Haw Par

Haw Par: Haw Par FY14 net profit improved 10% to $118.8m, while revenue grew at a steady 9% to $154.2m, attributed to the healthcare business (+18%) from higher sales in Asian markets, partially mitigated by leisure (-24%) and property (-5%) segments.

Gross margin climbed 1.9 ppts to 58.5%, while bottom line was boosted by higher dividend income and disposal gain ($10m) and higher share of results from associates, but partially offset by higher promotion and advertising costs, as well as lower fair value gains.

Management has proposed a final DPS of 14¢, maintaining FY14 total at 20¢.

Haw Par is more known for the world renowned Tiger Balm brand, and is among the stable of companies controlled by Singapore banking tycoon, Wee Cho Yaw, and has often been touted as privatization/restructuring candidate over the years.

Given the successful privatization of Pan Pacific Hotels by UOL and Singapore Land by UIC in 2013 and 2014 (all of which are controlled by Wee’s family), some investors are hopeful of a similar scenario for Haw Par, as its major shareholders attempt to unlock the group’s value.

The attraction of Haw Par lies in its compelling stub valuation. Under its investment holdings ($1.84b), the group holds equity stakes in UOB, UIC, UOL and Hong Kong-listed Hua Han Bio-Pharmaceutical.

This is in sharp contrast to the group’s current market capitalization of $1.88b, suggesting that the group is trading at a $400m discount to its investment holdings, with its remaining businesses and assets all come for free.

Haw Par's net cash position stood at $168.3m, representing $0.77/share, and offers an indicative dividend yield of 2.3%.

At $8.59, Haw Par is valued at 0.67x P/B. The counter sits on Market Insight's Value Portfolio.