Inelastic demand of consumer staples helps Hanwell maintain consistent performance

Boardroom manoeuvrings aside, how does Hanwell Holdings fare from an investment angle? Unlike companies in other sectors trying hard to find a technology angle so as to make themselves more appealing as a growth play, Hanwell’s businesses are decidedly basic.

The company can classify its business into two main segments. The first is a clutch of subsidiaries that form its consumer essentials segment. It is a key player in this market, supplying notable household brands such as Royal Umbrella rice, Golden Peony rice, Beautex tissue paper and Fortune tofu. Hanwell’s packaging business segment is through its 64% investment in SGX-listed Tat Seng Packaging Group. Tat Seng’s business involves the manufacture and sale of corrugated paper products and other packaging products mainly in China and Singapore.

Consumer staples are generally characterised by the inelasticity of demand for their products, and as an investment, are generally less volatile. In other words, investments in consumer staples are safer because less volatility denotes more predictability, or more room for investors to react to a market shock involving the demand and supply of the products related to the business.

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