Edgewise: Hanwell has doubled in a year. Can Sam Goi lift it higher?
Like a typical entrepreneur with an abundance of energy, Sam Goi Seng Hui likes to get his hands in different businesses. While his flagship Tee Yih Jia is a privately-held food manufacturer, Goi also has substantial stakes in a slew of listed companies from different industries.
These include stakes of 24.05% in cocoa supplier JB Foods; 25.23% in foodstuffs trader Envictus International Holdings. He also holds 13.7% of Serial System, which distributes electronics parts, as well as a 21.8% stake in Union Steel Holdings. Following conversion of a loan, he holds 21.17% of KOP, which is in a JV to develop a winter-themed resort in Shanghai.
Over the years, Goi has made it a point to remain as the second largest shareholder in each of these companies he invests in. The exception is property firm GSH Corporation, where he is executive chairman with his controlling stake of 44.49%.
Estimated by Forbes to have a networth of US$2 billion ($2.7 billion), Goi could have easily mounted a takeover of any of these companies — although he did not. That is his way of signalling to the incumbent company owners that they remain in control and that he is there to help grow their companies together — not just with his financial backing but with his extensive regional network of business contacts.
One of Goi’s investments — beverage maker Super Group — hit pay dirt in 2016 when Dutch company Jacobs Douwe Egberts bought out the controlling Teo family and Goi for $1.45 billion. For his 15.34% stake, Goi pocketed a cool $222 million.
Disclosure misstep
Now, a different story is shaping up at Hanwell Holdings — one which is unfamiliar to Goi. More than 15 years ago, he acquired a block of shares sold by QAF. For years, his stake in the consumer staples company had remained at around 15% but this increased to 17.33% early last year.
Things started to change in the middle of last year. On Aug 3, 2020, a Hong Kong court declared Hanwell’s then executive chairman Allan Yap bankrupt. Master Glory, a Hong Kong-listed company he chairs, made the disclosure on Aug 24, 2020. However, Hanwell did not disclose this information until a month later after queries by the Singapore Exchange. Bankrupt individuals are not allowed to hold directorships in Singapore companies.
On Sept 23, 2020, Hanwell announced Yap had resigned as executive chairman of both Hanwell and Tat Seng Packaging Group, another SGX-listed company. Yap, according to Hanwell, “expressed his apology on his oversight” for not updating his bankruptcy as he had been “extremely busy engaged on his other personal commitments”. In addition, “he confirmed that he has no disagreement with the board and there are no matters to be brought to the attention of the shareholders of both Hanwell and Tat Seng.”
After Yap’s resignation, his wife Coco Tang Cheuk Chee remains on Hanwell’s board as an executive director.
According to Hanwell’s FY2020 annual report, as of March 16, Tang and Goi held stakes of 19.4% and 22.55% in the company respectively.
Interestingly, Tang and Goi had been acquiring Hanwell shares in the second half of last year.
From Sept 8, 2020, Tang started buying Hanwell shares from the market, with volumes ranging from 300,000 to 5.87 million on different days. On Sept 22, 2020, she bought nearly 1.4 million shares. The following day — hours before the company disclosed her husband’s resignation — she bought a rather puzzling tranche of just 100 shares, which cost her $27.50.
On his part, Goi started scooping up Hanwell shares on July 9, 2020, paying 20.5 cents each for 588,700 shares. His most recent acquisition was on March 24 when he paid 38 cents each for 327,200 shares, giving him a to
tal of some 125.4 million shares, or 22.67%.
But there is now an even larger shareholder — one Ku Yun-Sen, who holds 24.23% via an entity called Violet Profit Holdings. This company is being liquidated in Hong Kong which means she will not be able to vote at the upcoming AGM on April 29, much less be involved in active management.
Leadership void
The way Goi sees it, there is a leadership void in Hanwell. He had sought the executive chairman role but was rebuffed by the board, citing his numerous commitments, as The Edge Singapore understands. Goi settled for the non-executive chairman appointment instead which started on March 8, joining his son Kenneth Goi Kok Ming, who has been on Hanwell’s board as a non-executive director since 2012.
On Feb 26, two weeks before Goi joined the board, Hanwell had promoted chief operating officer Yeo See Liang, who heads up the company’s Malaysia-based subsidiary, to be the second executive director after Tang. The rest of the board is made up of long-serving deputy chairman John Chen Seow Phun, a former politician, and two independent directors, Siu Wai Kam and Jasper Goh Yang Jun.
Goi believes there is more he can do for Hanwell. As the second largest single shareholder and as chairman of the board, he would like to work with the existing directors and management team to bring in additional independent board members with experience and a proven track record.
“Together, I believe we can enhance the overall leadership and corporate governance of the company and chart a successful growth strategy for Hanwell. I strongly believe this will benefit all shareholders of the company,” he says.
Presumably, the market has noticed the acquisitions made by Goi and Tang. For years, Hanwell shares have held steady at around 20 cents but started trending up last September. On April 23, Hanwell shares closed at 46 cents, a level unseen since 2007.
To be sure, Hanwell has seen better earnings. For FY2020 ended December 2020, revenue was up just 2.2% to $471.4 million. Yet, earnings surged by 267% to $22.2 million, thanks largely to higher earnings contribution from Hanwell’s subsidiary Tat Seng Packaging Group, which eked out better efficiency, enjoyed lower material cost and generated higher sales, leading to a 61.4% earnings growth of its own for FY2020. Even with the recent gain in its share price, Hanwell is trading at around 11 times earnings — half the valuation of many consumer stocks.
Up until 2012, Hanwell was known as PSC Corporation, which for years, was known as the sponsor of a popular Mandarin weekend variety show. The company name Hanwell is not exactly the most recognisable. However, the brands of consumer essentials it sells certainly are. These include Royal Umbrella rice, Golden Peony rice, Beautex tissue paper and Fortune tofu, which the company makes and distributes.
For the past five years, turnover of Hanwell’s consumer foods business has been hovering at between $161 million and $172 million. Even in FY2020, when there was an overall spike in demand for groceries because of the Covid-19 lockdown, revenue was $168 million, down from $172 million generated in FY2019.
For decades, Goi was known by the moniker “Popiah King” for being the market leader in the sale of popiah skin. What makes a popiah complete are the various ingredients such as vegetables, sausages, eggs, plus sweet sauce and chili paste. The flour-based skin wraps everything into a roll, stretched thinly but not to the point of breaking. The alternative is a loosely-filled popiah that is floppy and unsatisfying. Making a tight popiah requires a bit of skill and some experience. Goi may have his fingers in many different industries but he certainly is a veteran in the foodstuffs business. Perhaps there is really more he can offer at Hanwell.