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Tuesday, April 27, 2010


ICAP is selling @ RM 1.75 per share,valuing the company at about RM 245.0 mil on 28 April 2010

 Let's look at ICAP's latest balance sheet as at 28 Feb 2010.

Investment cost is about RM 165.3 mil.
Current asset is at RM 38.5 mil.
Addback the dividend from 28 Feb 2010 up to today,28 April 2010, is about RM 1.5 mil
Total Investment Cost plus Liquid Asset = RM 205.3 mil (RM 1.47 per share)

If you buy @ RM 245 mil , you're paying about RM 40 mil premium for the business.Note that RM 205.3 mil is the total investment cost for its portfolio (AT COST) and liquid cash. The 205.3 mil is quite safe because it's liquid and can be recovered easily if anything happens.

What will you get by paying RM 39.7 mil for the business?

  • Potential unrealized gain of RM 56.0 mil (Based on NAV of RM 2.16 per share). The unrealized gain of RM 56.0 mil may go up or down but it has safety margin (unrealized profit) of 16.3 mil (about RM 0.116 per share).
  • You are making about 41% instant return on the premium paid (RM 56 mil minus RM 39.7 mil divide by RM 39.7 mil )
  • You're getting the business for free plus 41% return
  • Margin of safety since the portfolio is selected using value investing principle
  • Good management with solid track record (20% compounded return)
  • Good sleep at night with no worries
Another information which is noteable in the 3Q is ICAP sold all TM, bought Suria and invested in "XYZ" company. XYZ company will be revealed in the 4Q when ICAP complete its acquisition. Subsequent to 28 Feb 2010, ICAP sold all KLK,LION,POHKONG,SWEEJOO and ASTRO to raise cash. I estimated the proceeds from the sale of these 5 counters is about RM 70 mil.The best thing is, the sale is not recorded in the balance sheet because it clearly stated under the note that "Subsequent to 28 Feb 2010,.."

The investment cost for these 5 counters is about RM 46 mil. The picture shows the 3Q balance sheet.

So, if you were to estimate the balance sheet as at 28 April 2010, certain assumptions have to be made. Assume the investment cost in XYZ and Suria is about RM 20 mil.
Hence, the investment cost = RM 165m - RM 46m (sold 5 counters) + RM 20m (XYZ and Suria)
Total investment cost = RM 139 mil
The current asset(CA) in 3Q is RM 38.5 mil. Assume further dividend of RM 1.5 mil. And proceeds from 5 counters sale is RM 70 mil.
Hence the CA= RM 38.5m - RM 20m (XYZ and Suria) + RM 1.5m (dividend) + RM 70 mil = RM 90 mil

So, Total Asset = RM 139 mil + RM 90 mil = RM 229 mil

Assuming no other investment been made by ICAP, that will raise it Total Asset to about RM 1.63 per share with huge unrealized gain in 4Q

Today price is RM1.75 per share only. What are you waiting for?

ICAP's Portfolio (estimated from 3Q quarterly announcement)

  1. Boustead Holdings Berhad
  2. Fraser and Neave Holdings
  3. Hai-O Enterprise Berhad
  4. Integrax Berhad
  5. Mieco Chipboard Berhad
  6. Padini Holdings Berhad
  7. Parkson Holdings Berhad
  8. Petronas Dagangan Berhad
  9. P.I.E. Industrial Berhad
  10. Suria Capital Holdings Berhad
  11. Tong Herr Resources Berhad
 Attached is the four years balance sheet of ICAP. Because its total liabilities is pretty negligible, just look at the trend of Total Asset since its inception until now. In 4Q, the Total Asset will increase significantly!!!


  1. Why forecast the total asset for the next quarter?

    Isn't that the week on week NAV a more realistic indicator to track the "value" of ICAP?

    Giap Seng

  2. Hi, BBC,
    This is an Excellent report. kEEP IT UP !!



  3. NAV is subjected to the fluctuation of share price.Meanwhile,total asset takes the investment cost only which is fixed.When shares are sold,the cash will go into current asset column.This will increase the total asset.Imagine you have RM 1.63 in your pocket and you've earning power of RM 1.00 in the next few years,but you're selling yourself at RM 1.70 now.Would you buy yourself?

  4. "Addback the dividend from 28 Feb 2010 up to today,28 April 2010, is about RM 1.5 mil" : as far as I know, ICAP hasn't paid any dividend up until now.

    "Good management with solid track record (20% compounded return)" : mind to let us know how you come to this return.


  5. "Addback the dividend from 28 Feb 2010 up to today,28 April 2010, is about RM 1.5 mil" : As far as I know, ICAP hasn't paid any dividend up until now.

    "Good management with solid track record (20% compounded return)" : Possible to show how you come to this return?


  6. You're a moron to ask this question.The dividend refers to "the dividend received from the portfolio" not the dividend declared to ICAP investors.