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Hong Chew Eu
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Retired Group CEO of i-Bhd. Now a full time blogger
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.
BAT Malaysia: Buying Cash Flows, Not the Narrative
British American Tobacco (Malaysia) Berhad is not your typical growth story. It is a classic case of defend and optimise. The cigarette market is structurally declining, illicit trade remains a persistent thorn, and new categories like vaping are still too small to offset the combustible base.
Yet, despite shrinking volumes, BAT Malaysia continues to generate enviable returns: a 21% ROIC and 47% ROE in 2024. Cash flows remain durable, but only if pricing power, product mix, and cost discipline consistently outrun volume attrition.
This is where the investment case gets interesting. Markets often discount such companies too heavily, focusing on past declines rather than the resilience of the cash engine.
BAT Malaysia’s premium and value-for-money brands still fund dividends and strategic bets, but with revenue flatlining and fixed costs creeping up, efficiency gains are not optional - they are survival.
The valuation math suggests limited margin of safety today, but a disciplined investor might still see opportunity when the price fully reflects structural headwinds. So, is BAT Malaysia a value trap or a cash compounder in disguise? The answer lies not in chasing growth, but in testing the durability of its cash machine.
Axiata’s Strategic Pivot: Transformation or Illusion?
Axiata once built its reputation as a sprawling mobile operator across Asia. Today, it claims to have transformed into a regional digital connectivity platform, with ventures in fintech, infrastructure, and enterprise services.
The story is compelling: exits from risky markets, mergers to consolidate strength, and a shift toward platform-driven growth. On the surface, this looks like a company ready to ride Southeast and South Asia’s booming digital wave.
But when you peel back the numbers, the picture is less inspiring. Over the past decade, revenue has barely grown, returns on capital still trail the cost of capital, and margins remain stuck. Even compared with peers, Axiata ranks near the bottom on profitability and shareholder returns.
So the question is — has Axiata truly pivoted into a stronger, value-creating business, or is this just another corporate reinvention that sounds better than it performs?
My deep-dive analysis suggests cautious optimism but no margin of safety at today’s price. Axiata may be worth watching — but is it worth buying yet?.
Astro’s Digital Gamble: Can Malaysia’s Pay-TV Giant Reinvent Itself Before It’s Too Late?
For two decades, Astro Malaysia Holdings was the undisputed leader of Malaysian Pay-TV. Its satellite dishes crowned rooftops nationwide, its channels dominated living rooms, and its financial performance seemed rock solid.
But the media landscape has changed dramatically. Streaming platforms like Netflix, Disney+ and YouTube have captured audience attention. The once-invincible Astro now faces declining revenues, shrinking profits, and the challenge of redefining itself in a digital age.
To counter this disruption, Astro has embarked on an ambitious transformation. It has launched Astro Fibre to bundle broadband with content, integrated global streamers into its Ultra and Ulti Boxes, and pushed its own OTT platforms such as sooka.
The company is positioning itself not just as a broadcaster, but as a converged media-tech platform that combines entertainment, connectivity, and enterprise services.
The question for investors is whether these moves are enough. From 2016 to 2025, Astro’s revenue contracted at an annual rate of 6.2%, while net profits fell to just one-fifth of their former levels.
Yet Astro is not without strengths. It continues to generate healthy cash flows, maintains a solid financial base, and offers bundled services that still resonate with local consumers.
At today’s share price, the stock even trades below its estimated intrinsic value, suggesting possible upside—if management can stabilize the business.
Astro’s future now hinges on execution. Will its digital pivot create a leaner, cash-generating platform fit for the streaming era—or is this another case of too little, too late?”
Forget Blockchain: Zetrix’s Secret Weapon Could Be AI + Robotics
Zetrix, formerly known as MyEG is a Malaysian digital services company that connects government, businesses, and consumers through its online platforms. Originally focused on e-Government services, it has since expanded into commercial digital offerings, from bill payments to insurance renewals.
Today, the company is pushing into blockchain with its Zetrix platform, enabling cross-border trade, digital credentials, and next-generation decentralized services.
In April 2025, MyEG and its Chinese allies established the China‑ASEAN AI Innovation Cooperation Centre at its Zetrix Tower. This government-backed lab will develop a national AI model, generative AI tools, robotics solutions, and AI-powered cross‑border ID systems.
Zetrix AI aims to integrate blockchain + AI + robotics, establishing itself as a digital tech leader bridging government and commercial sectors across the region.
While it is too early to see the impact of this AI push, it is instructive to note that its revenue in 2024 jumped up 31 %. PAT also increased substantially by 46 %. This surge was primarily driven by the rapid growth of its Web3 services, especially revenues from sales of digital assets via its Zetrix blockchain platform, layered on top of its traditional e-government and commercial digital platforms.
The company is trading today at about an Acquirer’s Multiple of 10 falling into the boarder of the Gem and Goldmine quadrants on the Fundamental Mapper.
Unfortunately Zetrix is a unique hybrid of e-Government digital services, commercial digital transactions, and new blockchain/Web3 ventures. As such there is no realy global peers. But if you look at other digital infrastructure and fintech businesses (Paytm of India, Ant Group of China, Indra Sistemas of Spain and Sopra Steria of France), the Acquirer’s Multiple ranged from 5 to 12.
Given that Zetrix’s revenue jump was driven by its blockchain platform, while its AI initiative is still at an early lab stage, the current valuation at 10x Acquirer’s Multiple likely reflects market caution on near-term earnings contributions from AI.
As Zetrix moves from proofs-of-concept to monetized AI applications, we would expect the market to reprice, provided execution risks tied to multi-jurisdiction operations and geopolitical partnerships are well managed.
Systech’s Big Bet on AI & Cybersecurity: Turnaround Story or Just Another Tech Mirage?
Systech started out as a niche provider of e-Business solutions, developing software platforms for direct selling and membership-based industries. Over time, it expanded into CyberSecurity, building capabilities in monitoring and protecting digital assets.
Facing persistent losses in its legacy MLM software business, Systech eventually exited this segment and repositioned itself by acquiring new ventures like Wilstech and TalentCloud AI.
Today, it stands as a digital transformation and cybersecurity group, offering solutions across AI, IoT, ERP, and information security. While its customer base spans Malaysia, Singapore, and parts of Asia, its revenues remain largely project-driven, reflecting both growth opportunity and concentration risk.
Its financial performance reflects this changing business profile. Over the past six years, while revenue roughly doubled, operating income fell from RM2.5 million in 2019 to an operating loss of RM2.7 million in 2024.
At this point, Systech is still in a transition phase, with no clear signs of operating stability. Revenues remain project-based, gross profit margins have been shrinking, and there is no evident margin recovery. The equity base has also eroded materially.
While the business has been strategically repositioned, the next 1-2 years will be crucial to determine whether its ventures with Wilstech and TalentCloud AI can evolve into a genuine financial turnaround, delivering positive margins and more stable earnings.
Given this picture, it is no surprise to find Systech currently placed in the Quicksand quadrant of the Fundamental Mapper.
G3 Global is Betting on AI. Is It Worth the Roller Coaster?
G3 Global exited its non-core apparel businesses by 2019 to focus on ICT, especially AI, IoT, and smart mobility. It established Atilze AI and partnered with SenseTime to position Malaysia as a regional AI hub for surveillance and facial recognition. In 2021, G3 briefly ventured into healthcare, but by 2023 had shifted back to large ICT projects, notably the AIS3 AI security system for KLIA and KLIA2.
Its financial performance has mirrored these business shifts, with only a marginal operating profit in 2023 over the past six years.
Looking ahead, G3 Global is set to remain focused on large-scale, project-driven deployments that integrate AI, surveillance, and smart infrastructure. Building on its AIS3 contract, the company is positioning itself as a specialist system integrator combining AI with security and mobility solutions.
However, the business remains heavily reliant on securing similar big-ticket projects, with limited recurring software revenues. Its future hinges on converting its AI expertise and partnerships into new contracts for smart city, airport, or government security initiatives, while also exploring opportunities in AI-supported healthcare tech.
Given this picture, it’s no surprise to see G3 Global positioned in the turnaround quadrant on the Fundamental Mapper.
From an investment perspective, G3 Global resembles a high-beta AI integrator leveraged to public sector security and smart city spending. While the SenseTime relationship and the flagship KLIA project provide strategic visibility, the lack of recurring revenue, volatile earnings, and a still fragile balance sheet suggest investors should watch closely for signs of a real turnaround, such as:
• Conversion of new pipeline contracts post-KLIA,
• How much of their solutions represent true AI IP versus pass-through hardware or software integration, and
• Whether they can build any high-margin proprietary platforms.
