The Hour Glass

[cyclone]

Proposed Acquisition of Properties in Auckland, New Zealand

The Hour Glass Limited announced that The Hour Glass (NZ) Limited ("THGNZ"), a wholly-owned subsidiary of the Company, has entered into the following sale and purchase agreements (each, an "SPA" and collectively, the "SPAs"):
(i) an SPA with Immeuble Blacketts Limited (as vendor), for the acquisition of a freehold property located at 90-92 Queen Street, Auckland, New Zealand; and
(ii) an SPA with Securities House Trustee Limited (as vendor) for the acquisition of a freehold property located at 112-116 Queen Street, Auckland, New Zealand.

The Properties are located in Auckland’s prime luxury retail precinct and benefit from a high volume of passing pedestrian traffic. Both Properties are presently tenanted.

The aggregate consideration for the purchase of the Properties is NZ$60.0 million (approximately S$54.0 million). The Purchase Consideration was arrived at on a willing-buyer and willing-seller basis, based on THGNZ’s assessment of the Properties’ values having regard to their prime locations. The Purchase Consideration will be funded by internal resources and bank borrowings. A deposit of NZ$$6.0 million in aggregate has been paid and the balance of the Purchase Consideration is payable in full on completion of the sale and purchase of the Properties pursuant to the respective SPAs, which is expected to be effected by February 2020.

The Properties will provide the Group with the opportunity to develop and strengthen the Group’s footprint in New Zealand over time.

More details in https://links.sgx.com/FileOpen/Proposed%...eID=594162

[opmi]

What footprint? NZ not even on top 30 market for Swiss watches. See below.

http://www.fhs.swiss/scripts/getstat.php...f&previous

[pacyfiq]

It's about property investment not about watches sale i think.

[brattzz]

It's about property investment not about watches sale i think.

Yes sir, we have to see what is the eventual usage of these prime properties, part of luxury goods sales, just purely watches or otherwise?

:O :O :O

[pacyfiq]

They open a shop in Auckland on 154 Queen Street, great move i think with the investment properties.

[weijian]

Most of the issues being discussed over the past few days have actually been a recurring topic of THG over the past few years. Low P/E valuation, low payout ratio, and high inventory level. Some of the rebuttals to my recent posts were made by contributors who actually came to the same conclusion as I have on the issues surrounding THG, 7 years ago, but now appear ignorant of them. But for the most part, it never occurred to the contributors -- at least not stated publicly -- that THG's market price never strayed too far from its book value, and a dividend yield of about 4%. I will recommend new-to-THG (prospective) shareholders to read the entire 97 page thread.

At current prices, THG is selling at ~70% of its last reported NAV.

Granted THG doesn't exactly have a good conservative balance sheet (since half of its properties are classified under investment properties and hence treated as "fair value" rather than "cost"). But once we account for the familial relationships between THG and the various Swiss watchmakers, and the customer relationships that THG has built up over the years, THG does make an interesting proposition in terms of the amount of value that one can purchase at current prices.

If THG eventually has to revert to its mean, ie. its NAV, THG would probably qualify close as the typical type of value investing that Ben Graham practiced long time ago!

[karlmarx]

At current prices, THG is selling at ~70% of its last reported NAV.

Granted THG doesn't exactly have a good conservative balance sheet (since half of its properties are classified under investment properties and hence treated as "fair value" rather than "cost"). But once we account for the familial relationships between THG and the various Swiss watchmakers, and the customer relationships that THG has built up over the years, THG does make an interesting proposition in terms of the amount of value that one can purchase at current prices.

If THG eventually has to revert to its mean, ie. its NAV, THG would probably qualify close as the typical type of value investing that Ben Graham practiced long time ago!

All businesses have relationships with their suppliers and their customers. Some will have better relationships, and some will have worse. In any case, the quality, and hence value, of these relationship should be manifest in their past operating performance. 

IF THG were to revert to its mean of NAV -- which is highly likely when coivd-19 is over -- an investor at present prices may expect to see a 50% gain in share price. 

Does that make THG an interesting proposition? That depends on whether the investor likes the potential reward for the potential risk.

[pianist]

https://sg.yahoo.com/finance/news/rolex-...41044.html

Rolex shuts plants, seems gloomy for hour glass as a whole

[dydx]

https://sg.yahoo.com/finance/news/rolex-...41044.html

Rolex shuts plants, seems gloomy for hour glass as a whole

We have to bear in mind that THG normally holds at least 6 months' of inventory and a large cash reserve (31Dec19 : net cash reserve was in excess of $150.0m), which allows the group to take full advantage of discounts and supply promotions as and when the Swiss suppliers offer them.

[opmi]

Can someone can help me with my question:

Does a watch distributor has to buy X amount of watches (quotas) every quarter/year to maintain the distributorship?

Thank you.