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05-10-2024, 11:46 AM
An open letter to the Board of Time Watch (2033)
As you know, I have been a disclosed 5% shareholder of TW since 6-Apr-2020. TW is 71.27% controlled by Michael Tung Koon Ming (Mr Tung), the Chairman, CEO and Founder of TW. TW is a manufacturer, brand-owner and retailer of watches in the PRC, including the core brand Tian Wang (天王) and the minor Swiss brand Balco, acquired in 2002. TW listed in HK on 5-Feb-2013 following an IPO at $1.35 per share which raised net proceeds of HK$742m.
In the year to 30-Jun-2021, a year in which you paid no dividends and during which HK's borders were closed for COVID, TW bought a 50-seat yacht for HK$43m! That replaced a presumably smaller yacht purchased in FY2016 for $12.5m. No doubt, this vessel was essential for marketing purposes to Chinese watch buyers who could not visit HK without quarantine. After our borders re-opened, you sold the yacht on 26-Jun-2023 for US$5.3m. While that represents a small gain before maintenance costs, please stop messing about with yachts. Charter one if you need to entertain customers or suppliers and can justify the expense. Corporate yachts are a notorious red flag to investors.
On the last day of FY2021, TW purchased Winning Asia Holdings Group Ltd (WAHG) from Mr Tung for HK$84.7m. WAHG owned the company's head office on 27/F of CEO Tower and 4 car spaces. The announcement failed to disclose that WAHG came with HK$40m of bank borrowings, so the property was actually valued at HK$123.6m as shown in the 2021 accounts. In FY2021, TW paid rent of HK$4.728m, so that represents a pre-tax yield of 3.8%. Two years later on 30-Jun-2023, the property was valued at $121.3m.
The Board did not see fit in 2021 to declare any dividends, but the results were good enough that it did see fit to pay Mr Tung a HK$10m bonus on top of his $7m salary.
As you know, I did try to resolve this issue with you privately, but in Oct-2023, having invited me to meet, I was told that Mr Tung cancelled the engagement because he "felt disappointed" by my email comments on the matter. I was left with no choice but to go public at a time of my choosing, which I now do. I expect you, Directors, including so-called Independent Non-executive Directors, to convene a board meeting and declare a distribution of all the surplus funds not later than the final results for the year to 30-Jun-2024, which must be published by 30-Sep-2024.
https://webb-site.com/articles/timewatch240605.asp
As you know, I have been a disclosed 5% shareholder of TW since 6-Apr-2020. TW is 71.27% controlled by Michael Tung Koon Ming (Mr Tung), the Chairman, CEO and Founder of TW. TW is a manufacturer, brand-owner and retailer of watches in the PRC, including the core brand Tian Wang (天王) and the minor Swiss brand Balco, acquired in 2002. TW listed in HK on 5-Feb-2013 following an IPO at $1.35 per share which raised net proceeds of HK$742m.
In the year to 30-Jun-2021, a year in which you paid no dividends and during which HK's borders were closed for COVID, TW bought a 50-seat yacht for HK$43m! That replaced a presumably smaller yacht purchased in FY2016 for $12.5m. No doubt, this vessel was essential for marketing purposes to Chinese watch buyers who could not visit HK without quarantine. After our borders re-opened, you sold the yacht on 26-Jun-2023 for US$5.3m. While that represents a small gain before maintenance costs, please stop messing about with yachts. Charter one if you need to entertain customers or suppliers and can justify the expense. Corporate yachts are a notorious red flag to investors.
On the last day of FY2021, TW purchased Winning Asia Holdings Group Ltd (WAHG) from Mr Tung for HK$84.7m. WAHG owned the company's head office on 27/F of CEO Tower and 4 car spaces. The announcement failed to disclose that WAHG came with HK$40m of bank borrowings, so the property was actually valued at HK$123.6m as shown in the 2021 accounts. In FY2021, TW paid rent of HK$4.728m, so that represents a pre-tax yield of 3.8%. Two years later on 30-Jun-2023, the property was valued at $121.3m.
The Board did not see fit in 2021 to declare any dividends, but the results were good enough that it did see fit to pay Mr Tung a HK$10m bonus on top of his $7m salary.
As you know, I did try to resolve this issue with you privately, but in Oct-2023, having invited me to meet, I was told that Mr Tung cancelled the engagement because he "felt disappointed" by my email comments on the matter. I was left with no choice but to go public at a time of my choosing, which I now do. I expect you, Directors, including so-called Independent Non-executive Directors, to convene a board meeting and declare a distribution of all the surplus funds not later than the final results for the year to 30-Jun-2024, which must be published by 30-Sep-2024.
https://webb-site.com/articles/timewatch240605.asp