Tiger Balm Liniment by Haw Par Corporation.

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"?