The Hour Glass

THG dropped more than 10% yesterday?

Are listed coys not required to make an announcement - that they are aware / not aware of any particular reason behind the significant price movement?

Or only if SGX query them?

(01-12-2023, 07:52 AM)Choon Wrote: THG dropped more than 10% yesterday?

Are listed coys not required to make an announcement - that they are aware / not aware of any particular reason behind the significant price movement?

Or only if SGX query them?

I believe the price drop to $1.52 and the massive 6.69m shares transacted yesterday were mainly due to a big seller in need of cash and needed to sell in a hurry, as the seller actually offered over 5.0m shares at $1.52m - lower than the last Buy/Sell at $1.56/1.57 just before 5:00pm - at the close of the official market at 5:00pm. It is interesting to note that all the shares offered at $1.52 were mopped up within the next 5 minutes, so there were strong buying interests who could take decisive actions for such a big amount.

A more relevant question is who were the lucky buyers?

(01-12-2023, 07:52 AM)Choon Wrote: THG dropped more than 10% yesterday?

Are listed coys not required to make an announcement - that they are aware / not aware of any particular reason behind the significant price movement?

Or only if SGX query them?

hi Choon,
Companies are only obliged to reply the "aware/not aware" thing when queried by SGX.

(01-12-2023, 02:41 PM)weijian Wrote:

(01-12-2023, 07:52 AM)Choon Wrote: THG dropped more than 10% yesterday?

Are listed coys not required to make an announcement - that they are aware / not aware of any particular reason behind the significant price movement?

Or only if SGX query them?

hi Choon,
Companies are only obliged to reply the "aware/not aware" thing when queried by SGX.

Thanks Weijian.

Am surprised that >10% in a day and such higher than usual volume and SGX still have not query.

Incident also shows that the person responsible for THG share buyback does not just set a auto buy when price dips to a certain level.

https://www.watchpro.com/the-big-america...6-company/

"...primary is going to meet secondary..."

The recent discussion on value trap in another thread makes me pause to think if THG is a value trap.

Based on the balance sheet as at March 2023, the combined value of THG's PPE and Investment Properties which is largely made up by properties in Australia and New Zealand amounted to ~S$350M, larger than even Inventories! (when THG is a retailer).

Notwithstanding that iconic / landmark properties are hard-to-come-by and that operating boutiques in self-owned, artfully designed and unique real estate can draw customers, but, has THG invested too much in such properties?

Considering that the default business model of a retailer is to lease shop space, THG has locked up S$350M in real estate. Premium real estate they may be, but there is also a high opportunity cost, especially when there is no immediate operating needs for certain properties. THG could have easily funded a higher dividend payout ratio, paying 50% instead of its historical ~30%.

So I do think that THG is a value trap. THG will never sell these properties. The value of these properties can then only be realised through stronger sales and earnings in THG's watch retailing business. But that will require many years of stronger sales and earnings. Management has perhaps overlooked / belittled this aspect - that for shareholders, there is an opportunity cost to money. Perhaps the duty-of-care falls on, especially the  independent directors of the board to remind management of this point.

How can retail shareholders effectively feedback and steer management / board towards a higher dividend payout ratio?

The recent discussion on value trap in another thread makes me pause to think if THG is a value trap.

Based on the balance sheet as at March 2023, the combined value of THG's PPE and Investment Properties which is largely made up by properties in Australia and New Zealand amounted to ~S$350M, larger than even Inventories! (when THG is a retailer).

Notwithstanding that iconic / landmark properties are hard-to-come-by and that operating boutiques in self-owned, artfully designed and unique real estate can draw customers, but, has THG invested too much in such properties?

Considering that the default business model of a retailer is to lease shop space, THG has locked up S$350M in real estate. Premium real estate they may be, but there is also a high opportunity cost, especially when there is no immediate operating needs for certain properties. THG could have easily funded a higher dividend payout ratio, paying 50% instead of its historical ~30%.

So I do think that THG is a value trap. THG will never sell these properties. The value of these properties can then only be realised through stronger sales and earnings in THG's watch retailing business. But that will require many years of stronger sales and earnings. Management has perhaps overlooked / belittled this aspect - that for shareholders, there is an opportunity cost to money. Perhaps the duty-of-care falls on, especially the  independent directors of the board to remind management of this point.

How can retail shareholders effectively feedback and steer management / board towards a higher dividend payout ratio?

It's already quite good to shareholders that HG is trading at a premium to book now. Watch retailers are seldom valued at a premium to book due to its high working capital demands

(22-12-2023, 08:58 AM)dzwm87 Wrote: It's already quite good to shareholders that HG is trading at a premium to book now. Watch retailers are seldom valued at a premium to book due to its high working capital demands

Hi dzwm87,

I guess it is because HG had been able to grow their earnings for the past few years, despite being asset heavy in inventory and properties. But the local market almost always don't favour asset heavy companies, especially if their earnings profile stays flat or starts to drop.

Do remember that HG did trade below book value for quite a number of years, until recent times.

Just wondering, could the "trading above book value" be something industry and not company specific?

I notice cortina has risen by 250%, it could be due to how the price of luxury watches rose a lot due to the affluence of a few wealthy nations such as the Chinese. So the major upticks we saw could be industry specific