The Hour Glass

hi this is my field report:
henry tay has impressed upon me as a prudent, serious & sharp businessman & a gentleman as well
maybe i see wrongly, but i thought his left eye tends to be smaller than his right eye, his eye-balls were always positioned to the left side.
full house attendance
now i can understand why they were unable to open an outlet in macau - people factor

I notice in Macau, there are rows of shops selling Rolex and branded watches like nobody business. Why bother to open there?

it was quite a rewarding and fruitful experience, and I have greater confidence in the company than before.

We are probably not going to see exceptional growth in the current FY, especially as the company is preparing for expansion in More Passion@Paragon as well as in Hong Kong. The company has already recruited the staff and sent them for training which explains why Q4 results is not as good as 9M 2012. As a reference, staff cost increases by 25% and rental cost increases by 36% in Q4, if you compare the financial statement for Q3 and the FY. This 2 costs take up 70% of total operating expense.

There is also some heated discussion about the pay during the proper AGM, and Dr Jannie Chan is a bit agitated when the word "family" is mentioned. I guess perhaps the gentleman is not aware that they are divorced. The conclusion is that since the day where they started at Metro, the pay structure has always been a basic pay + profit sharing bonus. Even their sales staff had their bonus pegged to profit and not just simply revenue.

The only thing I am not as pleased about is that after I am done chatting with Mr Michael Tay, there's no more lunch for me

(vested)

I am sure the knowledge gain is worth more than the lunch haha.
Maybe the free gifts for attending is an omega watch each!

(18-07-2012, 02:30 PM)shanrui_91 Wrote: There is also some heated discussion about the pay during the proper AGM, and Dr Jannie Chan is a bit agitated when the word "family" is mentioned. I guess perhaps the gentleman is not aware that they are divorced.

It depends on how the Q was asked. Her brother, son, daughter (not sure if still there) are also family mah...

(18-07-2012, 02:30 PM)shanrui_91 Wrote: The only thing I am not as pleased about is that after I am done chatting with Mr Michael Tay, there's no more lunch for me

I get that a lot - by the time I finish chatting with CEO and other executives, there's usually no food left!

Only exception was Boustead AGM though - they catered a stunning amount of food for the AGM which I (personally) think was also for their own staff afterward!

It's common but I figured the personal Q&A session is worth much more than the food.. Starhill REIT has the best food (quality + quantity) IMO...

Anyway, an article which I just came across:
http://www.bloomberg.com/news/2012-07-17...hange.html

Make me realize even though consumerism is one of the hot macro trends, retail spending can be volatile at times.. and stores can often be a form of operating leverage..

But guess HrGlass will not be affected as much given the low exposure to Chinese consumers.

AGM HIGHLIGHT... Heated argument between Dato Dr Jannie (Director) & Mr Mano (Shareholder) when ask about the compensation package among the family members. Jannie rebutted that it is an insult to them and reiterated that they should be viewed as professional and not familiy members. She got a bit agitated and emotional by saying how she sacrifice her family time running Hour Glass... Mr Mano presented calmly when he dealing with this situation. He requested for a minutes of the meeting later.

A shareholder also raised a question that rumours is resurfacing that THG is taking over Sincere Watch and Chairman was asked to comment. He declined to comment this time and invited that shareholder to chat with him privately. I remembered that in a previous AGM when Sincere Watch was for sale, he spoke to the floor that THG not going ahead, this time is 'DIFFERENT'......

This Mr Mano is a common figure in almost all the major AGMs.

actually, after Mr Mano talks about family, he says something like "husband, wife, son and brother-in-law" which gets Dr Jannie into the argument, saying it is an insult.

I don't think that THG will be interested in Sincere given that what I heard during the private session is that some big distributors are pulling out of Sincere. Perhaps pianist who has talked with Dr Henry will like to share more?

There's also at least 3 fund managers around who are vested in THG. one of them is from i think lumiere capital and he voiced out some concerns during the agm.

a quick summary of the different markets:

•Japan – not able to expand more due to HR issue. CEO very experienced and had been there for more than 20 years. After the radiation incident, there has been a change in mindset, and Japan start to experience the best growth, driving watch sales

•Thailand – 5 years ago, they were 5th and Prima Time was 6th. Now they are the 1st in market share. Worried that when the king dies, mourning might freeze sales of luxury goods.

•Indonesia - Need to pay duty taxes and goods might get stuck for 4-6 months with some getting stolen. Unless bribery is done, it is hard to go into the market and they are not willing to sacrifice reputation.

•Hong Kong - Intent to expand to hong Kong has always been there, but need to find the right place at the appropriate rent. Rental for hong kong is about 8% of revenue as compared to 3% in Singapore. THG has been lucky to get in at a lower price as compared to what it will have been 12 months ago. Both shops there are specialised shop with Patek phillipe being the main partner.

•China has high hurdle rate and low margin. store in singapore is 10x more efficient than China. It took Emperor 15 years of operation in China to make a profit 2 years ago. 1.5m profit on 100m revenue. His take is that only brand owners should expand in China and not multi-brand retailer. Neither is THG going to focus a lot to attract the Chinese as not many comes to Singapore, in fact there's more going to Dubai than Singapore. They will rather capture through proxy like Hong Kong, Japan and Australia where there's 24m tourist to HK every year.

•Singapore - They have been fighting for 10 years for a store at Paragon before they finally got it. Ngee Ann City not willing to take in new watch retailer or brands as the owner feels the current retailers are sufficient to capture the market.

While there's much more information that I have gleaned from the 1 hr + chat, I think this statement will sum it all.

"the recent Ex-Ceo of Sincere, Stephan Ritzmann, after the release of result asks I don't understand how did you guys manage to achieve this kind of margin because I am not able to"

and if you check the background of this Stephan Ritzmann, he has been in the watch industry for more than 20 years.

The only thing that I am afraid of is that I might be too confident of THG, so I think there is a need to treat my words with some biasness and doubt from now on.

(vested and bias)