Malaysia jewels uncovered
(21 December 2019)
In December, the team headed off to Malaysia again. This time, we focused on the midstream companies in Malaysia’s Electrical & Electronics (E&E) sector. From there, we identified Inari Amertron Berhad (KLSE: 0166), and we managed to uncover an extraordinary company, Insas Berhad (KLSE: 3379), which had been overlooked by many.
With that in mind, we attended the analyst briefing to gain a better insight into the company. Inari Amertron Berhad is an investment holding company with wholly-owned subsidiaries involved in Outsourced Semiconductor Assembly and Testing (OSAT) & Electronics Manufacturing Services (EMS) within the semiconductor value chain. Its primary customer is an American semiconductor company with a market capitalization of more than US$100 billion. The CEO shared with us some of the current and future development of the company and provided us with some in-depth industry knowledge.
(Picture with KC Lau, CEO of Inari Amertron Berhad)
In the course of analysing Inari’s shareholder list, we uncovered a company that caught our attention. Insas Berhad (KLSE: 3379), with a stake of around 16%, is one of the top shareholders for Inari. We decided to look deeper into the company, and we discovered that Insas is trading at nearly 66% discount towards its Net Asset Value (NAV).
Therefore, we attended their recent Annual General Meeting (AGM) to understand their business. Most shareholders present are emotionally involved in the company and eager to unlock the true value of Insas’ assets. Insas holds RM 640 mn cash as compared to its market capitalization of RM 613 mn. Some analysts have labelled Insas Berhad as one of the most undervalued companies listed on Bursa Malaysia.
(Picture with Dato’ Wong Gian Kui, CEO of Insas Berhad)
On behalf of our firm, the team would like to thank all the management for their precious time.
With that, 2019 is coming to an end, the team at FF would like to wish everyone a very Merry Christmas and Happy New Year.
A bold first step.
(26 November 2019)
In the month of November, the team at Financial Frontiers (“FF”) packed up our bags and embarked on a journey, a journey to the Treasure Island (Penang) on our neighboring country of Malaysia.
The idea was first formulated by our firm, months back during the built up to the peak of the trade war. FF’s investment thesis focuses on top-down approach with macroeconomics factors.
Our firm saw the opportunity for a seismic trade divergence and a shift in MNC’s supply chains for the semiconductors and Electrical & Electronics (E&E). After a thorough industry study combined with our prior experience in our core portfolio, Pentamaster International Limited (HKG: 01665), we felt a physical site visit was necessary. After all, the best way to understand the business was to be on the ground with the operational staff and interviewing the management.
On this trip we managed to visit the management from MMS Ventures (KLSE: 0113), Aemulus Holdings (KLSE: 0181) and ViTrox Corporation (KLSE: 0097). We picked up great industry’s depth on the various propositions of the E&E supply chain.
Apart from our focus in the E&E sector, FF also actively seeks out defensive stocks with attractive upside to mitigate the natural cyclical volatility that comes with the semiconductor industry. One such stock that caught our eyes was Guan Chong Berhad (KLSE: 5102). Guan Chong is a leader in its own rights, they are the 4th largest cocoa bean grinder and processor globally.
On behalf of our firm, the team would like to thank all the management for giving us their precious time. We look forward to touching bases soon.