$10 For $9 in Singapore's Stock Market

Anyone believe that you get get $10 notes for just $9? Probably not, but you can get around $10.50 worth of cash and listed stock for just under $9 by investing this company. Any guesses?


Well, it's Haw Par. The company has roughly $10.45 worth of cash and in its top 3 stock holdings after deducting its liabilities according to its latest annual report and shares outstanding of 219 million. Though its main shareholding, UOB has dropped in recent weeks, it still has roughly $10 in those components. Since these assets are listed or in cash, theoretically, it is able to sell out its shares in these companies and pay out a dividend larger than its current trading price of ~$9.

This does not include investment properties that it holds, such as Haw Par Centre and Haw Par Glass Tower, that have a book value of $225 million or $1.03 per share. It also has the Tiger Balm brand and leisure business such as Underwater World Singapore and Pattaya. One seems to be getting a lot for just $9 per share.

It has a P/E ratio in the mid-teens, but this only takes into account the dividends paid by its equity securities as it does not hold a large enough share to list them as associated companies. To get a better idea of the company's investment arm, it would be good to look at the comprehensive income, which shows the net fair value gain, showing the increase in the value of its investments.

Haw Par Comprehensive Income 

(Image source: Haw Par Annual Report 2014)

Haw Par's strong balance sheet as well as its strong brand name in areas such as healthcare with the Tiger Balm brand and landmarks such as Underwater World Singapore makes it an attractive long-term investment. However, it seems like the share has been undervalued for quite a long time, which may be a sign of caution to those thinking of making a short-term profit on the share. But for the long-term investor, as the shares that Haw Par owns increase in value so would its balance sheet and hopefully the dividends paid to it, increasing the company's profit, allowing the long-term investor to have a higher yield or to sell it for a handsome profit, but then again this is just a hope, so not a good idea to put too much hopes on it.

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