24 Dec 2019
(Stocks Discussion) SGX: Haw Par Corporation [SGX: H02]?
Discuss anything about share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell this stock on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment!
TL;DR Haw Par has a very stable and mature business with a rich history. Financially they look quite stable, and see well diversified across different geographical regions.
What is their Business Profile?
When we think of “Haw Par”, we think of Haw Par Villa. But we should also think of Tiger Balm, because this is the company that produces it. Born in the 19th century, the business was started with Aw Boon Haw (the Tiger) and his brother, Aw Boon Par (the Leopard) in the British colonial days.
The recipe of tiger balm was created after the brothers perfected the recipe passed from their father. Fast forward a 100 years till today, and the business has a market cap of $3bn and operates all over the world.
What are some strong points about their business?
Strong Business Model
Growing revenue and profitability are very good signs that demand for the products are growing. I also believe that the Haw Par brand name is very strong, and so the business as a whole carries a strong brand equity. Also, the business model seems quite defensible, and Haw Par is likely able to maintain its market position and grow further in time to come.
The business also seems diversified in the sense that revenue flows proportionately from different regions. This reduces the risk from revenue being affected too much if one region is particularly affected.
What do their financials tell us about the business?
Revenue has increased consistently over the years, at quite a good rate. Revenue increase for last year was $237m, an almost 7% increase from the previous year. The highest contributing sector for profits are investments, followed by healthcare.
Net profit has also grown tremendously over the past FY, with an increase of almost 50% to 180m. This led to an Earning Per Share of 81.2 Cents, much higher than 55.7 cents of the previous FY.
Return on Equity
With a Return on Equity (ROE) of 6.1%, this means that for every one dollar of equity, 6 cents of profits are generated. ROE has been actually increasing over the past few years.
With a Debt/Equity of 0.8%, this shows how little leverage the business has. This means that the company holds very little debt as compared to equity. This is a good sign, since it could mean more debt can be taken on to fund future operations as well as cheaper costs of financing. Moreover, it also means that the company has less debt to pay off in the future, which means lesser risk for shareholders but it could also mean more cash could be paid out in dividends.
The company is famous for its Tiger Palm business. Besides this, they are one of the key shareholders of UOB and UOL Group. So in terms of seniority, Haw Par group is like the grandfather in the empire while UOB and UOL are the children.
As mentioned by the others on this thread the company has very low liabilities because it is acting as an investment vehicle for the Wee family. Not much can be said about this stock, except that it is a stable dividend play due to its low debt, constant dividends received from UOB and UOL and a well-renown medicated product called Tiger Balm.
Being vested in Haw Par stock is akin to having exposure to 3 key sectors:
1) Healthcare medicinal...
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