World Class Benchmarking: Hap Seng Consolidated Berhad (HAP MK)
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Hap Seng Consolidated Berhad is a major Malaysian conglomerate established by the Lau family, with significant operations in property development and palm oil production, contributing 96% of its business from Malaysia. The company manages diverse sectors including credit financing and fertilizers, holding substantial market shares in East Malaysia. As of August 2016, Hap Seng's market capitalization was approximately US$4.77 billion, and it has consistently ranked highly in profitability compared to global industrial companies.
World Class Benchmarking: Hap Seng Consolidated Berhad (HAP MK)
- 1. Presented by: Dr. Andrew Stotz, CFA Hap Seng Consolidated Bhd
- 2. 28 August 2016 Background: Hap Seng Consolidated Berhad is a major Malaysian conglomerate, which was established by the Lau family, its largest shareholders. Historically, its core business had been palm-oil plantations, but in recent years, property has become its main source of profits. Malaysia constitutes 96% of its business, the rest mainly in Indonesia. Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Operating profit breakdown, by business segment 2015 Stock information: Name: Hap Seng Consolidated Bhd. Ticker: HAP MK Price (MYR): 7.75 Mcap: US$4,772m 3MADTO: US$4m Beta: 0.2x Sector: Industrials Industry: Capital Goods Major shareholders: 74% Cho Kun Lau 1% Dimensional Fund Advisors LP 22% Free float Hap Seng Consolidated Berhad (HAP MK) HAP operates in several businesses such as property, plantations, credit financing, fertilizers, automotive, and others such as quarries and trading Property division is involved in the development of residential and commercial properties in Sabah and West Malaysia. HAP’s commercial properties achieve high occupancy rates of over 90% and provide around 1,000,000 square feet of rentable area Plantations division is engaged in production and distribution of crude palm oil (CPO) with total area of palm plantation accounting for 40,000 hectares, which is in Sabah. HAP produced 160k tons of CPO in 2015 Credit financing division operates under Hap Seng Credit Sdn Bhd with the network comprising 10 branches nationwide providing term loans and industrial hire purchase financing to small and medium companies Fertilizers trading business is operated through eight warehousing facilities in Malaysia and five in Indonesia, offering several types of fertilizers used on plantations. HAP has 35% of the fertilizer market share in East Malaysia and around 17% in Peninsular Malaysia - 100 200 300 400 500 - 2 4 6 8 10 Aug-13 May-14 Feb-15 Nov-15 Aug-16 HAP MK (LHS) Price relative to local index (MYR) (%) Property 51% Plantations 17% Automotive 3%Credit financing 17% Fertilizers 4% Others 8%
- 3. 38 August 2016 Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Background: Hap Seng Consolidated Berhad is a major Malaysian conglomerate, which was established by the Lau family, its largest shareholder. Historically, its core business had been palm-oil plantations, but in recent years property has become its main source of profits. Malaysia constitutes 96% of its business, the rest mainly in Indonesia. Hap Seng Consolidated Berhad (HAP MK)
- 4. 48 August 2016 - 100 200 300 400 500 - 2 4 6 8 10 Aug-13 May-14 Feb-15 Nov-15 Aug-16 HAP MK (LHS) Price relative to local index (MYR) (%) Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Stock information: Name: Hap Seng Consolidated Bhd. Ticker: HAP MK Price (MYR): 7.75 Mcap: US$4,772m 3MADTO: US$4m Beta: 0.2x Sector: Industrials Industry: Capital Goods Major shareholders: 74% Cho Kun Lau 1% Dimensional Fund Advisors LP 22% Free float Hap Seng Consolidated Berhad (HAP MK)
- 5. 58 August 2016 Background: Hap Seng Consolidated Berhad is a major Malaysian conglomerate, which was established by the Lau family, its largest shareholders. Historically, its core business had been palm-oil plantations, but in recent years, property has become its main source of profits. Malaysia constitutes 96% of its business, the rest mainly in Indonesia. Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Operating profit breakdown, by business segment 2015 Stock information: Name: Hap Seng Consolidated Bhd. Ticker: HAP MK Price (MYR): 7.75 Mcap: US$4,772m 3MADTO: US$4m Beta: 0.2x Sector: Industrials Industry: Capital Goods Major shareholders: 74% Cho Kun Lau 1% Dimensional Fund Advisors LP 22% Free float Hap Seng Consolidated Berhad (HAP MK) HAP operates in several businesses such as property, plantations, credit financing, fertilizers, automotive, and others such as quarries and trading Property division is involved in the development of residential and commercial properties in Sabah and West Malaysia. HAP’s commercial properties achieve high occupancy rates of over 90% and provide around 1,000,000 square feet of rentable area Plantations division is engaged in production and distribution of crude palm oil (CPO) with total area of palm plantation accounting for 40,000 hectares, which is in Sabah. HAP produced 160k tons of CPO in 2015 Credit financing division operates under Hap Seng Credit Sdn Bhd with the network comprising 10 branches nationwide providing term loans and industrial hire purchase financing to small and medium companies Fertilizers trading business is operated through eight warehousing facilities in Malaysia and five in Indonesia, offering several types of fertilizers used on plantations. HAP has 35% of the fertilizer market share in East Malaysia and around 17% in Peninsular Malaysia - 100 200 300 400 500 - 2 4 6 8 10 Aug-13 May-14 Feb-15 Nov-15 Aug-16 HAP MK (LHS) Price relative to local index (MYR) (%) Property 51% Plantations 17% Automotive 3%Credit financing 17% Fertilizers 4% Others 8%
- 6. 68 August 2016 Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters HAP operates in several businesses such as property, plantations, credit financing, fertilizers, automotive, and others such as quarries and trading Hap Seng Consolidated Berhad (HAP MK)
- 7. 78 August 2016 Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Property division is involved in the development of residential and commercial properties in Sabah and West Malaysia HAP’s commercial properties achieve high occupancy rates of over 90% and provide around 1,000,000 square feet of rentable area Hap Seng Consolidated Berhad (HAP MK)
- 8. 88 August 2016 Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Plantations division is engaged in production and distribution of crude palm oil (CPO) with total area of palm plantation accounting for 40,000 hectares, which is in Sabah HAP produced 160k tons of CPO in 2015 Hap Seng Consolidated Berhad (HAP MK)
- 9. 98 August 2016 Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Credit financing division operates under Hap Seng Credit Sdn Bhd with the network comprising 10 branches nationwide Provides term loans and industrial hire purchase financing to small and medium companies Hap Seng Consolidated Berhad (HAP MK)
- 10. 108 August 2016 Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Fertilizer trading business is operated through eight warehousing facilities in Malaysia and five in Indonesia, offering several types of fertilizers used on plantations HAP has 35% of the fertilizer market share in East Malaysia and around 17% in Peninsular Malaysia Hap Seng Consolidated Berhad (HAP MK)
- 11. 118 August 2016 Background: Hap Seng Consolidated Berhad is a major Malaysian conglomerate, which was established by the Lau family, its largest shareholders. Historically, its core business had been palm-oil plantations, but in recent years, property has become its main source of profits. Malaysia constitutes 96% of its business, the rest mainly in Indonesia. Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Operating profit breakdown, by business segment 2015 Stock information: Name: Hap Seng Consolidated Bhd. Ticker: HAP MK Price (MYR): 7.75 Mcap: US$4,772m 3MADTO: US$4m Beta: 0.2x Sector: Industrials Industry: Capital Goods Major shareholders: 74% Cho Kun Lau 1% Dimensional Fund Advisors LP 22% Free float Hap Seng Consolidated Berhad (HAP MK) HAP operates in several businesses such as property, plantations, credit financing, fertilizers, automotive, and others such as quarries and trading Property division is involved in the development of residential and commercial properties in Sabah and West Malaysia. HAP’s commercial properties achieve high occupancy rates of over 90% and provide around 1,000,000 square feet of rentable area Plantations division is engaged in production and distribution of crude palm oil (CPO) with total area of palm plantation accounting for 40,000 hectares, which is in Sabah. HAP produced 160k tons of CPO in 2015 Credit financing division operates under Hap Seng Credit Sdn Bhd with the network comprising 10 branches nationwide providing term loans and industrial hire purchase financing to small and medium companies Fertilizers trading business is operated through eight warehousing facilities in Malaysia and five in Indonesia, offering several types of fertilizers used on plantations. HAP has 35% of the fertilizer market share in East Malaysia and around 17% in Peninsular Malaysia - 100 200 300 400 500 - 2 4 6 8 10 Aug-13 May-14 Feb-15 Nov-15 Aug-16 HAP MK (LHS) Price relative to local index (MYR) (%) Property 51% Plantations 17% Automotive 3%Credit financing 17% Fertilizers 4% Others 8%
- 12. 128 August 2016 Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters Operating profit breakdown, by business segment 2015 Property 51% Plantations 17% Automotive 3%Credit financing 17% Fertilizers 4% Others 8%
- 14. 148 August 2016 HAP: Leadership Sources: A. Stotz Investment Research, company data, FactSet Chairman Managing Director 2012 2013 2014 2015 Past 12 months Jorgen Bornhoft (Independent) Feb 2007 – Present Edward Lee Ming Foo Mar 2005 – Present
- 15. 158 August 2016 '12 '13 '14 '15 PTM 3 2 1 1 1 '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM 3 2 1 1 1 6 3 4 5 4 '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM 9 9 9 9 9 2 1 1 1 1 4 10 4 2 3 4 1 1 4 2 Benchmarked against 1,430 large Industrials companies worldwide. Profitable Growth Asset utilization Profit margin Sales growth Margin change Profitability Growth Source: A. Stotz Investment Research. Notes: 1 = top ranking and 10 = worst. Most recent year’s data is based on the past 12 months (PTM) of published data. Profitable Growth has maintained its #1 rank since 2014 This means HAP ranks better than 1,287 of 1,430 large Industrials companies globally HAP: A. Stotz Profitable Growth CEO, 2005 – Present Edward Lee Ming Foo
- 16. 168 August 2016 '12 '13 '14 '15 PTM 3 2 1 1 1 '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM 3 2 1 1 1 6 3 4 5 4 '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM 9 9 9 9 9 2 1 1 1 1 4 10 4 2 3 4 1 1 4 2 Benchmarked against 1,430 large Industrials companies worldwide. Profitable Growth Asset utilization Profit margin Sales growth Margin change Profitability Growth Source: A. Stotz Investment Research. Notes: 1 = top ranking and 10 = worst. Most recent year’s data is based on the past 12 months (PTM) of published data. Profitability maintained its #1 rank and is the main driver for HAP’s Profitable Growth rank HAP ranks among the best 143 large Industrials companies globally on ROA The Growth rank returned to its #4 rank from #5 in 2015 HAP: A. Stotz Profitable Growth CEO, 2005 – Present Edward Lee Ming Foo
- 17. 178 August 2016 '12 '13 '14 '15 PTM 3 2 1 1 1 '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM 3 2 1 1 1 6 3 4 5 4 '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM 9 9 9 9 9 2 1 1 1 1 4 10 4 2 3 4 1 1 4 2 Benchmarked against 1,430 large Industrials companies worldwide. Profitable Growth Asset utilization Profit margin Sales growth Margin change Profitability Growth Source: A. Stotz Investment Research. Notes: 1 = top ranking and 10 = worst. Most recent year’s data is based on the past 12 months (PTM) of published data. Asset utilization has been ranked #9 since 2012, while the Profit margin has been stable at the top Sales growth fell to #3 from #2 Margin change improved to #2 from #4 It was an improved margin rather than higher sales growth that drove the Growth rank HAP: A. Stotz Profitable Growth CEO, 2005 – Present Edward Lee Ming Foo
- 18. 188 August 2016 Do YOU want to see the Profitable Growth rank for a company in YOUR portfolio? Leave a comment below with company name and country of listing…and I’ll post it if I have it