Last week I received a call from My Johor Sifu – The Champion of Champions Among the Likes of Dr. Neoh Soon Kean, Fong Shiling, Warren Buffet & other Great Investors of Growth & Value Stocks.
He made a request to post this in i3 investors forum for the benefit of all serious long term Value Growth Investors.
The Super Stock is HARRISON Holdings
These are the salient points he messaged me
1) Current price Rm3.68. EPS is 27 sen. Translating to P/E 13.5
2) NTA Rm4.38 (Prime Prime Assets still at Old Book Value)
3) Proposed dividend is 25 sen (a jump from 15 sen last time). Translating to a dividend yield of 6.8%
4) If Harrison price goes up to Rm4.50 dividend yield is 5.5%. Still better than Bank FD of 4% now.
5) Company year in year out making 30 sen and above except for year 2014 where it disputed with custom due to some technical excise duty and settled Rm30 millions with custom department once and for all
6) The business resumed to normal from year 2015 and can easily make Rm30 millions due to nature of products such as Nestle, Dutch Lady, Coco cola products and basic neccessities like Milo & Maggee Mee.
7) Oil palm price remain high. Consumers are not really affected as most of these necessities are to be delivered to various small towns in Sabah and Sarawak.
8) It is recession proof business as it’s turnover merely relate to basic necessities
9) Its history dates back to British colonial times. Name was Harrison crossfieldbhd. That means most of the estates in Sabah/Sarawak rely on its delivery of basic necessities.
10) There is a saying estate workers in Sabah have money but if Harrison does not deliver basic necessities in time, they will die of hunger.
11) Before dividend proposal was announced price hovers around Rm3.40 to Rm3.50. I don’t think the effect of dividend has been priced in. I bought around Rm2.60 to Rm2.70. The effect will be priced in once it cross Rm4.10
OTHERS HARRISONS HOLDINGS (MALAYSIA) BERHAD (“The Company” or “HHMB”) – PROPOSED FINAL SINGLE-TIER DIVIDEND OF 25 SEN PER ORDINARY SHARE IN RESPECT OF THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
|HARRISONS HOLDINGS (MALAYSIA) BERHAD|
HARRISONS HOLDINGS (MALAYSIA) BERHAD ("The Company" or "HHMB") - PROPOSED FINAL SINGLE-TIER DIVIDEND OF 25 SEN PER ORDINARY SHARE IN RESPECT OF THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
The Board of Directors of the Company is pleased to announce that the Company intends to seek the approval from its shareholders for Proposed Final Single-Tier Dividend of 25 sen per ordinary share in respect of the financial year ended 31 December 2016 at the forthcoming Annual General Meeting.
The dividend entitlement and payment dates will be announced in due course.
This announcement is dated 12 April 2017.
These were the sms he made to me while I erased other calls or past sms from my phone to make space for him.
In simple, straight to the point language My Johor Sifu mesaged me. Then I replied, “I haven’t bought any Harrison yet, how to post?” He replied, “Then go get some”
“Ha! I bought so many other shares until no more money left now. Waiting for cash from one house I just sold”, I answered.
He said, “You should have sold your house last year and dump into the market now so hot!” “Ha how many lots do you want? At the closing price of Rm3.67. You will save on broker’s commission?” “Ok, I hutang first, please let me have 3,000 Harrison shares at Rm3.67. I will pay you later.”, I replied.
Now better keep your promise- Johor Sifu, You just sold me 3,000 Harrson shares at Rm3.67 on credit with zero commission & zero interest, Ok?” Hahaha! So good! So happy indeed. He’s putting monies into my pocket. I think Harrison is a sure fire winner!
Now let’s Calvin share more about Harrison Holdings Bhd
This was a nostalgic share we both bought in year 2006, I think, around Rm1.40. About the same time My Johor Sifu also mentioned Pintaras Jaya at Rm1.40. Pintaras Jaya powered up to Rm7.00 & split later (Up 500%)
However, I had taken profit on Harrison and had forgotten about it. Until My Johor Sifu messaged me.
Harrison is going to increase its Dividend payout from 15 sen to 25 sen.
Something’s brewing there. Just like last time Tomypak at 40 sen suddenly declared a 4 sen dividend unexpectedly (Tomypak later surged to Rm4.00 and spilt (Up 1,000%)
Another stock was Daibochi which Dr. Neoh bought 1 million shares. We also bought at that time around 60 sen. Why? Daibochi manufactures plastic food packaging for Nestle.
So when we entered GIANT SUPERMARKET we SAW Daibochi everywhere.
A Sea of Green in Milo
A Sea of Yellow in Maggie Mee
A Sea of Red in Kit Kat
Everywhere is Daibochi. Daibochi made us tonnes of monies as its price followed Nestle’s growth.
Ha! Now It is Harrison’s Turn
Being the major Controlling Distributor of Milo, Maggee & other foodstuff for Nestle in Sabah & Sarawak – Harrison has captured this recession proof market by being Its Distributor throughout the towns, villages & kampungs of East Malaysia.
And Coco cola which Warren Buffet owns substantial portion, is also being distributed by Harrison. And wide range of health care & personal hygiene products also pass through Harrison many distribution channels & warehouses!
In USA Berkshire owns lots of Johnson & Johnson and Proctor & Gamble shares which are daily necessities. So is Harrison – it distributes recession proof necessities.
After many decades history Harrison’s business is fully entrenched & penetrate & saturate all areas of Sabah & Sarawak.
It is like the arteries that bring blood to the very heart of East Malaysia. Without which it cannot survive just like blood circulates and bring nutrients & oxygen to every part of our human bodies.
So this is the type of business that Warren Buffet said, “Even a fool can run it”
And it runs so well that even if the stock market closed tomorrow and don’t open for the next 10 years, we think Harrison will still do fine. Just like Wrigley Chewing gum has a 100 year history & survived – so will Harrison in East Malaysia. After all Harrison Crossfield has a 100 year history already.
Just like PIE, Harrison from now will be a Prime Dividend Stock.
With Earnings of Rm29 millions and Cash Payout of 25 sen it is about Rm17 millions payout. There is still a good yearly surplus of Rm12 millions left over after dividend payout.
Will Harrison follows Dutch Lady’s foot print by Increasing Dividends as Retained Earnings Increased. (Remember that Dutch Baby changed name to Dutch Lady. Earnings increased followed by Progessive Dividend Increment. Thus propelling Dutch Lady share price from Rm4.00 to Rm40.00 and more – up 1,000%)
Will Harrison follow Dutch Lady Into BLUE CHIP TERRITORY?
Only Time Will Tell
MY Johor Sifu thinks Harrison’s Fair Price is Rm4.50.
He also said that the recent hype on logistic stocks have overlooked Harrison being a Huge Logistic SetUp with Warehouses & Distribution Centers Throughout East Malaysia!
So from Rm3.68 to Rm4.50 there is about 20% discount. From Rm3.68 to Rm4.50 there is 82 sen upside. He always has a very reasonable expectation.
Calvin thinks Rm4.50 is a sensible price, but it should cross Rm5.00 just like Scientex & Pintaras Jaya with so Solid Growth Story!!
But who knows? Last time we bought Ajinomoto at Rm2.50. To my surprise Ajinomoto rose to a high of Rm18.38 (Up 635% ). At this price Johor Sifu has switched to Harrison with undervaluation and far more potential for upside.
For Now All VALUE INVESTORS WILL ACCUMULATE THIS COMING SUPER STOCK CALLED HARRISON.
(Value Investors hold stocks for 10 or more years like Warren Buffet. So while DR. Neoh Soon Kean is the Benjamin Graham of Malaysia my Johor Sifu could be called the Warren Buffet of Malaysia. He buys and holds for very long time.). So 3 to 7 Baggars are very common. And 10 Baggars or more also occurred from time to time.
Calvin Tan Research
Note: My Johor Sifu is the Top 30 Shareholders of Harrison. He was also Top Holder in Ajiya with Dr. Neoh Soon Kean. He already sold out his Ajiya shares for a nice Rm1.5 million profit.
Do you want to know his name?
One day his name will appear beside Fong Shiling(ColdEye) & Dr. Neoh Soon Kean
For now I don’t have his permission to disclose.
According to Johor Sifu a defensive Stock like Harrison with only 13.5 P/E should trade at at least 15 to 20 P/E in the likes of Nestle & Dutch Lady.
So expect a rerating due to its increasing Dividend Yield Now.
RHB Investment Bank has included Harrison as one of its Jewels for Year 2017. Its modest target price for Harrison at Rm3.92 will soon be breached – only a matter of time!