23-11-2020
To:
Datuk Ng Peng Hong @ Ng Peng Hay
Non-Independent Non-Executive Chairman
iCapital.biz Berhad
Cc: Mr Tan Teng Boo
Designated Person
Dear Sir,
Further proposals/questions To Be Tabled at iCapital.biz 16th Virtal AGM
I have been a share owner of iCapital.biz since its inception in 2005. I uphold the spirit of Independence, Intelligence and Integrity as enshrined in iCapital’s motto. They are also my personal philosophy.
Further to my letter of 13 November 2020, I have the following additional questions to ask in the AGM:-
Question 4
Terms and conditions of the agreement for the “Dual-listing project”
4.1
(a) the date on which the terms of the dual-listing project were agreed upon
(b) the purpose or goal of the project
(c) the consideration for service rendered to achieve the goal
(d) the manner in which the consideration will be satisfied
(e) the basis of arriving at the consideration
(f) time frame of the project
(g) any penalty for failing to achieve the goal of the project
4.2
Who initiated the idea to carry out the dual-listing project?
4.3
Who are the directors approving the project agreement?
Question 5
Regarding the Judicial Review application against Securities Commission of Malaysia (SC) and City of London Investment Management Limited (CLIM)
as announced in Bursa Malaysia on 1 October 2020 below:-
5.1 Has the SC refused to reprimand CLIM and ordered the latter to divest down its shareholding?
5.2 If so, what are the reasons that SC did not reprimand CLIM?
iCapital.biz has already notified CLIM to reduce its shareholding to below 20% since 18 October 2019 or earlier as shown below.
5.3 Since iCapital.biz has already discharged its duty, the onus is on CLIM to comply and divest down its shareholding. And SC surely would have intervened if it is obvious that CLIM has contravened the 20% limit and did not divest. Why does iCapital.biz have to apply for Judicial Review? Will it be beneficial to the interest of the general share owners?
5.4 What is the estimated cost of the suit?
5.5 How likely will the suit be won? We don’t want another “dual-listing scenario”.
5.6 Even if we won, will it boost the market price in due course or the other way round?
5.7 Even if CLIM divest down its shareholding to below 20%, there may be other parties acting in concert without our knowledge to quietly accumulate iCapital.biz’s shares. How are you going to stop that?
5.8 On the other hand, CLIM appears to be a value investor as defined by our Designated Person. They have been persistently acquiring our shares over many years while our other share owners keep selling. Why do you want to chase away a value investor?
5.9 Also, CLIM being an institutional investor, they are supposed to be a more rational investor than noise trader. The way they keep buying iCapital.biz’s shares when the price goes down exemplifies this. With more rational investors in our share owners, the gap between the market price and NAV will narrow eventually. Don’t you think so?
5.10 Has the board of directors weigh out the pros and cons before seeking Judicial Review?
Question 6
In order to improve market price, will the Board consider adopting a dividend policy (say 1% of the NAV)?
Rationale:
A)
In
the prospectus when iCapital.biz was launched in 2005, on page 1 Clause
1.2 it states that the investment objectives are primarily to go for
capital appreciation and dividend revenue is of secondary
consideration.
Agreed.
However it did not prohibit distribution of dividend on the part of our company itself. It does have provision for dividend payout. (And in iCapital.biz’s investment portfolio, there are also quite a lot of dividend payers as compared to growth type).
On page 4 Clause 1.7 of the prospectus, it states that the Board may recommend the payment of dividend.
B)
By having a dividend policy, the general share owners will be able to plan ahead of what revenue in terms of dividend they can possibly expect. This will increase their ability to hold on to their shares rather than disposing them of when they need some money. This I think will improve the market price.
C)
Although NAV is important, market price is more important than NAV.
Why?
Because NAV can only be realised when a company is liquidated. At other time it is only a book value and until realised, it remains a book value.
Even when liquidated, the cash derived from the NAV is much less after deducting expenses and discount again if situation is not opportune.
Market price on the other hand is the real hard cash that your asset can be converted into. What you see is almost 99% of what you will get.
Temporary discount in market price may be due to noise.
However if the discount drags on continuously for years it means that market perception is not positive on the company, hence there is a shortage of demand.
And when this shortage of demand meets an increase of supply because our share owners are short of revenue and are forced to sell some of their shares, the price plunge.
By having a dividend policy, share owners having to force-sell their shares will perceivably be less and so supply will be less.
At the same time, perception by investors will improve and so boost up the demand side.
The increase in demand and the decrease in supply may even have a multiplier effect on boosting our market price.
Question 7
How is the relationship of iCapital.biz with the news paper media in recent times?
I notice from iCapital.biz’s website the last time its AGM was reported in the news paper was the 11th AGM in 2015.
I also don’t seem to have read any news on iCapital.biz in the newspapers in the past few years. Compared to the “hot” news in earlier years, one will wonder why?
News media coverage plays a role in boosting the image (whether good or bad) of a company and its share price. Should we neglect them?
I hope all my proposals and questions in this letter and the previous can be tabled at the coming 16th AGM for discussion.
Thank you.
https://klse.i3investor.com/blogs/3Is/2020-11-23-story-h1536580991-iCapital_biz_Further_questions_to_be_asked_in_the_16th_AGM.jsp
