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Tiger Balm Liniment by Haw Par Corporation.

Sunday, September 29, 2013

When I was a boy, I used to wonder why older folks liked to rub medicated oil on their temples. I didn't like the sharp and stinging scent.

You know what they say about how only time can teach us certain things. This is one of those things.

For about 10 years now, I have been using medicated oil regularly. 10 years? Do I keep a record? No, I kept the empty bottles:

First bottle on the extreme left was manufactured in 2002 while the one on the extreme right which is the one I am using now was manufactured in September 2011.

Two lessons from this:

1. Often, we can only really understand why older people are the way they are when we grow older ourselves. We should be more patient when interacting with our elders.

2. I could have bought shares of Haw Par Corporation in the past when it was much cheaper but I did not. A pity. It last traded at $7.45 a share.

Based on its financial statements, I am estimating a PER of almost 15x at current share price. It seems to have a fixed annual DPS of 20c which gives a dividend yield of 2.68%. The stock has a NAV/share of some $10.71 which means it is trading at a discount of 30.5%. Its balance sheet is very strong too.

Some might ask if it is better to invest in SPH. Well, if SPH were to pay a DPS of 21c, at $4.10 a share, we would get a yield of 5.12%. From this angle, SPH wins hands down.

However, if Haw Par Corporation were to pay out all its earnings as dividends, we could see a higher yield of 6.7% or so. Of course, I am not suggesting that it would but, comparing it with SPH thus, it seems stronger compared to SPH.

It is probably safe to say that anyone investing in Haw Par Corporation probably looks at it as an asset play. It does not seem attractive in any other way to me as an investor at its current share price.

Remember, "you could sit on an undervalued situation your entire adult life and the stock wouldn't budge a nickel." (Peter Lynch, One Up On Wall Street.)

Still, all investments are good at the right price and if PER were to decline to 12x or if the stock were to trade at a 40% discount to its NAV while maintaining a DPS of 20c, it could be a very compelling buy! Well, I can always dream.

Related post:
How to be "One Up On Wall Street"?


EY said...

Hi AK,

Wonder what good are the empty bottles that you have kept them for 10 years...

You never fail to amaze me. I just picked my jaw from the ground!

Solace said...


First Notice Haw Par when it was trading at $6.10. Done fundamental analysis at that time and thought it was undervalued.

However in the end, i did not invest in it as my funds were channeled into Dukang and Kingwan as i believe they have better short term growth prospect.

The boat has sailed, hopefully it will come back for me one day. :)

AK71 said...

Hi Endrene,

You dropped your jaw and I lost my words. Haha... I was lost for words because I didn't know how to reply to your comment. ;p

What good are the empty bottles?Good for nothing other than to remind me that I have been using Tiger Balm liniment regularly for 10 years. LOL.

Actually, they are also good to amaze people like you and to make their jaws drop! ROFL. :D

AK71 said...

Hi Solace,

Well, if your investments in Dukang and Kingwan have provided better returns, then, no regrets. Anyway, there will be many more opportunities down the road, I am sure. ;)

Singapore Man of Leisure said...

1) Endrene,

I dare not ask what AK did with all those empty St. Dalfore jam bottles. Perhaps they became the feature wall in his condo?

2) AK,

Your technique in crafting your investment story is getting better and better ;)

Surrounding the cold hard skeletons of quantitative facts with the warm flesh and blood of qualitative analysis.

You very de good!

No, I'm not going to face-palm myself again. No feeling liao.

I won't be surprised if you tell me you had collected cologne bottles too =-=

AK71 said...


Oh, it is quite OK to ask. I will not be offended. Promise. ;)

The empty jam jars? I recycle them actually although I did keep a few to hold pencils and pens. I kept some smaller glass jars to hold paper clips and coins too. I am very into the 3 Rs. :)

Aiyoh, simi technique in crafting investment stories? Now, I feel pressure to keep writing like this. Cham. -.-"

Anonymous said...

Hi Ak,

I used to own Haw Par at $6 a few years back, but I didn't read Peterlynch books then, and It didn't move for months, and I sold it for more exciting counters.

How silly I was. I am quite sure I will have a second chance sooner or later.

With the congress dyfunctioning, maybe its will be sooner... =p

AK71 said...

Hi Mike,

With a low probability that Haw Par would ever monetise its holdings in UOB, UOL and UIC, the true value of Haw Par's stock might never be realised. In such an instance, it would be prudent for us to demand an even larger discount to NAV before investing in the company.

Then, we have to question our motivation for investing in the company.

For people who invest in Haw Par thinking of it as an asset play, they could be disappointed and many have been holding for years. I feel that it might be a better idea to look at Haw Par as a market stalwart or a slow grower. In such instances, the dividend yield would be an important consideration.

A 20c DPS would give us a dividend yield of 4% if the stock should trade at $5.00 per share. Is that ever going to happen?

JJ said...

Wah...... AK .... u the very the can! Tell me who bought these for you or applied it on you? Your next investment is a warehouse, u definitely need space for your many collectible items.

What next?? to shock us....

Ooppsss..... I better go look for my jaw now!

AK71 said...

Hi JJ,

How do you know I collect cans too? ;p

I bought these for myself lor. I buy when I see there is a special offer. Recently, NTUC Unity Healthcare had a good offer. $4.70 instead of $5.70 per bottle. I bought three. One for my mom, one for my sis and one for myself. :)

Get a warehouse? Nah, I will probably clear these out together with my St Dalfore and Snapple glass jars soon. Yah, I have those too. ;p

opal said...

Investing in warehouses? Maybe Mapletree Log or GLP :)

AK71 said...

Hi opal,

Now that you have mentioned it, I do own a few warehouses through AIMS AMP Capital Industrial REIT, Sabana REIT, Cambridge Industrial Trust and Cache Logistics Trust. ;p

Ivanp said...

Hi Ak,

Keep those small bootles and maybe in 30 years they will be very valuable as antiques ;)


AK71 said...

Hi Ivan,

You think so? I sell to you at $5.00 each now. You want? ;p

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