Tuesday, November 28, 2023

Inside The Bedokian’s Portfolio: Haw Par Corporation Limited

Inside The Bedokian’s Portfolio is an intermittent series where I will reveal what is actually inside our investment portfolio, one company/bond/REIT/ETF at a time. In each post I will talk a bit about the counter, why I had selected it and what lies ahead in the future.

Today’s counter is a follow-up from the post about myself going back to prospecting after a while, and the counter selected is Haw Par Corporation Limited (Haw Par). This is a classic value/dividend hybrid counter in my opinion.


A Little More Than Just Tiger Balm


Haw Par’s main product is the ubiquitous Tiger Balm, which within it contains an assortment of ointments, patches and rubs for different uses ranging from the traditional kind (e.g., soothing of headaches) to relieving of muscle pains from sports. Being one of the known brands of analgesics, Tiger Balm is marketed in more than 100 countries around the world.


On top of ointments, Haw Par also has in its portfolio four commercial and light industrial properties (three in Singapore and one in Malaysia) and an underwater theme park (Underwater World Pattaya) in Thailand.


And there is another point on its other investments, which I will mention later.


Fundamental Analysis


Ratio Analysis

I will use the selection guideline from the eBook1 and apply it to Haw Par’s ratios (as of 26 Nov 2023 of price SGD 9.75):


Equity Selection Guideline

Haw Par Corporation Limited

Price-to-Book Ratio of 1 and below


Debt-to-Equity Ratio of 50% and below


Current Ratio 1.5 to 3

3.11 (deemed acceptable)

Price-to-Earnings Ratio being the 25% lowest amongst other companies within the same sector/industry

12.33 (as there were no other comparable companies within the local market, a judgement call made to deem acceptable)

Dividend Payout Ratio 25% and above


Dividend Yield higher than 10-year average inflation rate (based on past 3 years)


Based on MAS figures of year-on-year CPI for the past 10 years, the average annual figure is 1.4%

Forward yield – 4.1%

Trailing yield – 3.58%

Yield figures from Dividends.sg between 2020 and 2022 were above inflation rate


From the table, Haw Par had passed the selection guideline.


Income And Cash Flow Analysis


From the excerpts of the income statements, the following gross profit margins (GPMs) and net profit margins (NPMs) were derived:


















Though numbers of the last three years were usually sought, I had added in 2019 to see a comparison between what is deemed to be a normal operations year and 2020 when COVID-19 struck.


The GPM were from profits of Haw Par’s main operations which are the Tiger Balm, properties and the underwater park. Across 2019 and 2020, the GPM was dented by around 23%, but it can be observed that it is heading for recovery from 2021 onwards. The half year result for 2023 had shown an increase of 16.3%year-on-year, continuing the upward trajectory. 


However, what is surprising is that on top of the said operations, Haw Par also has other investment income from dividends, interest and share of profits from its associated companies, and these brought up the NPM to relatively high percentages. One could view Haw Par is a holding company of sorts, and it is really a bit more than just Tiger Balm.


Moving on to cash flow, it is positive and rather consistent from 2020 onwards, though it dwarfed when compared to 2019 and before. As long as the cash flows are positive and the variations are not wild (i.e., swing from negative to positive), I am alright with it. Furthermore, with almost no debt, interest rates, which are the talk of the town, are of little effect to Haw Par.


What’s Next


Once a brand known only in East Asia, Tiger Balm expanded globally and had formed a sort of moat. However, the other point of interest would be Haw Par’s investment income, and this had shown profitability based on past records. If the four income components (Tiger Balm, properties, underwater park and investments) are profitable, it would be a good hold for the next decade.


All figures are derived from Yahoo Finance and Haw Par’s annual reports unless otherwise stated.




Bought Haw Par at:


SGD 9.75 at Nov 2023




1 – The Bedokian Portfolio (2nd Ed), p103-106


2 – Condensed Interim Consolidated Financial Statements For The Half Year Ended 30 June 2023. 11 Aug 2023. https://hawpar.listedcompany.com/newsroom/20230811_171738_H02_P6PDPS9GN49RIN42.1.pdf (accessed 26 Nov 2023)

Saturday, November 25, 2023

Going All-In Into Treasury Bills And Deposits?

With interest rates now at an all-time high since around 16 years ago, short term treasuries and bank deposits are providing a much safer and better deal in providing more bang for the buck (from a risk premium point of view). It is basically common sense; why would I want to plonk my monies in an investment with possible capital loss for maybe an additional 1-2% yield when I could put it in an almost-capital guaranteed place at an almost-guaranteed return?

Yet, investors (including myself) are going for the former, scrolling through numerous screeners, scrutinizing the ratios and financial numbers, getting knowledge on the company’s/sector’s/industry’s goings-on, and understanding the macroeconomics of the time, etc. I must confess it is hard work, and all these could be dealt away with by just applying the latest treasury bill and/or going down to the bank/financial institution that offered the best rates.


You can still do that, but for myself I would not switch 100% of my capital to them. As the adage goes, “Good times do not last forever”. We cannot expect that interest rates would stay high, and just like other forms of investments, they will go down eventually. This is because markets and economies go through a cycle, and other instruments would provide a better bang for the buck than treasuries and deposits. We need not look further than just two years ago when little people paid attention to them due to the low interest rate environment.


This is where we need to capitalise on the (deemed) only free lunch in the investing world, which is diversification. By diversifying, you can capture the prevailing highest return offered by an asset class / region / country / sector / industry / company on part of your investment portfolio, while at the same time protecting it from extreme drawdowns suffered by other asset classes / regions…etc.


Quoting the second part of the adage mentioned above, that is “Bad times do not last forever, too”, brings us to the diversification-related property of rebalancing. Depending on the preferred make-up, or asset allocation, of your investment portfolio, if an asset class begins to grow/decline beyond the set allocated level, you can either start selling/buying counters from that said asset class, or inject funds to buy up others, or both, to bring balance back to the portfolio.


Whilst some critics may say the method above reduces overall returns as compared to having a concentrated portfolio, which is correct, the main aim is to try to reduce as much risk as possible. Sure enough, we have had heard of success stories of investors/traders going all into one counter and reaped exorbitant profits, but what if the call was wrong? We cannot predict how the markets and economies turn out, and investing gurus and fund managers are not correct all the time, same as us retail investors. Thus diversification, rebalancing and asset allocation are a better defence against volatility and outright 100% capital loss (save for alien invasions and nuclear winters).


A final word for dividend investors: high interest rates are not favourable for equities and REITs due to high costs of leverage, and this brings a bargain for erstwhile healthy counters which were depressed overall by the situation. As we know current yield = dividend / current price, if the leverage is low, cash flow is strong and there are still profits, it is a good consideration to look at it further and swoop in if it is worth.

Tuesday, November 7, 2023

The Gold Rush

An article from the Straits Times a few days ago caught my attention, which read:

Singapore’s central bank the world’s third-largest gold buyer from Jan to Sept 20231


It reported that Singapore had purchased 75 tonnes of the precious yellow metal during the first nine months of the year. While sitting at third, the purchase was slightly dwarfed by the largest buyer, China (181 tonnes) and second-placed Poland (105 tonnes) for the same period. 


Gold is recognized globally and used by central banks as reserve assets, which could prop up the country’s currency and economy in times of need. The buying-up of gold by central banks had increased since 2022, with that year well over 1,000 tonnes were purchased, mainly fuelled by the Russo-Ukrainian conflict and soaring inflation then. The recent crisis in the Middle East had made the price of gold jumped to above USD 2,000 before settling down to the current USD 1,980-ish.


Photo credit: istara from pixabay.com

The Importance Of Gold


Gold is usually seen as a safe haven by many investors, which explained its price spikes in times of uncertainty. Yet it is an asset which, unlike most other asset classes, does not provide growth in terms of yield.


For The Bedokian Portfolio, gold comes under the category of commodities asset class, which also includes silver and oil. Commodities (especially gold) forms as a dampener in reducing volatility and stabilizing the overall portfolio, as demonstrated in my post here.


I had described the various ways of owning gold in the eBook2, but since this post started off from the news of central banks buying gold by the tonne, it would be appropriate for me to share on the various aspects of owning physical gold.


Owning Physical Gold


Before going in, you must be clear on the objective of owning gold; you are owning based on the market value of the commodity, nothing else. Thus, if the design of the gold bar/coin intrigues you and you are willing to pay (very much) extra for it, then it would be in the alternate investment form of collectibles called numismatics. These should not be in your normal investment portfolio but be held in a separate one instead.


That aside, let us go into the key points of owning the metal itself.


Find a reputable dealer/bank


This would be the first thing in my mind before going around and buy gold. Recent years had seen several bullion dealers setting up shop in selling physical precious metals, which is good as there is a freedom of choice and comparison. As a rule of (my) thumb, a dealer with a physical shop, and with a few years’ presence is preferred. Also, it should carry some gold from LBMA (London Bullion Market Association, more on this later) accredited refineries and mints.


If your trust level is for dealers are still low, perhaps you could try out the banks. To my knowledge, United Overseas Bank (UOB) is the only bank that sells physical gold over the counter, but only at UOB Plaza in Raffles Place (disclaimer: I am not sponsored by UOB).


Know the form and weight


Physical gold comes in two forms: bars and coins, which are both self-explanatory. Within the bar itself, there are two sub-types: cast and minted. Cast bars looked rugged and rough, while minted ones are more refined looking, hence the former would have a lower premium (see later) than the latter.


Next up, there are different weight (or mass, for those who are particular on the term) steps; the smallest is one gram, while the largest can go up to one kilogram. Though some of the weights are in metric, there are also weight steps in imperial system called troy ounces (oz), as international gold prices are determined per oz.


The premium


One of the main disadvantages of getting physical gold is you cannot buy it at its spot price. This is fair as the refinery/mint would need to bear additional costs for smelting, packaging, transport, etc. Since we are investing on the value of gold itself, we would try to look for physicals that has the lowest premium over spot.


Other than cast and minted conditions (for bars), the weights do play a part in premiums. Ideally, the heavier the weights, the lower the premium portion of the overall cost. For example, using gold prices and USDSGD exchange rate on 6 Nov 2023, and using a dealer’s online prices, a one-gram bar’s premium is about 33% over spot, as compared to 0.4% for a kilogram.


Of course, for retail investors it would be a tall order to get a kilogram of gold (commonly referred to as kilobar), so the sweet spot for premium would be to keep it within 5%. For myself, it would be minimally 1 oz, which is around 3.2%, and I could make a quick check of gold prices since it is based on oz.




The LBMA is a trade association that governs the standards for the global wholesale market for precious metals, and that includes their purity. If a refinery/mint is a member of the LBMA, it would be subject to the rigour of the LBMA and thus the gold bars and coins produced would be of the highest standard that could be traded (and of investment grade quality). Additionally, in Singapore, physical gold that are LBMA approved would be exempted from the Goods and Services Tax, therefore there would be additional cost savings.




Physical gold being a tangible asset requires the use of storage. If the quantity is small, you can keep it at home (or other storage options such as a bank safe deposit box), or if the quantity is large, you can engage with the dealer to use their storage facility, though this would bring additional costs.


Other administrative stuff


Some nitty gritty stuff before I sign off from this post. First, an invoice/receipt is issued whenever you buy a physical. Keep this piece of document as it is needed when you decide to sell it back to the dealer/bank or other dealers. Second, for minted bars, it normally comes in a package denoting the serial number and an assayer’s (an entity that tests the metal’s purity) verification. Do not remove it from the packaging as doing so would make the trade-in difficult as the dealer has the right of not accepting it.


I hope the above would provide some helpful tips in starting your physical gold journey. Remember, gold is just one of the assets for your investment portfolio, and diversification is still important on the overall scheme of things.


1 – Tan, Angela. Singapore’s central bank the world’s third largest gold buyer from Jan to Sept 2023. The Straits Times. 2 Nov 2023. https://www.straitstimes.com/business/singapore-s-central-bank-is-the-world-s-third-largest-gold-buyer-from-jan-to-sept-2023 (accessed 6 Nov 2023)


2 – The Bedokian Portfolio (2nd Ed), p38-41