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Hong Chew Eu
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Retired Group CEO of i-Bhd. Now a full time blogger
Everyone talks subscribers, spectrum, 5G rollouts. But what if Malaysia’s most interesting telco story isn’t about growing bigger – it is about making scale pay?
Maxis has quietly crossed a line few noticed. It is no longer just a mobile giant. It is a fully converged operator where Mobile + Home + Enterprise now compound together, turning connectivity into recurring cash. Revenue is rising steadily, margins have stabilised, and cost discipline is doing the heavy lifting. Not sexy, but powerful.
The real punchline? ROIC sits above the cost of capital. In a mature industry. In 2025.
This is not a hyper-growth rocket — it is a cash-conversion engine. And the upside story now rests on one question:
Can Maxis squeeze more value from customers it already owns?
Higher Enterprise penetration, better ARPU, fewer subsidies — just a few subtle shifts could unlock a structurally stronger Maxis than the last decade ever showed.
Investors love growth stories. Quiet compounders? They get ignored… until they don’t.
Maxis is no longer the telco you thought you knew.
KLCC Stapled Group is a rare creature in Malaysia’s property market. It is an investment built on some of the country’s most iconic real estate, yet one that quietly challenges investors to look beyond the glamour of its assets.
Holding the Petronas Twin Towers, Suria KLCC, and a portfolio of blue-chip, long-lease offices, KLCCSG appears on the surface to be the perfect defensive play: stable, predictable, and anchored by Petronas itself. But beneath this sheen lies a more complex story - one where resilience meets structural cost pressures, and where stable cash flows coexist with muted long-term growth.
Most investors approach KLCCSG like a typical REIT, focusing on yields and NAV discounts. But this perspective risks missing the bigger question: Is KLCCSG truly a value-creating business, or simply a premium asset holder delivering modest, cyclical returns?
When you examine it through a business-owner lens - looking at ROIC, capital efficiency, operating leverage, and reinvestment discipline - the picture becomes more nuanced. KLCCSG is fundamentally sound, financially disciplined, and strategically positioned. Yet, profitability has eroded over the years, margins have tightened, and structural costs continue to rise.
The result? A high-quality, defensive investment - but at today’s price, one without a margin of safety.
The transformation of i-Bhd from a digital appliance company 20 years ago into a property group today was via a series of 5-years business plan. The next 5 years-plan envisage another pivot for i-City, its flagship development, to be the first Malaysian AI and Robotics urban centre,
IOI Corporation may not be the fastest-growing name in the plantation sector. But beneath its quiet exterior lies a far more compelling story than most investors realize.
For nearly a decade, IOI has navigated one of the world’s most volatile commodity industries with a steadiness that few of its peers can match. Revenues may have plateaued, but margins, returns, and cash generation have quietly held firm through price booms, downturns, labour shortages, and structural shifts in global sustainability standards.
While others chased expansion, IOI doubled down on discipline. It focused on controlling fixed costs, sharpening operational efficiency, and building a downstream portfolio that delivers resilience when crude palm oil prices swing.
Its balance sheet has strengthened, its global footprint has deepened. And its integrated model has created advantages that are far harder to replicate than headline numbers suggest.
Yet despite this underlying strength, the valuation picture tells a very different story - one that raises a critical question for investors: Is IOI a defensive compounder hiding in plain sight, or a fully priced stock offering little margin of safety?
Why IJM Could Outperform — Even Without a Construction Boom
Investors often chase the next “turnaround” story. But what if the real outperformer is one that is already delivering steady, disciplined gains? IJM Corporation Berhad may not grab headlines, yet its post-2022 transformation tells a different story - faster profit growth, stronger cash flow, and sharper capital discipline.
After shedding its plantation arm, IJM refocused on four synergistic engines — Construction, Property, Industry, and Infrastructure — each feeding into the other through vertical integration. This structure is not just efficient; it is strategic.
It gives IJM cost advantages that peers struggle to match, recurring cash from concessions, and a pipeline tilting toward higher-value projects like industrial parks, logistics hubs, and data centres. Peer analysis shows IJM ranking among Malaysia’s best in returns on capital, margins, and cash flow stability — even as its earnings per share lag. That weakness, however, looks fixable.
With better capital allocation and leverage discipline, IJM could move from “good” to top-quartile performance among construction and property conglomerates.
The catch? The stock already trades near intrinsic value. Yet the fundamentals suggest growing strength. For long-term investors, the question isn’t whether IJM can survive a mature market, but whether it can thrive in it.
IHH: A World-Class Hospital Network, Still Healing Its Returns
Can a hospital group with world-class brands and sprawling global reach truly deliver premium returns — or is it just a premium story?
IHH Healthcare, one of Asia’s largest multi-country hospital networks, has spent the past decade expanding across the region. This scale gives it strong moats - brand reputation, procurement efficiency, and network effects that draw both top specialists and patients. Yet behind the glamour of its Mount Elizabeths and Gleneagles lies a tougher investment question: has size translated into superior capital returns?
Yet, beneath this impressive surface lies a more sobering truth. IHH’s growth has leaned heavily on volume and operating leverage rather than structural efficiency. While post-pandemic recovery and better FX management have helped earnings rebound, the balance between growth and discipline remains delicate.
In a region where peers like Apollo Hospitals and BDMS are sharpening their focus on returns and efficiency, IHH still appears to be finding its equilibrium. It has the brand, the breadth, and the demand tailwinds, but whether it can translate these into sustainably superior performance remains the question worth watching.
Unless IHH can consistently turn its scale and reputation into lasting value creation, investors may find its promise greater than its payoff. It is a premium platform, yes — built on trusted brands and strong demand, But it has yet to prove that growth and quality can truly compound together.
Genting’s Big Move: Will the VTO Fix a Low-Return Giant?
Genting has been in the news recently with its voluntary takeover (VTO) proposal to acquire the remaining 51% of Genting Malaysia Berhad that it does not already own.
The VTO signals strategic intent — to unlock better capital allocation, simplify the group structure, and pursue big-ticket ambitions such as potential U.S. expansion.
The move does not change Genting’s underlying operational and efficiency challenges; those remain the key hurdles to long-term value creation.
The weakness lies in capital efficiency — ROIC has rarely cleared 7%. EPS has shrunk over the past decade, and large expansions like Resorts World Las Vegas have lifted fixed costs without delivering matching returns. Unlocking value depends on redeploying cash into higher-return projects and narrowing the gap between ROIC and WACC.
The VTO may simplify Genting’s structure, but only higher returns — not bigger bets — can fix a low-return giant.
Hap Seng: When Diversification Stops Protecting You
Once seen as one of Malaysia’s more resilient conglomerates, Hap Seng Consolidated now faces a different reality. Its diversified portfolio - spanning property, plantations, trading, credit financing, automotive, and building materials - once offered protection against market swings. But beneath the surface, those defensive qualities are eroding.
From 2015 to 2024, Hap Seng’s revenue grew modestly at 2.8% annually, yet profits fell 20%. Leverage climbed, cash flow conversion weakened, and return on equity slid even as operating margins remained industry-leading.
The company’s strength in property and trading masks a deeper fragility: mature markets, thin moats, and rising competition. Property depends heavily on land sales, trading offers scale but little differentiation, and credit financing lacks defensibility against banks.
While Hap Seng still commands strong EBIT margins and a sizeable cash buffer, its returns no longer exceed its cost of capital. Over the past three years, ROIC averaged 5.8% - below its 6.7% WACC - suggesting that growth is destroying rather than creating value.
For value investors, Hap Seng offers stability but not compounding potential. It remains a case study in how diversification can preserve earnings - but not necessarily grow them. Unless management rebuilds its moats or discipline, the Group risks becoming more a capital preservation play than a value-creation story.
CelcomDigi’s Next Chapter: Compounder or Value Trap?
CelcomDigi is now Malaysia’s largest mobile operator — the product of a merger that promised scale, synergy, and a new growth chapter for the nation’s telecom sector.
Two years on, the Group stands as an undisputed market leader, connecting over 20 million customers through a converged, 5G-ready network. Yet behind this dominance lies a deeper question: has the merger truly created value, or has it merely reshaped the numbers?
The merger of Celcom and Digi was hailed as a strategic masterstroke — cost savings, efficiency gains, and a stronger platform for enterprise growth.
But when you strip away the headlines and look closely at the fundamentals, the story becomes far less straightforward. Revenue growth has barely moved, margins have continued to narrow, and fixed costs remain stubbornly high.
Still, CelcomDigi’s returns exceed its cost of capital — a sign of value creation at the business level. But translating that into shareholder wealth is another matter entirely.
I broke down CelcomDigi’s performance through two lenses — absolute and peer-relative — to reveal where it truly stands in the spectrum between compounder and value trap.
Is CelcomDigi quietly building long-term value beneath the surface — or has it already peaked as a mature, cash-rich incumbent? The answer lies not in its size, but in what that scale has (and hasn’t) achieved.
This is not a story about telcos alone; it is about the fine line between stability and stagnation — and why even market leaders can become value traps when scale stops translating into growth.
