S$63.5 million in cash. A S$41 million market cap. And zero dividends. HL Global Enterprises (SGX: AVX) is either the most obvious deep-value play - or the most perfectly constructed value trap.
The SEA Analyst, thanks for your analysis of HL Global Enterprises Limited (AVX; HLGE SP).
Without a path to growth or capital returns, minority shareholders may wait forever for the discount to close.
This reminded me of Haw Par, which both of us analysed too.
I first invested in Haw Par Corporation Limited (H02; HPAR SP) in Feb 2021. I was attracted to its inorganic growth potential, which I believed the market had not fully recognized.
Through reading management interviews and analysing its hiring activity, I believed Haw Par was about to make a major acquisition. This could increase its profits by almost 50%.
I also believed the market had not fully recognized the ‘hidden’ assets within H02. Its accounting policies have artificially depressed its return on asset (ROA), making it look like a low-return business.
More than 5 years later, I sold all my shares.
H02 still has not made any significant acquisitions. There is no convincing evidence it will do so any time soon.
The hidden assets I saw in H02 remain hidden. I now believe these hidden assets will unlikely ever be unlocked and returned to shareholders.
Furthermore, I believe the outlook for Tiger Balm is bleaker than the market expects.
Yes, our article's last section lands on the same conclusion. Liquidity is both the symptom and the mechanism: thin trading is why the discount persists, and thin exit options are why the arbitrage stays theoretical. Without a catalyst from the controlling shareholder, the discount is structural, not temporary.
The SEA Analyst, thanks for your analysis of HL Global Enterprises Limited (AVX; HLGE SP).
Without a path to growth or capital returns, minority shareholders may wait forever for the discount to close.
This reminded me of Haw Par, which both of us analysed too.
I first invested in Haw Par Corporation Limited (H02; HPAR SP) in Feb 2021. I was attracted to its inorganic growth potential, which I believed the market had not fully recognized.
Through reading management interviews and analysing its hiring activity, I believed Haw Par was about to make a major acquisition. This could increase its profits by almost 50%.
I also believed the market had not fully recognized the ‘hidden’ assets within H02. Its accounting policies have artificially depressed its return on asset (ROA), making it look like a low-return business.
More than 5 years later, I sold all my shares.
H02 still has not made any significant acquisitions. There is no convincing evidence it will do so any time soon.
The hidden assets I saw in H02 remain hidden. I now believe these hidden assets will unlikely ever be unlocked and returned to shareholders.
Furthermore, I believe the outlook for Tiger Balm is bleaker than the market expects.
I discuss the details here: https://angsanaanderson.substack.com/p/haw-par-right-for-the-wrong-reasons?r=5rl2u5
No liquidity
Yes, our article's last section lands on the same conclusion. Liquidity is both the symptom and the mechanism: thin trading is why the discount persists, and thin exit options are why the arbitrage stays theoretical. Without a catalyst from the controlling shareholder, the discount is structural, not temporary.