The Hour Glass

(22-07-2012, 02:16 PM)d.o.g. Wrote: So if you are concerned about corporate governance, maybe this should give you pause. Granted, these incidents happened a long time ago, but do leopards change their spots?

Oh - and if you are against gambling, note that Yeung's Emperor Entertainment Hotel houses a casino.

I do know about AY, isn’t he a controversial figure?

Of course, I do concern about corporate governance of EW, but fortunately AY is not playing any role in the management (both operation and overall strategic development) of the company, his daughter CY is. Also, as you have said, these incidents happened a long time ago.

To me, the most assuring thing is - a good buddy of mine works for a PE firm that has a strategic stake in EW. This PE firm sits on the Board of EW and has high expectation for good corporate governance from the management of companies in which they have invested. And………………(sorry, that’s all I can say about this PE firm). That said, nothing is full proof.

Emperor Entertainment (with casino) and EW (dealing with watch and jewelry) are two separate entities. I am against IRRESPONSIBLE gambling but I do "trade" in gambling stocks like SJM and Genting Singapore.

Anyway, thanks very much for your information and concern, I really appreciate it.

(23-07-2012, 10:30 PM)Boon Wrote:

(22-07-2012, 02:16 PM)d.o.g. Wrote: So if you are concerned about corporate governance, maybe this should give you pause. Granted, these incidents happened a long time ago, but do leopards change their spots?

Oh - and if you are against gambling, note that Yeung's Emperor Entertainment Hotel houses a casino.

I do know about AY, isn’t he a controversial figure?

Of course, I do concern about corporate governance of EW, but fortunately AY is not playing any role in the management (both operation and overall strategic development) of the company, his daughter CY is. Also, as you have said, these incidents happened a long time ago.

To me, the most assuring thing is - a good buddy of mine works for a PE firm that has a strategic stake in EW. This PE firm sits on the Board of EW and has high expectation for good corporate governance from the management of companies in which they have invested. And………………(sorry, that’s all I can say about this PE firm). That said, nothing is full proof.

Emperor Entertainment (with casino) and EW (dealing with watch and jewelry) are two separate entities. I am against IRRESPONSIBLE gambling but I do "trade" in gambling stocks like SJM and Genting Singapore.

Anyway, thanks very much for your information and concern, I really appreciate it.

I start to put EW in my watching list at 0,92, bought at 0.76 (just to try) and now EW quote at 0,68 today. Why it's down so much?...i heard concern about valuation, luxury market in China...but i'm still surprise to see the volatility on this stock, any explanation?

(23-07-2012, 11:07 PM)pacyfiq Wrote: I start to put EW in my watching list at 0,92, bought at 0.76 (just to try) and now EW quote at 0,68 today. Why it's down so much?...i heard concern about valuation, luxury market in China...but i'm still surprise to see the volatility on this stock, any explanation?

Hi pacifiq,

I do know about the concern on luxury market in china but nothing on valuation. From my experience, there is more volatility and liquidity in HKEx than SGX (you don't have to agree). Both share price of EW and Hengdeli have been moving southwards lately. Hengdeli has been buying back its own share. I will try to find out more.

Interestingly, the PE ratio of EW (at 7.47) and THG (at 5.86) is converging. If one keeps falling and the other keeps inching up, it would become a reality. Will see !

Watch exports have held fast to the course set at the beginning of the year. They have however outpaced the annual target, with the rate of variation over twelve months taking a positive turn even though a slowdown in growth is expected at the end of 2012. With a level of 1.9 billion francs, watch exports in June recorded their strongest growth of the first six months (+21.7%). The first half-year therefore surpassed 10 billion francs, an increase of 16.4% compared to 2011.

Gold watches underpinned this strong growth in June. Steel and bimetallic timepieces saw their
value increase but at a below-average level. The total number of timepieces exported fell in relation
to June 2011 and the trend is aligned with gradual stabilization. Steel watches and those in the
category of other materials played a key role in this development.

Main countries Wristwatches by price categories
Countries Mio. de CHF Change in % Share in %

Hong Kong 404.0 +28.0% 21.2%
USA 194.8 +23.8% 10.2%
France 133.7 +5.1% 7.0%
Italy 119.2 +23.5% 6.2%
China 112.5 -22.6% 5.9%
Germany 112.2 +64.6% 5.9%
Total 6 countries 1076.3 +18.3% 56.4%

The fall in volumes is attributable to watches costing less than 200 francs (export price), which recorded a decline of 9.1% while maintaining their value. Between 200 and 3,000 francs, results were up 2.5% by value and 6.5% in volume terms. Timepieces costing more than 3,000 francs continued their strong growth and saw their value increase by 34.4%.

Swiss watch exports to Hong Kong and the United States recorded an above-average increase. China suffered from a particularly unfavourable base effect (+78.9% in June 2011) and consequently registered a decline. This result accentuated the slowdown experienced on this market since beginning of the year, which remains however well above 2011 levels. Europe bounced back, thanks in particular to very strong growth in Germany. Italy also contributed to this good performance and, to a lesser extent, France.

Source: FHS

Today (30Jul12, Monday) is the 2nd market-day after THG had gone 'XD' last Friday (27Jul12) for the $0.06/share Final dividend for FY12 (ended 31Mar12), and the share price has already started to rebound and closed up $0.02, at $1.32, with a high 167 lots transacted.

If we adjust or add back the $0.06/share Final dividend (payable on 8Aug12) for FY12, THG has already risen further post the dividend, to reach a new high today of equivalent $1.38! Awesome!

[quote='dydx' pid='29606' dateline='1343661902']
Today (30Jul12, Monday) is the 2nd market-day after THG had gone 'XD' last Friday (27Jul12) for the $0.06/share Final dividend for FY12 (ended 31Mar12), and the share price has already started to rebound and closed up $0.02, at $1.32, with a high 167 lots transacted.

If we adjust or add back the $0.06/share Final dividend (payable on 8Aug12) for FY12, THG has already risen further post the dividend, to reach a new high today of equivalent $1.38! Awesome!
[/quote]

THG closed up another 3 cents at $1.35. Why is the market so enthusiastic after the xd date? Or put it another way, even with current valuation, and bearing in mind the profitability of the underlying business, would it be fair to venture that THG is still being conservatively priced by Mr. Market?

If one can reasonably foresee that the business is sustainable and reasonably likely to continue growing for the next 5 to 7 years, then wouldn't current valuation be on the conservative side? Of course investors owe it to themselves to conduct their own due diligence.

I suppose quality does attract serious and well-funded investors! And these potentially include institutional and private funds.

At today's (31Jul12) closing share price of $1.35, and adding the $0.06/share Final dividend for FY12, Mr Market has brought THG to a new record high of the equivalent of $1.41 - this amounts to a further 3.7% increase from the last done share price of $1.36 on 26Jul12, before the counter went 'XD' on 27Jul12.

I guess it pays to take a longer term view when holding a high-quality stock.

The Hour Glass ($1.40) - Today climb up again, with decent volume...... At $1.40, it closed at historical high now, moving into uncharted territory.....

(01-08-2012, 06:10 PM)crabcrab Wrote: The Hour Glass ($1.40) - Today climb up again, with decent volume...... At $1.40, it closed at historical high now, moving into uncharted territory.....

At today's (1Aug12) closing price of $1.40, and adding to it the $0.06/share Final dividend for FY12, Mr Market has pushed THG to a new record high equivalent price (inclusive the dividend) of $1.46 - and this amounts to a further 7.35% increase in last 4 market-days, from the closing price of $1.36 on 26Jul12, before the counter went 'XD' on 27Jul12.

I think increasingly, THG as a high-quality stock has and will become the preserve for mostly the serious, well-funded, and long-term oriented investors, including the controlling shareholders - similar to the present situation of Vicom. With some luck, THG's share price could rise further towards and rests at a price level pegged at a 10% discount of its theoretical fair intrinsic value, incorporating projections of further growth in the underlying business and profits at reasonable rates in the next few years.

(01-08-2012, 07:00 PM)dydx Wrote:

(01-08-2012, 06:10 PM)crabcrab Wrote: The Hour Glass ($1.40) - Today climb up again, with decent volume...... At $1.40, it closed at historical high now, moving into uncharted territory.....

I think increasingly, THG as a high-quality stock has and will become the preserve for mostly the serious, well-funded, and long-term oriented investors, including the controlling shareholders - similar to the present situation of Vicom. With some luck, THG's share price could rise further towards and rests at a price level pegged at a 10% discount of its theoretical fair intrinsic value, incorporating projections of further growth in the underlying business and profits at reasonable rates in the next few years.

THG indeed has a lucrative and profitable business... Is there a wide moat for this company? Can investors imagine reasonably where the company will be in terms of revenue and profit growth 5 to 7 or more years down the road? I guess the competitive advantage comes from the management's intimate knowledge of the watch retailing industry as well as the trust and relationship they have forged with the principals. One should not forget that the competitive advantage is also likely to become slightly greater every time a customer goes away from a store feeling pleased with the service rendered... when valuing a business, I suppose it would also be fair to not only look at profitability metrics but also consider all other intangibles as well.

I'm biased. Investors must do their own due diligence.