Most small-cap rallies overshoot the underlying business and the board's job in the moment is to do nothing without looking like they are doing nothing. Holding-company arithmetic catches up eventually. The question is whether the chair has the patience to let the multiple compress on its own schedule rather than chasing the narrative.
The holding company discount you're describing is the more common structure, i.e. parent trades cheap relative to listed subsidiary, patience lets the gap close.
Sunright is the reverse: the parent (SGX:S71) trades at a significant premium to KESM (Bursa), which is 87% of the underlying business. If the arithmetic catches up here, it catches up by compressing S71's multiple toward KESM's - which is the bear case, not the bull case. That's what makes it an interesting structure to analyse rather than a straightforward patience trade.
Thanks! Your 2018/2021 peak framing maps cleanly to KESM's standalone history: FY2021 RM 7.3m NPAT on RM 248m revenue --> FY2025 RM 8.2m loss on RM 210m. Same shortage-to-trough trace.
The flip triggers we'd watch for the reversal you're flagging: KESM Bursa Q3 (next month, around 10 June 2026) and Q4 (around 25 September 2026). Two consecutive flat-or-negative quarters there would settle whether 1HFY2026 was real recovery or a one-half mean-reversion. Will read your piece. Thanks for the cross-reference.
Most small-cap rallies overshoot the underlying business and the board's job in the moment is to do nothing without looking like they are doing nothing. Holding-company arithmetic catches up eventually. The question is whether the chair has the patience to let the multiple compress on its own schedule rather than chasing the narrative.
The holding company discount you're describing is the more common structure, i.e. parent trades cheap relative to listed subsidiary, patience lets the gap close.
Sunright is the reverse: the parent (SGX:S71) trades at a significant premium to KESM (Bursa), which is 87% of the underlying business. If the arithmetic catches up here, it catches up by compressing S71's multiple toward KESM's - which is the bear case, not the bull case. That's what makes it an interesting structure to analyse rather than a straightforward patience trade.
The SEA Analyst, thanks for highlighting Sunright. Interesting company and structure.
Sunright is new to me. At first glance, the cyclical risk is significant.
Sunright's profits and share price peaked around 2018 and 2021. This coincided with the peaks in semiconductor shortages.
Right now, earnings seem sustainable at least until the end of calendar 2026.
But there is a risk that the shortage ends and earnings collapse around calendar Q1'27.
I discuss why in detail here: https://angsanaanderson.substack.com/p/where-are-we-in-the-semiconductor?r=5rl2u5
Thanks! Your 2018/2021 peak framing maps cleanly to KESM's standalone history: FY2021 RM 7.3m NPAT on RM 248m revenue --> FY2025 RM 8.2m loss on RM 210m. Same shortage-to-trough trace.
The flip triggers we'd watch for the reversal you're flagging: KESM Bursa Q3 (next month, around 10 June 2026) and Q4 (around 25 September 2026). Two consecutive flat-or-negative quarters there would settle whether 1HFY2026 was real recovery or a one-half mean-reversion. Will read your piece. Thanks for the cross-reference.