Haw Par: 2Q15 net profit jumped 87.8% y/y to $115.9m on one-off gains from partial divestment of an associated company. Stripping out exceptional items, net profit would have receded 2.4% to $60m.
Revenue grew 12.5% to $51.2m on stronger healthcare sales (+19.3% to $44.4m), but partially dragged by leisure segment (-18.4% to $3.6m) amid lower visitorship at Underwater World Singapore and Pattaya, and weaker property income of $3.2m (-17.7%) from lower occupancy rates.
Gross margin edged up 1.5ppt to 61.2%. Bottom line was markedly higher, largely from an exceptional gain of $55.6m as the conglomerate cut its stake in associated company, Hua Han Bio-Pharmaceutical to 8.1%.
Management was relatively muted on the group’s outlook amid global uncertainties, except for leisure segment which was singled out to be facing headwinds from intense competition and a tepid tourism sector in Singapore.
Nonetheless, its equity stakes in UOB (69.7m shares), UIC (68.2m), UOL (42.8m), and HK-listed Hua Han Bio-Pharmaceutical (398m) total a combined market value of $1.977b, above Haw Par's market cap of $1.897b
This translates to a $80m discount, which implies that the balance of Haw Par’s assets, including Tiger Balm business, two Underwater World parks and property investments in Singapore, Malaysia and HK come for free and does not take into account the group's net cash position of $215.2m.
An interim DPS of 6¢ was maintained.
Haw Par is currently trading at 0.7x P/B and offers an indicative dividend yield of 2.3%. The stock sits on Market Insight’s Value portfolio.
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