Hanwell Holdings Limited

I bought Hanwell Holdings Limited (listed in Singapore Exchange market) at $0.255 on 26 August 2010 and sold it at $0.300 19 September 2014. Consequently, we made 19.6% profit inclusive dividend collection and transaction cost.

Background of Hanwell

Hanwell Holding Limited (‘Hanwell’) is listed in SGX. Its former name was PSC Corporation Limited. Those who are in my generation would have seen a variety show where PSC sponsored on every Saturday or Sunday just like Sheng Siong today.

It is distributor of ‘Royal Umbrella’ rice (premium Thai rice brand) which we usually buy from supermarkets. It also distributes ‘Beautex’ products (tissue papers and boxes) and sweets like ‘Mentos’.

Fortune Food is a subsidiary of Hanwell. It sells soya bean drinks, tofu, noodles, etc. We all know that our mothers would buy Fortune tofu (or its competitor’s tofu product) for home-made dishes.

It used to distribute ‘Rockport’ shoes. For unknown reason, its owner of ‘Rockport’ is not continuing dealership with Hanwell.

This is the much I can summarise and there is much more information you can look up on its website.

Rationale of Investing in Hanwell

4 years ago, I judged that it is undervalued on asset basis. I do like its nature of assets Hanwell owns. At that time, I am fixed into doing pure and plain value investing. I recognised that it has the ability to remain going concern status for foreseeable future.

The reasons I held it so long are as follows:

1. A former insider sold his Hanwell shares to insider’s wife at $0.40 plus through outside market arrangement. That is as far as I recall in my mind.
2. As my investing knowledge base grew, its assets can be easily structured to generate reasonable return.
3. I think it is reasonable that Hanwell’s listed equity investment is decent enough to provide return. For example, it sold Intraco stakes to second best buyer at decent profit – I do not know why it chooses that way instead of being passionately selling to best buyer. This should repeat the same for Tat Seng investment.
4. Goh Seng Hui, commonly known as ‘Popiah King’ that is what online source says, has significant stake in Hanwell. He is buying small batches of Hanwell stocks in very odd interval over few years span.

Events Happened During My Holding Period

I was surprised that Hanwell easily settled with the owner of ‘Rockport’ before the case commenced in the court. I am impressed with that but not impressed with no disclosure of how it managed to do it.

Hanwell is making slow moves to restructure its assets and tries to optimise them based on their expected economy climate. As a result, it is stagnant growth company itself.

In few years ago, when it was arranging to sell Intraco stake to interested buyers, its share price went up but never reach to my perceived price. The price level went back to the usual range of between $0.260 to $0.285.

Recently, for odd reason, there was sharp rise last month when Hanwell sponsor a public event. After one day sharp rise, it went back to normal price range.

Management Quality

During conversation with a friend with my imaginary scenarios on Hanwell, he has reservation with its management based on my 'animated' comments.

One of the Board of directors, Allan Yap, used to be politican for a major political party. But it is not a guarantee that he would steer Hanwell into performing optimally or ensure that top executive management discharge professional duties properly.

We should recognise that most of Boards of Directors for either private or listed companies in Singapore tend to be unambitious as Westerners counterparts. I do get the perception that they are there for the paycheck like the average employee on the street. However, it may not be entirely true for some directors (just in case I could be wrong).

Rationale for Exit

1. I have no idea what Goh Seng Hui plans to do with his significant stake in Hanwell. Can anyone who knows him be so kind to tell me his pattern?
2. Value investing based on buy and hold style may not be the best solution while waiting for true value to unlock itself out of sudden. It became more apparent that activist role is needed to jolt this stagnant company. Unfortunately, I am not prepared to take that role.
3. I think I can find investment opportunities with better risk-return profiles than this Hanwell. Hence, with sale of stocks in this year, I am hoarding cash while waiting for suitable investment. The intention is to have more concentrated portfolio.
4. There is no movement such that insiders are making effort to close the bridge between the current market price to so-called insider price of $0.40 plus.