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icapital.biz Bhd (ICAP) Shares Outperforms MSCI Malaysia Over 1- and 3-year Period

KUALA LUMPUR: The share price of Malaysia’s only listed closed-end fund, icapital.biz Bhd (ICAP) has flat out outperformed the MSCI Malaysia Index, the S&P500 and Nasdaq index over a 1-year period in US dollar terms from 1 April 2023 to 29 March 2024.

Capital Dynamics CEO and icapital.biz Bhd’s designated person Tan Teng Boo

Over that 1-year period, ICAP’s share price returned 47.75%, while MSCI Malaysia returned (-0.98%) and the S&P500 and Nasdaq returned 27.86% and 34.02% respectively.

Meanwhile, on a 3-year period, ICAP still outperformed the other three indexes, returning 49.34%. The MSCI Malaysia index, S&P500 and Nasdaq returned (-17.58%), 32.26% and 23.65% over the said period.

As of 29 March 2024, ICAP’s total net asset value (NAV) stood at RM536 million or RM3.82 per share, based on its 140 million shares outstanding.

ICAP’s designated person Tan Teng Boo said: “Who says Malaysia is not a good investing destination? It’s even better than investing in Nasdaq. It’s about choosing the right Malaysian asset. If you invest in ICAP shares, there is no need to worry about the ringgit.”

Tan, who was also recently named Adjunct Professor of University of Technology Sydney (UTS) in Australia, turned bullish on the Malaysian market during Investor Day on 5 November 2023, as he feels it is in a sweet spot of sorts.

He says that the Kuala Lumpur Composite Index (KLCI) is poised for a prolonged bull market over the next 3- to 5-year period, fueled by macro tailwinds, forecasting the index to hit 2,500 to 3,000 points during that period.

Should that happen, Tan has two scenarios for ICAP’s share price should the KLCI hit 3,000 points.

Firstly, Tan foresees the NAV of ICAP doubling to RM7.86. If so, then this will be a rise of RM4.81 or a 158% rise from RM3.05.

In the second scenario, Tan says that historically, the NAV of ICAP has outperformed the KLCI by 6% per annum.

“Thus, if the KLCI doubles in 5 years, the NAV of ICAP will be RM10.19 by then.

“Assuming its share price trades at a 10% premium to NAV, its share price will trade at RM11.21, which is a rise of RM8.16 or 267% from RM3.05,” he said.

Tan adds that the performance scenarios mentioned do not include the contributions from ICAP’s innovative dividend policy.

ICAP’s innovative dividend policy was announced on 29 September 2023, with the goal of proactively narrowing the discount between ICAP’s share price and its NAV per share.

It is formulated as follows: a base rate of 1% of ICAP’s NAV per share, plus 8% of the difference between ICAP’s share price and NAV. This additional 8% is referred to as the top-up rate.

In summary, this innovative dividend policy consists of the aggregate of the 1% base rate and the 8% top-up rate.

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