My Bet on Integrax was Spot On!

My Bet on Integrax

was Spot On!

One of the most important traits in investing is to have that ability to be early enough to spot on potential undiscovered good stocks trading at very undemanding value.

Should one has that ability and spotted one, one should have the courage to buy some shares in that company and patiently wait for the time to come.

In 2013, I went for a two day one night trip at Pulau Pangkor. I had the opportunity to see the ports at Lumut were having a very busy schedule all day long. Coming home, I did some research and was thrilled to see that the busy ports belonged to Integrax Berhad.

A further "check" revealed that Integrax is in cash rich position and not one single individual or company owned a very substantial stakes in the company, examples 40% or 51% stakes.

In fact, the three major share holders holds  a total collectively 60.67% - 22.81% by Amin Halim Rasip (original founding shareholder), 22.12% by Tenaga Nasional Berhad and 15.74% by Perak Corporation Berhad.

A thought came up to me that if these three major shareholders decided to take Integrax private one day, it would not face much resistance. Perhaps the major resistance would have come from the Integrax's number five top shareholders i.e. TSM Global Berhad holding 12,000 million shares or 3.99%.

Based on that, I bought a handful of Integrax shares at an average price of RM1.85 in 2013.

When I posted the blog : Integrax's Future Potential Kingmaker on January 27, 2014,  at that time, I believed that Tenaga, being a government-linked stock and Perak Corp - also a state agency under the government would have no problem teaming up together and if they can get the support of Amin, would possibly launch a takeover offer for Integrax at any time.

Should that happens, then TSM would be in a Kingmaker's position to support or even ask for a higher offer. But things are not what we expect to be. Instead it was Tenaga alone launching the takeover offer.

Why Tenaga wants Integrax?

It is not difficult to understand why Tenaga wants to own Integrax fully or at least having strong management control, but of course it would be better to fully own it rather than not.

Being the major user of the port and with more coals shipment coming in the future, it makes sense to fully own the port and dictate control. But now it cannot because the other two major shareholders have different plans, directions and social responsibilities for Integrax.

I strongly believe Tenaga has big plans for Integrax once it is fully under its control or privatised. But of course, Tenaga would not be telling us right now. Instead, Tenaga is "supported" by some "stupid" analysts who recommended that at RM2.75, it is a fantastic offer considering that Integrax never traded at the price during the last ten years.

Sorry if I am a little blunt in calling those analysts stupid. Analysts are supposed to be very educated people who graduated with high honours. That is why they are able to analyse this and that and come out with a recommendation. This time, they think the minorities shareholders are easy to misled them in parting with Integrax shares to Tenaga.

Did they think of the future potential business of Integrax or are they talking about the past performance of Integrax only? The present offer price doesn't mean it is fair based on the past performance of Integrax.

Obviously there is a hidden agenda from Tenaga which of course we can only guess this and that only.

Why Amin refused to sell at RM2.75?

Amin Halim Rasip (the original founding shareholder) is someone who knows the enterprising values of Integrax more than anyone else. If not for his statement issued, I sincerely would not have known so much the potential earnings and future business of Integrax.

For example, I did not know that Integrax is one of the few ports in the world with one of the main terminals operating in deep water.

Furthermore, Integrax holds cash as much as RM154 million which translated into cash per share of 50 sen. That means Tenaga is only valuing Integrax at a PE of only 16.5 and not 20.

That also means Tenaga is effectively paying only RM2.25 per share for each Integrax share which is even lower than the pre-offer price!

If Tenaga is sincere enough, Tenaga should offer significantly higher then RM2.75 per share plus the distribution of RM154 million to each shareholder. Then perhaps this might sound a bit tempting. Otherwise, it is not an attractive offer at all.

I am with you, Encik Amin.

It is about time those "Davids" team up with Encik Amin and show it to Tenaga that the offer price is extremely too low! Interestingly, TSM with a 12,000 millions shares are now pondering which sides to take. Years back, my 36,000 shares of TSM was forcefully taken privatised by the company even though I could not be bothered to  go to the stock broking firm to sign the documents to hand over my shares to them. They simply sent me a check.

So what goes around must come around. This time, TSM are in a position  as I was several years back. And this time, ironically, TSM and I owned shares of the same company together!

So to Encik Amin, you have my supports and my followers' as well. I appeal to other minorities to join Encik Amin to challenge Tenaga this time.

Minorities should be brave enough  to show their support. When we have strong support, Tenaga would be forced to make a revised offer which must be attractive enough.

In fact, I am suggesting that first, Tenaga must make a very significant higher revised offer and also the distribution of Integrax's cash hoard of RM154 million to all shareholders!

Hear it, Tenaga Nasional Berhad?

Delloyd Ventures Bhd's privatisation is on!

Delloyd Ventures Bhd (DVB) obtained its shareholders' approval at the extraordinary general meeting held on Jan 15, 2015 for the takeover by major shareholders.

The Selective Capital Reduction will result in entitled shareholders receiving a total capital repayment of RM181.15 million, or RM5.15 per share.

DVB's Managing Director Datuk Seri Tee Boon Kee said that the privatization exercise will be completed by end-March and delisting of DVB from the bourse will take place in April.

Once again, I have lost another battle to keep my shares when it came to a privatisation exercise. Recall that on Aug 19, 2014, I bought 2,000 shares of Delloyd hoping that the privatisation exercise would not be a successful one. Well, it looked like the major minorities' approval were easily obtained at the extraordinary general meeting.

Stocks prices have recovered at the moment

During the last two weeks, I have not been able to purchase any stocks which fit into my requirements' lists.  Some which I have earlier identified have recovered substantially and some in between 52 week high and low.

But I am still monitoring and as such, should an opportunity presents itself, you can bet that I will be making a purchase on it. Stay tune.

Mr Sim on Jan 12, 2015 asked this question:

What do you think about Uchi Tech in these ringgit depreciation?

It give 5.6% of net dividend annually...

Dear Mr Sim,

Uchi Tech will benefit from the stronger dollar's rise as most of its revenue is quoted in the green back.

That is why Uchi Tech is now trading higher its 52 week high. Dividend payout is also attractive. What do you think?