A solid but slow compounder of wealth. I don't expect much value adding activity but you can expect your money to be safe as it is trading well below book value.
Haw Par recently released its FY2024 results, sparking renewed interest among investors. As of the latest closing price on February 21, 2025, the stock traded at S$11.45, though posts on X suggest it has climbed higher (around S$13.75) following the results announcement. Here are the key takeaways:
Earnings and Dividends: The company reported solid profitability, with posts on X citing a direct earnings per share (EPS) of S$1.03 and an underlying EPS of S$1.86, reflecting the contribution of its investment holdings. More notably, Haw Par declared a special dividend of S$1.00 per share on top of its usual final dividend of S$0.20 per share, bringing the total payout to S$1.20 for FY2024. This translates to an impressive yield of over 10% at the pre-surge price of S$11.45, a rare treat for shareholders.
Stock Price Movement: The stock has been on an upward trajectory, up 31% over the past eight months, with a 6.6% jump post-results. This momentum suggests it’s testing a resistance level around S$13.75, a triple-top from its historical chart.
Valuation: Haw Par’s accounting Net Asset Value (NAV) is estimated at S$18.74, while its market-value NAV is higher at S$24.53, according to X posts. At S$11.45 (or even S$13.75), the stock trades at a significant discount to its NAV, hinting at undervaluation. The trailing dividend yield, excluding the special payout, sits at around 3.5% based on last year’s S$0.40 dividend, which is decent for a stable stock.
Financial Health: The company maintains a pristine balance sheet with zero debt and cash comprising 20% of total assets. This low-risk profile appeals to conservative Singaporean investors who value stability.
Business Segments Breakdown
Healthcare (Tiger Balm): This segment remains the public face of Haw Par, generating steady revenue from Tiger Balm and Kwan Loong products. While not a high-growth area, its consistent demand across Asia and beyond provides a reliable cash flow base.
Investments: The bulk of Haw Par’s value lies here, with substantial stakes in UOB and UOL. These holdings tie its performance to Singapore’s banking and property sectors—both resilient but cyclical. Rising UOB share prices or UOL’s property ventures could further boost Haw Par’s NAV.
Property and Leisure: This smaller division includes rental income from investment properties in Asia and leisure operations like oceanariums. It’s a minor contributor but adds diversification.
What’s Driving the Stock?
Special Dividend Buzz: The S$1.00 special dividend has lit a fire under the stock, signaling that management is willing to reward shareholders. For Singaporeans who love dividends (who doesn’t?), this is a big draw, though it’s unclear if such payouts will recur.
Undervaluation Opportunity: Trading well below its NAV, Haw Par looks like a classic value play. The gap between its market price and intrinsic value (especially market-value NAV) suggests room for growth if the market rerates it closer to its asset worth.
Risks to Consider
Dependence on Investments: Haw Par’s fortunes are tied to UOB and UOL. A downturn in Singapore’s banking or property markets could drag its NAV and stock price lower.
Low Growth: With a long-term growth rate of 5-6%, it’s not a high-flyer. Investors seeking rapid capital gains might find it lackluster compared to tech or growth stocks.
Liquidity and Control: The Wee family, led by Chairman Wee Cho Yaw, controls a majority stake through personal vehicles. This limits the likelihood of a takeover or significant capital return, as they’re unlikely to liquidate UOB/UOL holdings.
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