JcbNext Bhd (KLSE:JCBNEXT): A Net-Net Bet on Capital Allocation
Management owns 55% of the float and is paid a modest salary. The company has plenty of cash but management is frugal to the point of turning off the central air-conditioning in their office block in KL last year when their main tenant moved out. Management appears to be well aligned with shareholders.
The company began accumulating 104 Corporation shares in 2009 and continued buying during the GFC, reaching a 22.2% ownership stake in 2010. At that time, 104 was growing revenue at around 20% and paying a 6% dividend yield. Importantly, 104 has a business model that JcbNext’s management is very familiar with. I estimate it is worth around 25% more than the current carrying cost. This position now makes up around ⅓ of JcbNext’s NAV which is fine considering 104’s entrenched market position.