Published December 25, 2008

Haw Par stock deeply undervalued: Kim Eng Research

Research analyst believes a general offer for the firm by UOB chairman is not forthcoming

By JAMIE LEE
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HAW Par Corporation's investment portfolio is worth an estimated $1.1 billion - or about $5.36 per share - making it 'deeply undervalued', said Kim Eng Research analyst Gregory Yap in a report this week.

The portfolio - which is Haw Par's main asset - comprises shares in United Overseas Bank (UOB), United Industrial Corporation and UOL Group.

The number of UOB shares alone that Haw Par is estimated to own are worth $4.50 per Haw Par share.

Mr Yap had no rating or target price on the stock.

Haw Par Corp closed trading unchanged at $3.59 yesterday.

The Kim Eng Research report follows a media report speculating that UOB chairman Wee Cho Yaw would take over the company when he raised his direct and deemed holding to 30.38 per cent through Wee Investments in early December - a report which Mr Yap dismissed.

'The Straits Times speculated last week that Wee Cho Yaw will have to make a mandatory general offer for Haw Par as he had acquired more than 30 per cent of its shares on 5 Dec,' said Mr Yap in his research note on Dec 22.

'However, we believe a general offer is not forthcoming based on this assumption, as Wee & his concerted parties already owned more than 30 per cent prior to the 5 Dec transaction.'

'Regardless of whether Wee actually takes over Haw Par, we reckon the stock is deeply undervalued,' Mr Yap said.

Mr Yap calculated that the Wee family's total personal interest stands at about 60.6 million shares, or 30.6 per cent.

Four investment companies hold Mr Wee's deemed interests of 59.1 million shares, or 29.9 per cent, said Mr Yap.

These include Wee Investments with 43.9 million shares or 22.2 per cent, Supreme Island with 11 million shares, Kheng Leong at an estimated 2.7 million shares and CY Wee & Co with 1.5 million shares.

Mr Wee and his sons also own another 1.5 million shares.

About a third of Haw Par is held by UOB and two institutional players.

UOB holds 10 per cent, while Arnhold & Bleichroeder Advisors and Mackenzie Cundill Investments hold 25 per cent.