Posted by: donmihaihai | April 25, 2018

SGD400M is not alot

The cash on the B/S of Haw Par is not a lot. Even if the Haw Par pays out every single cent plus the coming dividend payment, the return on current price is just about 13%. And it is about 12% of the net assets.

But that SGD400M cash is the sore eye. The management has failed badly. Year after year, it has prudently looking for acquisition of operating business. But it never happen, regardless of the market cycle. The longer it remain as such, the more likely management will do something stupid due to increasing weight of the cash. About time for management to think about this 12% with an estimate growing rate of 15%.

ROE of Haw Par is always low mainly because of accounting standard. Accounting standard also doesn’t fully capture the wealth generated by investees(UOB & UOL) but it captured the swing in share prices instead. Still the wealth generated is flowing to Haw Par.

Due to such situation, Haw Par usually trade below intrinsic value or its true worth. And at certain price, it is a remarkable investment and will not be easily available elsewhere. Holding on to  huge block of UOB and UOL compare to its operating businesses created such opportunity.

As share price has never gone crazy, it save me time and effort. It is for lazy investor who sit on its ass for a long time. Whatever discount the share price might be trading at for the last 20 years, it has never mask the growth in NAV per share and will not for the next 20 years as long as Haw Par, UOB & UOL being managed as per current.

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