Haw Par Corporation Delivered Another 1st Half 2024 of Excellent Results-17.1% Growth in Net Profits!

Haw Par Corporation is on its way to another year of extraordinary good results coming off FY2023-an impressive S$122Mil 1st half profits being generated!  Its 1st half 2024 Earning Per Shares (EPS) is at 55.1 cents and I think it should eventually hit more than S1.00 for the entire FY2024. This is amazing given that its historical EPS are 82 cents (FY2019); 54 cents (FY2020); 50 cents (FY2021); 67 cents (FY2022) and 98 cents (FY2023) respectively. The huge earnings for 2023 and 2024 is mainly attributable to its investment income from its strategic stake in UOB and also interest income from government debt securities.

Tiger Balm Still Doing Well.

Revenue top line from its main business of Tiger Balm healthcare have also been doing well recently and gradually recovering to pre-COVID level. It grew an impressive 6.3% year on year basis for the 1st half. Furthermore, the Management of Haw Par Corp has been looking out to deploy excess capital on hand via the acquisition of a new business. However, from management last update, they still have not found a suitable business for Haw Par Corp to acquire. 

For those interested to know more about Har Paw Corporation, I will recommend you guys to read up on an interesting deep dive of Haw Par Corporation by our Incipient Investor friend from Passive Loss's blog in 2023.

Parting Thoughts

Shareholders who are hoping for a "special dividend" payout will be extremely disappointed. The interim dividends is at 20 cents which is a miserable pay-out ratio of approximately 36% only based on the current earning of 55.1 cents. Management has previously indicated that they will continue to look out for suitable business investment opportunity. 

It is also strange that despite the better results of Haw Par for 2023 and 2024, its share price never recover to its former glorious price of S$13.60 per share in July 2021 and has continued to languish at the S$10 per share price range. 

SGX Stock Which Increased Dividends by 33% and EPS Increases But Market Price Nose Dived Over the Years.

This is one of the weirdest local stock I seen on SGX. While its Earnings Per Share improve over the past 3 years and increased dividends by 33%, its market price kept nose diving and never regain its former glorious form. I have added on to my minor stake into this stock for diversification into my current REIT centric portfolio.

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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!  

Bad News From Mapletree Logistics Trust And Recent Investment Notes.

To be honest, I was initially dancing with joy when Mapletree Logistics Trust (“MLT”) announced that it was on an acquisition spree of up to 10 logistics properties that will be yield accretive to DPU. However, my joy turned into deep sorrow quickly when it was revealed that there will be no rights issue for existing unit holders but only a private placement for the equity component funding. I think that this is very unfair to existing unit-holders as new unit-holders got their units (@$1.649 per unit) at a discount to market price. But guess that MLT wants to complete the deal lightning fast and to have absolute certainty on the fund raising so all existing unit-holders just have to suck thumb. The only consolation here is that there will soon be another cash distribution from MLT (1 Jan 2023 to 10 April 2023) to existing unit-holders before issuing out new units.

Other investment highlights

For me, I do not usually do “monthly investment portfolios” updates like other bloggers at every month end as many times, nothing much has changed within 1 month but nevertheless, I try to update it every 2-3 months for documentation purpose- will probably update it at end of April’23 or beginning of May’23. 

Basically, stock markets are still in doldrums. Things may get worse before it gets better. Personally, the old adage that the stock market is always 6 months ahead of actual economic fundamental is eerily true for me at most time. My thoughts are that there are many good bargains out there for the picking during these dark times. My recent own acquisition sprees in the past month are:

1. ComfortDelgro (recovery play);

2. Hong Leong Finance (boring pick but historically well managed financial institution);

3. NetLink Trust (stable and resilient recurring revenue);

4. Haw Par Corporation (“Tiger balm” company that holds lots of UOB stocks as its strategic investments);

5. DigiCore REIT (its price crash till all time low due to concerns over another tenant bankruptcy);

6. United Hampshire US REIT (resilient revenue from its grocery tenants) and 

7. Fidelity Global Dividend Fund (decided to use Endowus and further diversify investments into funds)

Parting thoughts

Will the global economies and stock markets go down further from here despite the recent rally? Well, I am not sure and does not have a crystal ball. After the past years of abundance and excesses, the COVID pandemic finally ended the prosperous era and kicked off the “years of famine”. I will just continue to invest regularly to build up my passive income portfolio and wait for the better time to return and reap capital returns.