INSAS (3379) - Insas - Head In for a Northern Ride
Insas Berhad (Insas - 3379) is a diversified group with businesses in technology, property investment holdings, finance, corporate advisory, stock brokering, car rental and logistic. 2 of it's subsidiary which are also public listed are Hohup Construction Berhad (Property and Construction) and Inari Amerton Berhad (Technology).
With the existing state of economy uncertainty, it is vital for investor to seek out for strong fundamental company if they want to stay invested in the market. Beside searching for a company that had resilient business, strong cash backing, one of the most important investing factor that will influence the appreciation of share price the most will be the the company earnings, and the earning per share.
As for Insas, what can we foresee of for it's performance in 2017 ?
Looking at the technical outlook of Insas, it is noticeable that Insas had broken away from a long term down trend line that had been plaguing the counter for more than 1 year. Currently, the share price had saw a solid footing with support at RM 0.70. The counter is seen consolidating at the price range of RM 0.70 to RM 0.75, and will be looking to break above RM 0.75 should a stronger financial quarter prevails. Technically looking, Insas had a tendency of turning uptrend with bullish bias.
Financial Outlook
Despite the challenges poised for FYE 2016, the group had steered through the harsh waves to finish the financial year in a positive note, albeit with a lower revenue and a slightly lower earning per share at 11.64 cents. However, it is good to note that the NTA of the company increased slightly to RM 2.04 per share. To highlight it further, the company cash and cash equivalent as well as financial asset at fair value make up of more than 50% of the company NTA.
While most of the segment had performed well, the biggest drag for the group is from the investment holding and trading segment. This is due to recognition of losses from fair value changes of financial asset. We believe that the financial asset held by the group such as quoted shares in the market had reached a fairly bottom price, hence the losses shall not be look to see a possible repeat for the time being.
One of the notable improvement is the operation profit from the financial services and credit leasing segment, putting up a drastic improvement of more than 100% for the segment alone from a profit of RM 9.6 million to 23 million. The biggest contributor is from Insas Credit & Leasing division.
To support this, RCE Capital Berhad (Rcecap - 9296) which also involves in money lending business had saw booming revenue for the past 2 quarters, which is the back bone reason of the explicit surging of the share price as of lately. Despite the tough market, Rcecap had proven itself with share price appreciated to almost 100% within a 3 months period.
More consolidation in the Semiconductor related technology sector
With the growing reliance of human activities in technology, the semiconductor and related sector will be going to see further consolidation. The advancement in hand held devices and automotive industry continue to see more and more usage of advance chip set in the devices. With self driven car being the hottest development in the technology market now, it had spur big merger and acquisition in the sector. The latest being Qualcomm putting up USD 38.5 billion to acquire NXP semiconductor in order to put up a stronger synergy together.
This will be indeed a good news for Inari Amerton Berhad, which is also in the related field of play. Currently, Inari is having a market capitalization of RM 3.17 billion. Insas 21% stake in Inari will probably valued at RM 650 million.
That will be a jackpot deal for Insas's shareholder if Inari is up for a deal.
On a quick summary, Insas is a rather interesting counter to be monitor at the current level. At the range of RM 0.70, with a strong fundamental background and supported earning, there are strong potential on the counter heading uptrend, supported with a good 1Q FYE 2017 result in the coming days.
Bone's TP : RM 0.90
INSAS (3379) - Insas - Head In for a Northern Ride
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