whichever side you choose.

You're welcome kcc

There is no rights share. There is only rights to RPS which is not convertible to share. So there won't be adjustment on the mother share after ex-date. Insas will remain the same before and after ex date.

RPS is like an IOU and can be traded. No impact on Insas share price. No adjustment. Warrants are just sweetener for you to subscribe to the RPS. Bottom line after ex date Insas share price will not changed.

Any gain in warrants after taking into account the price of RPS are either a gain/loss overall after the corporate exercise. It's your take whether you will gain or loss after having the mother share. RPS and warrants when the corporate exercise completed.

I think our friend Leno used to call himself the King of Insas. And he did mentioned this stock is not for everyone using his wisdom. And now seem like he has been dethroned as a King and address all of us as donkeys. What a shame...

Posted by leno > Mar 13, 2014 02:59 PM | Report Abuse

hahahah ... that's wat separate amateur and the super-intelligent me mar ... i was the king of analabs which i bought 80 sen and sold off RM 1.84 ... INSAS my average less than 40 sen .. and haven't sold a single share lor. Why i still not selling leh ? Because now i AM the KING OF INSAS. Dun play play hor ...

Posted by leno > Mar 13, 2014 03:53 PM | Report Abuse

there are many type of players mar ... some want to make money and dun care about boring, some want excitement but pretend to say want make money, some want excitement but think they wan make money, some always lose money but dun mind one; So insas definitely is not for every one mar ... onli for those wan make BIG BIG money and FAST FAST one lor ...

OMG this guy... Of course anything there is a chance to go bearish and there is a chance it will go bullish. The discussion for those that see value and opportunity in th corporate exercise. It is also for people who are bullish. If you aren't bullish then you won't buy. If you are bullish then you will see great value at current price. That's market for you...

Please refer to the announcement where the company posted the corporate exercise circular in PDF. And go to page 6-7 in that circular. You will get all salient points for the RPS. This is the exact word from that page:-

"The RPS may be surrendered by the Warrant holders at 100% of the issue price of the RPS for the exercise of the Warrants in lieu of the exercise price of RM1.00 per warrant"

I'm pretty positive the weakness in share price is due to lack of understanding. Mother share should worth more than RM1. It's just matter of time before completion of the exercise. There is a reason why so...

Thank you AzmiMerican

The RPS is not interesting but its the key to warrants. And RPS will not drop as much. One gotta understand the structure of this RPS.

1. It can be used to convert your warrants. Instead of pumping RM1.00 cash, you can use RPS to convert the warrants. Great if you can buy below RM1.00. Because of that, I don't believe it will drop. I am not surprise, RM1.00 will be preserved. Why would anyone wanna sell RPS below what they have given to Insas? Especially true when RPS can be used as a currency to convert warrants, without taking out anymore cash.

2. Can you imagine what will Dato Thong do if RPS trades below RM1? He will buy the RPS for the same reason as Point (1). Why should he pay RM1 to convert his warrants, when he can purchase the RPS below RM1.00 as everyone expected? If RPS trades at RM0.80, might as well he purchase RPS at RM0.80 and use it convert his warrants in the future isn't it? Why need to fork out RM1.00 to convert? That is silly...

3. Company will also purchase back the RPS because they don't have to pay interest for the RPS that has already been purchased. Or in another words, pay interest to themselves... right hand to left hand transaction. And if they can purchase at RM0.80 in the market today, then they don't have to redeem the RPS at RM1.00 in the future isn't it? Not only they save on interest, they may recognize capital gain during maturity. Company will only buy the RPS when it is trading at ridiculous price because the reason they issue RPS is for funding and not to re-purchase share back. But if at ridiculous low price, I am confident they will buy back for the reason above.

4. For every 2 warrants there will be ONLY 1 RPS, so supply for RPS is limited compare to warrants. And since RPS can be used to convert warrants to mother share coupled with RPS earns interest, I doubt RPS will trade much below RM1.00, if it trades below RM1.00.

5. Lastly, we are talking about Insas (mother share) trading at RM0.80, so everyone thinks RPS is not interesting. But has anyone give a thought... what if.. what if... mother share trades at RM1.00 or RM1.20? We all knows warrants will worth a lot.. But what about RPS? Do you think RPS will trade at RM1.00? Logically IT WONT!

Insas at RM1.20, I have the option to convert my warrants. But I don't have to use my cash. I can use the RPS I have inherited from IOU (corporate exercise) at RM1.00 to convert one of my warrant. And another warrant, if I am smart, I will buy from the market since everyone thinks it will be traded at RM0.80 (at a discount), then use it to convert my 2nd warrant. Then I effectively change RM1 RPS (from my inherited RPS) to get RM1.20 Insas' share and change RM0.80 RPS (I bought from market) to get RM1.20 Insas share. That is common sense.

So no reason for RPS to trade far off from its par value. Warrants will more than offset the RPS if it ever trades below RM1.00. And if Insas share go pass RM1.20, RPS will not trade at RM1.00 anymore. So if your view is within 5 years Insas share will trade up to RM1.20.... you will gain a lot from warrants and you will get a lot from RPS...

No reason for the company to call off the corporate exercise. This is a good deal...But oh well Mr. Market is always right. I only can share my view.

SS61M: Again you are not reading properly. First of all, TP is a moving target and is not an absolute figure. Therefore you cannot use my figure as an absolute TP ie it will touch and stay there. Share price never moves like that. And yes volatility changes daily. That's why I mentioned I used historical volatility and I used the word range. It will or may trade within the range. Best you do your own homework. Don't take people's work as it is.

Leno. For a while I thought you are a genius but unfortunately you are such a rude person and idiotic. Even novice knows there are instrinsic value for the two warrants? And what about potential re-rating of mother share? You don't invest for today's price. You invest with a forward looking mindset.

SS61M: Please refer to circular page 7.

Word by word again:-

" The RPS will be listed on the Main Market of Bursa Securities"

AzmiMerican & SS61M: I only can give a range based on historical volatility (warrants worth more with higher volatility) and price range for the mother share with 5 years expiry. You can do your own research and math..

At RM0.80
Vol 25% - Warrants RM0.18
Vol 45% - Warrants RM0.31

At RM1.00
Vol 25% - Warrants RM0.31
Vol 45% - Warrants RM0.46

At RM1.20
Vol 25% - Warrants RM0.47
Vol 45% - Warrants RM0.61

As mentioned, let the market weed out the weak sellers first. It is interesting to see.

Mililia. It doesn't matter at wat price the RPS is traded once u bought the RPS from the open market u still have to subscribe $1 to Insas, right? The dividend yield will never more than 4sen. I guess the RPS will be traded at 15-20 sen.

SS61M: Again I think you are confused about rights and RPS. You don't get RPS if you don't subscribe to the rights. So when you already have RPS, you would have already subscribe RM1 to Insas! If RPS is traded at 15-20sen, then the yield is 27%. I don't think market is that not efficient...

SS61M: I am not referring to the rights. I am referring to the RPS which will be traded once the whole corporate exercise is over. If it is trading below RM1, then you are actually buying at a discount. And as I have suggested please read the circular and since many people are reluctant to read, I will post it here, word by word:-

"The RPS may be surrendered by the Warrant holders at 100% of the issue price of the RPS for the exercise of the Warrants in lieu of the exercise price of RM1.00 per warrant"

What it means is, your RPS is the "currency" to convert your warrant on hand!! If you are going to buy RPS at RM80sen but use it to convert your warrant to mother share, isn't it already a GAIN to you? You don't have to fork out RM1.00 to convert your warrant!! You are using RM0.80 RPS which you purchase from the market to convert the warrant.

Do you get it? Because of that, RPS itself has greater value than the normal ICULS. Its like you buy Groupon voucher at RM80 to purchase an item worth RM100. Understand?

At 81sen...

So warrants worth a lot considering mother share is at the bottom. If anyone interested how much warrants worth, I don't mind to explain. That's is a winner.

However, most importantly, how much RPS will worth? Will it worth less or more than RM1? If it worth less than RM1, then why would I want to lend RM1 to Insas? Or will it worth more or equal to RM1? Can the warrants more than offset the price of RPS?

What do you think?

Again, I canno say at RM0.81 RPS is worth nothing! Read the circular and you will realized there are benefits to this RPS. First of all, this RPS is non-convertible to shares and it pays 4% interest annually. It may sounds like weakness at first glance. But if one understand the circular and why management make this way, then you will realized it is actually superior. First, non convertible to share equal non dilutive. Isn't good?

Secondly, RPS to me is like an IOU letter to the company at interest of 4%. It is like a bond until you note there are two features on this RPS. First, it is tradeable. Secondly, it can be used to convert warrants into mother share. These two features especially the second one, make this RPS into a hybrid securities,ie, it's a bond with a feature of an equities with capital appreciation.

Since it is tradeable, you don't have to be a space scientists to know it may trade at a discount. I say may because of the second features. RPS is also the "currency" to convert the warrants. And there are more warrants compare to RPS at the ratio of 2:1. The supply of RPS is limited. And as an investors of the warrants and believe the share price for the mother will hit at least RM1.00, would you buy RPS when it's below RM1.00? I would! Why? Because not only I get interest, but I know I can convert my warrants at a discount. For example, if mother share is 81sen. And RPS also trades at 81sen and I have warrants. Remember the ratio is 2:1. The. I will buy RPS, keeps if I want and get 4sen dividend annually (that is 5% yield) or I can convert one of my warrants using RPS into mother share. Whatever it is I know my RPS will worth at least RM1 when it matures. So, buying RPS at a discount is almost a sure win. It's worth at least RM1 not because you loan to Insas RM1 but it can be used to convert the warrants. That is the key!

I have to disagree with your warrants arguments. Just as you have mentioned, warrants are just the sweetener to the RPS. So it's not about the warrants. It's all about the RPS. A 5 year warrants always worth something. How one will value the warrants differ with one another. To me, Insas warrants worth a lot considering this is the bottom of the share price. Any re-rating on the mother shares will amplify the gain on the warrants. Warrants worth more when there is volatility, therefore, considering downside limited compares to the upside for its mother share, Insas' warrants are extremely valuable!!! The weakness in share price is due to RPS in my opinion. But the RPS has been a victim from lack of understanding.

That's too basic. Let me put it in scenario analysis. Assuming the share price remains at current price of RM0.80-0.85. What's the:-

1. Value of the RPS?
2. Intrinsic value for the warrants?
3. Share price of the mother share after ex-date and after you get the warrants and RPS?

I'm just curious. Of course I've the answer already. I think there are at least 3 scenarios to analyse here but let's start with one first.

Didn't realised felicity actually wrote about Insas too...
http://www.intellecpoint.com/2014/12/buy-insas-and-sell-parkson.html

What I'm curious is what he thinks of the RPS and warrants. I will definitely share my points when I have more time.

I don't think it's foreign selling nor shareholders with big holdings. More like retailers cause if the foreigner and big shareholders selling, they won't sell so slowly while keeping the price in range. If anyone understand the concept of the corporates exercise for the rights, it's crazy selling at current price. But the silver lining is they is equal strong buyers at current price.

Should allow this stock to weed out the weak. Then only I will write why I think the corporate exercise will push the share price up. I am quite surprise so many sellers to be frank.

Capital gain is not the fault of the company. Capital gain is due to supply/demand of the share. Only dividend payout is subject to the discretion of the company. But one has to understand, we aren't management of the company. Different company has different dividend payout philosophy, requirement for working capital and cash management strategy. There will be enough counters that will fit your higher dividend payout company and Insas is not one them. To be fair, I'm sure the owner also wants dividend. So if they didn't give out good dividend it is fair. That is provided, Insas is not overpaying their management/owners. Don't you agree?

What's more important now is does the share price provides opportunity to buy into a company with enough safety margin. And is there a short term angle to make money due to the rights issue exercise? My answer is Yes!

Yes, I believe the share price is undervalued, more so, when the share price drops because concern on oil price. But one has forgotten already..the share price is strongly correlated to Inari's performance. Insas' holding in Inari accounts for 85% of its market cap. In another word, the market is valuing the M&A Securities, Melium Group, Rental Car business, stakes in Gleneagle Hospital, Ho Hup and etc only with 15% of its current market cap. To me that is already super undervalued. That's find if market doesn't want to value business segment properly because they think it is lack of transparency. But Inari Group is a listed entity and its transparent. And since, the movement of Insas is greatly influence by Inari, we should examine future earnings of Inari.

With stronger US Dollar, higher usage of smart phone, introduction of LTE and recovery in US/Europe... Guess who is the winner? Inari! Don't look down on the impact of stronger USD to Inari, any forex gain is a direct flow down to the bottom line without any effort. It's going to be huge... And recovery in US and Europe will increase its product demand. Look at Inari-Amertron biggest client, Avago's share price performance. That will give you a snapshot what will be the performance for Inari and how Insas will benefit.

Then one will ask why I prefer Insas rather than Inari? Simple... One is trading at 5x and another one at 11x PE. And one with diversified business and another one single business. Which one will you prefer? And what oil price has to do with Inari/Insas again? There should be divergence by right. Semiconductor sector should benefits with lower oil price, higher demand of US/Europe, stronger USD. That's why Avago's share price is so strong... Think about it.

But oh well. You can't fault short term jittery. To me, it's a good time to buy. All that is before I explain why the share price will go up just based on the rights issue exercise. What I just mentioned is a long term story. Right issue exercise is a short term catalyst. I will explain in the new post.

My 2 cent.

There is no way one can find out why people selling Insas. But it is worth to note why the company and the owner keeps buying back. Here is the logic:-

1. Shares the company bought back will be held as treasury share. Treasury share will not participate in the rights issue exercise. As a result, the company will get less money from the right issue exercise. So why the company do it? The logic is the company thinks the low share price outweighs the money they will get from the rights issue. And also, they think capital appreciation will outweighs th money they get from rights issue. That is a positive sign.

2. Why would the owner, Dato Thong do share price back then? Didn't he knows the more share he owns the more money he has to pump into the company from the rights issue? I'm sure he is aware. The reason he bought back to me only because of two reasons:- 1) to instill confidence to the market. 2) he view the share is undervalued and there will be capital appreciation. That is a positive sign.

But what's more important... I think the company and the owner knows the share price will have to re-rate before the rights issue. How they want the share price to be re-rated that is up to your imagination. I will write why the share price will increase just purely on the structure of the rights exercise.

Be fearful when everyone is greedy. Be greedy when everyone is fearful. That's my 2 cent.

Yes you are right that there is a delay when comes to announcement. But I have to disagree with when you talk about selling. Anyone with holding above 5% has to disclose their shareholding whether they are buying or selling. So, until we see an announcement Tabung Haji is selling in couple of days. Then I'll stick to my assumption.

No hard selling but just some analysis and assumption. If one notice on the announcement Tabung Haji bought 15,000 shares from the market on November 28th. The question is which respectable billion dollar fund bought only 15,000 shares. So why only 15k shares? The answer in my opinion is because while they are buying on that day, all of the sudden the share price drops substantially in a day! From 2.40 to 2.20. So they cancel the order and end up with 15,000 shares.

Then Tabung Haji stops buying until share price show some resemblance of stability. Then on Dec 2nd and 3rd, they are back buying 700,000 shares. Just announced today. You can check. This has been my indicator on whether the Fund will continue buying after accumulating them from 5% up to 10%. In my opinion, if they stop buying after reaching that level then it is bad cause no one will push up the share price. But today's announcement just show they are still buying and may need more. I'm not surprise, they will push it all the way to 15%. Syariah funds really have limited counters where they can plow their money in KLCI. If they want syariah compliance AND good company, I think they choice is limited. That's my opinion.

Bear in my mind LTAT, EPF, KWAP and PNB which has syariah mandate has not appear in the 5.0% shareholding that require disclosure. Still has opportunity in my opinion.

Does it matter this is the news? The share price going down coincide with the drop in oil price again. Too much fear for this counter just because of weak oil prices. That's too bad but also provides opportunity.

If anyone believe in the fundamental of this company and thinks they are going to secure RAPID project in couple of months plus strong earnings, then current price provides good opportunity. Double digit growth, potential clinging major contract at RAPID at 7x PER, then this a cheap counter.

That's my 2 cent.