Haw Par Corporation Dividend Yield Increased 33.3% After 35% Increase In Net Income For Interim June 2023.

Well, I have to admit that I am pleasantly surprised that the very “conservative” management of Haw Par Corporation has decided to increase their interim dividends by a whopping 33.3% from S$0.15 per share to S$0.20 per share. This is an annualised dividend of S$0.40 per share which gives an approximate 4% dividend yield based on its share price of S$10 per share as at 31 August 2023. My venture into Haw Par Corporation has been more of an investment into an undervalued business whose market value is only at 65% of its book value while waiting for the market to crawl up towards its real intrinsic value. With the increase in dividends, it seems to be fitting into my preference for having material recurring income during the wait and I am seriously looking into acquiring more of Haw Par Corp shares into my portfolio.

1. Dividends History and Dividend Yield. 

This is a record high for dividends to be paid out to shareholders. It has been hovering around S$0.15 per share for the past 4 years (with the exception of a special dividend of S$0.85 per share in 2019 for Anniversary). Haw Par management is basically the same one as UOB so they are well known to be extremely stingy conservative. Since Haw Par has much strategic holdings in UOB securities, the Haw Par Group thus will also benefit from the increase in dividends payout from UOB which is having record breaking profits post the worldwide interest rate increase and better net profit margin as well as new business from the acquisition of Citigroup's consumer banking franchise in Indonesia, Malaysia, Thailand and Vietnam back in 2022.

2. Latest NTA is at Discount of 53.3% To Its Market Trading Price.

The last traded price is around S$10 per share while NTA per share is at S$15.33. This is a massive 53.3% discount. 

3. Quick Financial Highlights

Haw Par has an exceptional first half results driven by its "Other Income" from UOB dividends as well as interest income from purchase of treasury bills which is a remarkable +37.7% increase. Haw Par Corp has been maintaining its payout ratio of 42% for both 2023 and 2022. This means that 58% of earnings are being retained in the business which theoretically should increase its market valuation over time. 

Parting Thoughts

For those interested to know more about Haw Par Corporation, I suggest you folks take a look at the detailed and brilliant analysis done by our young friend, Passive Loss SG, at his blog earlier in March 2023. At the same time, wishing him a speedy recovery from his medical treatment for a recent critical illness. Hope to see more of his postings soon!