by winston » Sat Jul 16, 2016 3:06 pm
not vested
Haw Par rides healthcare boom
We are adding Haw Par Corp to our blue-chip portfolio. This is a new stock that was previously not included in any of our portfolios. Haw Par may seem an unconventional choice, but it has many of the other attributes of a blue-chip stock.
Notably, its Tiger Balm brand is a household name in the region. With a market capitalization of about $2 billion, it is also a relatively large company, though much of that value reflects its holdings of securities.
Why add Haw Par to the blue-chip portfolio now? The company has ended the operations of its local oceanarium on June 26. A previous issue of The Edge Singapore (Issue 734, June 27) reported on the closure, noting that the oceanarium had been a drag on the company’s earnings. For 1QFY2016 ended March, Haw Par’s leisure segment, which includes the oceanarium, saw a 9.6% y-o-y decline in revenue to $2.7 million.
Meanwhile, Haw Par’s healthcare business, built around the Tiger Balm brand, is roaring ahead. In 1QFY2016, Haw Par’s revenue climbed 14.9% y-oy to $52.3 million, mainly bolstered by its healthcare segment. Its earnings surged 26.8% to $17.1 million, thanks to higher contribution from its healthcare segment and investments.
Haw Par has a strong balance sheet. As at end-March, the company had cash and bank balances of $338.1 million. After accounting for borrowings of $45.8 million, it had a net cash position of $292.3 million. Additionally, it also enjoys healthy cash flows. Net cash from operating activities increased to $11.5 million in 1QFY2016, compared with $8.8 million in 1QFY2015.
Meanwhile, Haw Par has recently paid a final dividend of 14 cents a share and a special dividend of 15 cents a share with respect to 2015. Together with an interim dividend of 6 cents a share, the total payout for the year was 35 cents. This translates to a good yield of about 4% at its current share price.
Source: The Edge
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