SG Talk

A bit illogical the market.

Instead of buying UOB shares you van own it through Haw Par ...and get 30% higher free cash flow





I expect to see Haw Par keep climbing due to thjs discrepancy gap.

(11-07-2024, 02:34 PM)sgbuffett Wrote: [ -> ]A bit illogical the market.

Instead of buying UOB shares you van own it through Haw Par ...and get 30% higher free cash flow





I expect to see Haw Par keep climbing due to thjs discrepancy gap.

This is nothing particularly unique, lots of companies price below their net cash or net investment value. The reason for the discount is the uncertainty of unlocking the "trapped" value. Haw Par, UOL, UOI, UIC, UOA etc. (sometimes known as the Wee Companies) are a by product of SGX not allowing dual class voting shares.

It is a way for the Wee family to control its crown jewel, UOB, without the need to directly own >50% through a series of cross ownership entities. While this makes such vehicles generally cheaper than their book value, there is very little hope of the discount being materialized as the primary purpose of the setup is not for unlocking shareholder value or even to maximize profit.

Also capital management in  these companies tend not to follow strictly financial principles, it is not uncommon for such entities to hoard truckloads of retained earnings even if there are no investment opportunities in the foreseeable future. These companies can also change their cross ownership allocation on a whim depending on what is needed for the family.

(11-07-2024, 04:42 PM)maxsanic Wrote: [ -> ]This is nothing particularly unique, lots of companies price below their net cash or net investment value. The reason for the discount is the uncertainty of unlocking the "trapped" value. Haw Par, UOL, UOI, UIC, UOA etc. (sometimes known as the Wee Companies) are a by product of SGX not allowing dual class voting shares.

It is a way for the Wee family to control its crown jewel, UOB, without the need to directly own >50% through a series of cross ownership entities. While this makes such vehicles generally cheaper than their book value, there is very little hope of the discount being materialized as the primary purpose of the setup is not for unlocking shareholder value or even to maximize profit.

Also capital management in  these companies tend not to follow strictly financial principles, it is not uncommon for such entities to hoard truckloads of retained earnings even if there are no investment opportunities in the foreseeable future. These companies can also change their cross ownership allocation on a whim depending on what is needed for the family.

I  understand the hostage value concept....where the company has money and die die refuse to pay out as dividends or hold assets way above stockmprice but refuse to give small share holders anyway to realise it. One day when discrepancy became very big they pay to delist by never give a fair price like Great Eastern demisting by OCBC.

In addition to the UOB shares Haw Par has $2.5 per share in cash. The dividend from it's UOB shares alone translate to 60cts per share every year.....not counting the Tiger Balm business.

As the cash pile up it becomes bigger att some point they will be motivated to take action

No body will buy rah , Must well buy Seng Song shares Surely will Up again

partly due to recently CDC handout later come Year end and soon Next year Jan and again CNY period.

(11-07-2024, 05:03 PM)sgbuffett Wrote: [ -> ]I  understand the hostage value concept....where the company has money and die die refuse to pay out as dividends or hold assets way above stockmprice but refuse to give small share holders anyway to realise it. One day when discrepancy became very big they pay to delist by never give a fair price like Great Eastern demisting by OCBC.

In addition to the UOB shares Haw Par has $2.5 per share in cash. The dividend from it's UOB shares alone translate to 60cts per share every year.....not counting the Tiger Balm business.

As the cash pile up it becomes bigger att some point they will be motivated to take action

Not necessary, this is at the end of the day a family instrument, not a company that is "accountable" to investors. The Wee family has no financial need to liquidate value from these vehicles as well.

Even if one day family circumstances change, it is unlikely a normal investor is going to outlast the patience of an old rich family. For e.g. there is nothing to stop them from using the excess cash to buy up more of the Wee companies in the market or worse still embark on some sort of adventure in either properties or new industries. Maybe there is a young family member who wants to have a hand and run a show somewhere and they figured Haw Par is a good choice?

What I'm trying to say is it is cheap for a reason. It is not right to simply present the case in such simplistic fashion as UOB shares worth more than Haw Par market cap therefore it is underpriced and a good buy. 

You claim to already know value traps, but in your original post you made no such mention and simply presented to everyone a case of Haw Par being cheap and therefore worth a buy. I don't know which is worse, you not knowing and then simply dishing out free ideas ignorantly or you already know and yet choose to omit certain facts and misrepresent the situation.

Although investment is always a YMMV thing, it's really not ethical to just throw out ideas like that without providing the full picture together.

Up 7.45% today as more realise the hidden value of the stock...up 38% since thread started.