Haw Par Corporation: Asset-Rich Sum-of-the-Parts Bargain in Singapore

Sid Choraria presented his in-depth investment thesis on Haw Par Corporation (SGX: H02) at Asian Investing Summit 2017.

Haw Par Corporation is a deep value stock, with investments, property portfolio value, and net cash combined exceeding the recent market cap. Meanwhile, the company has a strong consumer/healthcare franchise, with growing intrinsic value and value-oriented management. Haw Par has been listed on the Singapore Exchange since 1969, with a rich company history dating back to the 19th century. The core business, Tiger Balm, is available for free, as the value of cash, investments, and real property exceeds market cap. Meanwhile, the core business generates $100+ million in FCF on a normalized basis. Haw Par owns stakes in three public companies: United Overseas Bank (SGX: U11), UOL Group (SGX: U14), and United Industrial (SGX: U06). Management appears focused on returns on capital. The company has a “blue chip” board, including Lee Suan Yew, the younger brother of the architect of modern Singapore.

About the instructor:

Sid Choraria is an Asian Equities Portfolio Manager focused on identifying exceptional businesses, cultures and CEOs/management teams to invest like a business owner, preferably for 10 years or longer.

The typical company Sid prefers is a business that can endure the risk of impermanence over decades. His research indicates that over 98% of investable companies fail the test. The culture must be unquestionably superior. Such companies are customer obsessed and have strong non-transactional relationships with constituents. Sid prefers early-stage pricing power that is not discovered. The universe is limited to exceptional Asian businesses and great global companies with significant revenue and cash flow from Asia very material to shareholder value.

In Aug 2013, Sid elicited a rare response from legendary Warren Buffett with a letter and thesis on an under-followed, 135-year-old Japanese company. The company, Kobayashi Pharmaceutical (4967 JP) founded in 1886 is as old as Coca Cola and Wrigley’s chewing gum but with poor coverage when Sid discovered it. He presented the idea on MOI in 2013. Since the letter, business value has quadrupled compounding roughly 26% outperforming the S&P, NASDAQ and respective Asian indices. The inversion lessons influenced Sid’s journey to focus on less followed companies, great cultures and businesses that can endure the test of time.

Sid enjoys mentoring young talent and giving back knowledge by speaking at the world’s top universities like Harvard, Princeton, Columbia Business School, NYU Stern, LBS, USC and Brown. From 2014-2016, he consistently won a few research awards for probing research on Asian companies judged by over 70 judges. His contributions have featured in Goldman Sachs Alumni Network, CNBC, Sydney Morning Herald, Alpha Ideas India, Value Spain, Intel and GIC.

Sid has worked in Asia for 15 years and grew up in the region. Previously, he has served in senior investment roles in Asia, at multi-billion long-only and long-short funds. He worked at Goldman Sachs technology investment banking in Asia. These experiences taught him the significant importance of teams, culture and incentives.

Sid received his MBA from New York University Stern School in 2011 and was recipient of the Harvey Beker Scholarship. During his MBA, Sid worked at Bandera Partners, a fund focused on small mid cap activism, run by Jeff Gramm, Author of “Dear Chairman”, Greg Bylinsky and Andy Shpiz.