Haw Par Corporation

[kazukirai]

pardon me for asking this cos i never been to sentosa for many years already:
are dolphins in sentosa found only in haw par's underwater world resort?

I think it's in some Pink Dolphin Lagoon. Not sure if that lagoon's part of the Underwater World.

I think RWS might be getting some dolphins too, unless the activists get their way.

[pianist]

pardon me for asking this cos i never been to sentosa for many years already:
are dolphins in sentosa found only in haw par's underwater world resort?

I think it's in some Pink Dolphin Lagoon. Not sure if that lagoon's part of the Underwater World.
I think RWS might be getting some dolphins too, unless the activists get their way.

with the upcoming RWS' big marine life park in sentosa, i guess Haw Par's underwater world might be in for a hard time..

[kazukirai]

with the upcoming RWS' big marine life park in sentosa, i guess Haw Par's underwater world might be in for a hard time..

IMO, I don't think Underwater World is a big part (teeny, tiny part actually) of the equation when looking at Haw Par.

[LLI]

A valuation exercise I created with a friend.
Showing how Haw Par is currently still undervalued compared to its historical trading range.
Let me know what you think
Attached is the summarized report

---------------------------------------------------------
Using a SOP valuation, Haw Par Corp is basically make up of the few segment
1) 3 operating business
a. Healthcare – Tiger Balm Brand
i. Average 2 year earning of $16million
ii. At 10x PBT for a stable, good brand consumer business
iii. Value at $ 160million

b. Leisure
i. Underwater world Singapore
ii. Underwater world Thailand
iii. Average 2 year earnings of $ 5million
iv. At 5x PBT for a high Capex business that have only about 6-10years of lease left
v. Valued $ 25 million

c. Property
i. Rental about SGD 11.5 million Net, about 6.3% yield
ii. Book value is quite an accurate reflection
iii. Valued Q4 2012 - $ 211 million

2) Associates
a. Hua Han Bio-Pharm (16.6%) - http://www.bloomberg.com/quote/587:HK
i. SGD 180 million at quoted price
ii. Giving it a 20% due to lack of control and owning it through investments
iii. Valued $ 144million

b. UIC Tech (40%)
i. Associate earnings are mainly from Hua Han
ii. Valued at $ 0

3) Investment – Quoted Securities
a. Mainly holdings of UOB, UOL Group Ltd, UIC Ltd
b. UOB - http://www.bloomberg.com/quote/UOB:SP
c. UOL - http://www.bloomberg.com/quote/UOL:SP
d. UIC - http://www.bloomberg.com/quote/UIC:SP
e. $ 1,815 million AFS, $151million cash = $1,966 million

4) Total liability is around $ 117 million, operating lease is around $ 17million while contingent liabilities are only $ 68,000.


Total valuation = 160+25+211+144+1966-117-17 = $2,372 million
Current share count is 198,183,654, dilution from options is less than 0.1% a year.

Per share valuation is around SGD 11.96 – which is roughly the book value of the company.
In our opinion, the company should trade at a rough premium to its BV.
From a historical P/B valuation, it should be at around SGD 9.60 value, still 29% above current price.

P/B is a fair indication of value for Haw Par as it is mainly an investment company. P/B (M) is more consistent as in 2005, there is a change in accounting standard, revaluing AFS investment to fair value from cost. It can be observed that before the global financial crisis, HPC is trading around 0.8BV, but after the crisis, it has stayed around the 0.6 BV range.
The CAGR of BV from 2000 to 2012 is at 6% a year while the CAGR since 2008 before the crisis is 4.3% a year.

Given that the company is growing BV at 4% a year conservatively, and with a 2.5% yield, the company is giving us a 6.5% yield. Additional to trading at 0.8 – 0.9 BV, it is still 19% - 34 % away from the normal range. Assuming that the company will take 5 years to reverse this undervalue situation. That works out to be another 4.7% a year. That will give us roughly 11.2% CAGR yield from ROE, dividend and reversal of undervalued situation.

Disclosure: I am LONG Haw Par Corp.

[greengiraffe]

Wee family also Long Haw Par. I think they are more keen to see gap to real book value narrowing.

Whatever will be will be. You are in good hands.

A valuation exercise I created with a friend.
Showing how Haw Par is currently still undervalued compared to its historical trading range.
Let me know what you think
Attached is the summarized report

---------------------------------------------------------
Using a SOP valuation, Haw Par Corp is basically make up of the few segment
1) 3 operating business
a. Healthcare – Tiger Balm Brand
i. Average 2 year earning of $16million
ii. At 10x PBT for a stable, good brand consumer business
iii. Value at $ 160million

b. Leisure
i. Underwater world Singapore
ii. Underwater world Thailand
iii. Average 2 year earnings of $ 5million
iv. At 5x PBT for a high Capex business that have only about 6-10years of lease left
v. Valued $ 25 million

c. Property
i. Rental about SGD 11.5 million Net, about 6.3% yield
ii. Book value is quite an accurate reflection
iii. Valued Q4 2012 - $ 211 million

2) Associates
a. Hua Han Bio-Pharm (16.6%) - http://www.bloomberg.com/quote/587:HK
i. SGD 180 million at quoted price
ii. Giving it a 20% due to lack of control and owning it through investments
iii. Valued $ 144million

b. UIC Tech (40%)
i. Associate earnings are mainly from Hua Han
ii. Valued at $ 0

3) Investment – Quoted Securities
a. Mainly holdings of UOB, UOL Group Ltd, UIC Ltd
b. UOB - http://www.bloomberg.com/quote/UOB:SP
c. UOL - http://www.bloomberg.com/quote/UOL:SP
d. UIC - http://www.bloomberg.com/quote/UIC:SP
e. $ 1,815 million AFS, $151million cash = $1,966 million

4) Total liability is around $ 117 million, operating lease is around $ 17million while contingent liabilities are only $ 68,000.


Total valuation = 160+25+211+144+1966-117-17 = $2,372 million
Current share count is 198,183,654, dilution from options is less than 0.1% a year.

Per share valuation is around SGD 11.96 – which is roughly the book value of the company.
In our opinion, the company should trade at a rough premium to its BV.
From a historical P/B valuation, it should be at around SGD 9.60 value, still 29% above current price.

P/B is a fair indication of value for Haw Par as it is mainly an investment company. P/B (M) is more consistent as in 2005, there is a change in accounting standard, revaluing AFS investment to fair value from cost. It can be observed that before the global financial crisis, HPC is trading around 0.8BV, but after the crisis, it has stayed around the 0.6 BV range.
The CAGR of BV from 2000 to 2012 is at 6% a year while the CAGR since 2008 before the crisis is 4.3% a year.

Given that the company is growing BV at 4% a year conservatively, and with a 2.5% yield, the company is giving us a 6.5% yield. Additional to trading at 0.8 – 0.9 BV, it is still 19% - 34 % away from the normal range. Assuming that the company will take 5 years to reverse this undervalue situation. That works out to be another 4.7% a year. That will give us roughly 11.2% CAGR yield from ROE, dividend and reversal of undervalued situation.

Disclosure: I am LONG Haw Par Corp.

[bookworm]

Many other companies in this category. There must be asset unlocking theme. Otherwise, will continue to stay undervalued...

[specuvestor]

Many other companies in this category. There must be asset unlocking theme. Otherwise, will continue to stay undervalued...

Exactly... this is more key than many PASSIVE value investors realise besides the numbers crunching

Wee is not interested in realising value for minorities. Haw Par had a huge run primarily because MAS force the untangling of the cross holding web. Otherwise it would be business as usual. And Peter Cundill hold till he's dead. In the long run he will be right....

There is a lesson to be learnt here

[felixleong]

Haw Par is a value trap that I held it for 3 years and gave up.
I think the probability of realizing its full NAV within say 5 years is very low, probably under 10%.

You can take a look at asset play counters like Hong leong finance, global investments & St******.
If you do sum of parts valuation, you could get a good discount to NAV plus a decent dividend yield.

However the problem is often, what's the probability of the shareholder realizing its full NAV within a investment period of say 2-5 years?

[LLI]

http://www.nextinsight.net/index.php?opt...2&Itemid=1 - Analysis from NextInsight

Wonder where he got the share numbers of UOB UOL UIC and whether its accurate.

Yea, the number seems ok. CEO mention that these 3 companies will NEVER be sold. The main growth we should expect is coming from Hua Han.

[greengiraffe]

Then again, value in Haw Par will continue to prevail and while we may not get spectacular gains, we will be assured of sustainable returns over time.

Its a hare or turtle race - you free to take your pick...

GG