As the quarter result was released yesterday, I was totally shocked by the results. I did expect a good net profit but there was one more surprise. The cash flow from operating activities, anybody following Insas knows that cash flow from OA has been negative for a long time but was covered very well by the surplus from investing activities through the years.
If you bother doing a little bit of research, you will know that Insas has been generating a surplus of 30MILLION in cash annually on average for the past 5 years despite an outflow of cash due to operating activities. If you bother doing some calculations, you will come to the conclusion that cash inflow from investing activities can cover Insas easily for 10 years+.
Therefore, when I saw that the operating activities were net inflow this quarter and the previous. I was totally shocked because this means that the share price is going to fly the next day because:
1. Insas already has NTA way above market capitalization. NTA mostly consists of liquid assets and liquid assets can easily cover all of these borrowings.
2. In the past 4 years, Insas has never shown any inflow of cash from operating activities. Net inflow from operating activities is actually a VERY BIG DEAL for Insas.
3. A small % disposal of Inari brought in a gain of 23.1 MILLION which is one of the big reason why I told you that if you bother doing some calculations, you will know cash will be net inflow for 10 years to come.
4.Cash actually increased due to the disposal of financial assets. You can see the decrease in fair value investment and it was not due to a fair value loss but a disposal.(Disposing before the correction, dam!)
However, today I got another surprise. The share price is hovering at the same price. Thank god for people who love dividend so much that they are blinded by any future prospects. I will repeat this: OPERATING ACTIVITIES IS NET INFLOW and they still own around 19%+ OF INARI. DGSB fair value gain was not recorded. Am I the blind one here? Who knows?
A side point I would like to make
Let's take a look at Berkshire, it is very unfair to compare Insas to Berkshire for obvious reasons. Insas is a mere ant compared to Berkshire. However, I just want to point out the fact that Berkshire holds a large amount of CASH which Insas do too in comparison to their own market capitalization.
Do you know why Warren Buffett always keeps cash and so should you too? The reason is to buy in during such events when everybody is panicking especially those on trading on margin. The reason I am pointing this out to you is to tell you that Insas is READY to weather the STORM(drop in the market) and come back even stronger. Therefore, whenever there were any WORRIES about the US stock market that caused Insas to drop in price, just find it very funny that most investors in Insas do not understand Insas. Insas does have investments in the US but takes note that they have 10x the CASH than the amount they are invested in the US.
In a hypothetical situation that there is a recession is coming, which company that you are invested in weather the storm better than Insas? If there is, please share because my funds will be happily parked in it.