How Does Haw Par Corporation Ltd Make Money?

It is essential for investors to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business Haw Par Corporation Ltd (SGX: H02) is involved in and how it rakes in the money. As a quick note, Haw Par owns the Tiger Balm brand of ointment. Other than its healthcare business, it also owns strategic stakes in two big-name listed companies in Singapore.

With that, let’s look at Haw Par’s segment profits before interest expense and tax for the financial year ended 31 December 2017 (FY2017):Source: Haw Par FY2017 Annual Report 

The healthcare division mostly manufactures and distributes topical analgesic products under the Tiger Balm and Kwan Loong brands. Tiger Balm has been dubbed as “the world’s leading analgesic remedy”.

In 2017, the healthcare division made revenue of S$201.7 million, 14% higher than the previous year. The increase was due to growth in all major geographical regions, especially in Asian countries where tourism numbers rose.

The investments division engages in investing activities, mainly in quoted securities in Asia. Haw Par’s investment portfolio now consists largely of strategic stakes in UOL Group Limited (SGX: U14) and United Overseas Bank Ltd (SGX: U11). The assets provide Haw Par with a stable source of recurring dividend income.

The property division owns and leases out several investment properties in Asia. In Singapore, Haw Par has three leasehold properties, namely, Haw Par Centre, Haw Par Glass Tower, and Haw Par Technocentre. In Malaysia, it owns Menara Haw Par, a freehold commercial building located in Kuala Lumpur.

Meanwhile, the leisure division owns and operates Underwater World Pattaya in Thailand. Haw Par used to own Underwater World Singapore, but that business has ceased since June 2016.

Now that we know the basics of Haw Par’s business segments and how they bring in the money, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash-generating abilities and so on before deciding to invest in it.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of United Overseas Bank Ltd. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.