The Hour Glass

[dydx]

Q1 (ended 30Jun11)-FY12 results just out.....
http://info.sgx.com/webcoranncatth.nsf/V...800151138/$file/THGL_1Q_FY2012.pdf?openelement
THG earned a PBT of $11.439m (+66% yoy) on a Revenue of $137.1m (+30% yoy) in Q1 - which is supposedly the slowest quarter seasonally for retail business - in spite of the curb in spending on luxury items by the Japanese after the devastating earthquake and tsunami in Japan which occured on 11Mar11.

Based on Q1's higher NP of $8.614m (+65% yoy) and EPS of $0.0368 (vs. $0.0224 in Q1-FY11), I guess there is still a fair chance that THG could deliver a full-year NP of approx. $35.0m and an EPS of close to $0.15 in FY12 (ending 31Mar12).

[valuehunter]

I was at Malmaison by The Hour Glass over the weekend and i must say i was suitably impressed with the product knowledge and service standard of the staff. Equally impressive was the ID of the store which was of a very good quality and it almost certainly will enhance the shopping experience of potential customers. Based on my observation, it was heartening to see that the store was also reasonably well-patronised!

[Musicwhiz]

Business Times - 26 Aug 2011

Sales to hit all-time high?

The watch industry is now safely out of the woods after the 2009 financial crisis. By CHUANG PECK MING

A GLORIOUS future lies ahead for the watch industry, still led and shaped by the Swiss. Yet caution is the watchword on the lips of many in a business that has just gone through its darkest hour since the quartz invasion in the 1980s.

There is even uneasiness as sales pick up against the backdrop of a shaky recovery in the wider economy, with changing customer tastes and buying habits. The thought that's on the minds of many watch executives now is probably this: You can never tell.

For it was just three years ago, in 2008, that they were riding on a new high with the best sales ever. Then suddenly within a year, almost without warning, their world came crashing down when the Great Recession wiped out up to a third of sales.

However, business has returned with a promise of more to come. Shipments of Swiss timepieces bounced back last year (2010) at a 22.7 per cent clip from the year before to hit a near-record of SFr 16.2 billion (S$25.7 billion). The big turnout this year at the key SIHH and Baselworld watch shows in Geneva - Baselworld saw visitor numbers jump 10 per cent from 2009 - is further proof that the industry is out of the woods.

A happy Baselworld show director Sylvie Ritter declared that the watch business is back in 'full health'. Observers say there was a positive spirit at the annual fairs, with brands unafraid to offer big ticket items.

Sales growth of the Richemont Group, owner of names like Vacheron Constantine, IWC, Jaeger-LeCoultre and Cartier, rose 33 per cent to 6.9 billion euros (S$11.9 billion) for the year ending March 2011, while profits were up 63 per cent. The Swatch Group, which has in its stable Omega, Breguet, Glashutte, among others, reported that January 2011 was its best January on record and the fourth best month ever for sales.

The sentiment of many - both observers and those in the trade, including The Hour Glass' Michael Tay - is that this year is on course to set new sales records for timepieces. Analysts are seeing growth of at least 10 per cent, as Asian buying - the Chinese especially - stays strong.

Swiss watch shipments to China jumped 40 per cent in the first quarter, catapulting the Chinese market from 10th in 2010 to the third largest in the first three months of 2011 for Switzerland. Hong Kong, at No 2 last year, knocked off the United States to become the biggest market, while Singapore jumped from eighth to fifth biggest.

Wealthy Chinese are said to now own an average 4.4 luxury timepieces each. Some Swiss watch executives estimate that Chinese customers account for up to six of every 10 Swiss watches sold in the world. 'The Chinese market is only at the beginning,' Hublot boss Jean-Claude Biver told The Financial Times. 'We probably have another 20 years before we should worry.' But after that, he pointed out, there will be the South American market, the Indians, the Vietnamese and Indonesians.

In any case, Swiss export sales through March this year - up 14.7 per cent - have raced past those in the peak year of 2008 for the industry. And many, notably high-fashion names traditionally not in the watch business, are jumping into what they see as a business with still plenty of room to grow.

LVMH, the world's biggest luxury group, is expanding its watch line by snapping up smaller sized pushers. At the same time, it's pushing on in beefing up its Louis Vuitton timepieces, reinventing Zenith and raising the profile of TAG Heuer. Hermes is opening more watch boutiques and unveiling new models. Zegna, the Italian men's apparel house, has inked a 10-year deal with Girard Perregaux.

Still, the rosy picture in the early part of the year was tainted by the huge earthquake and tsunami in Japan and the political uprisings in the Middle East. These kept watch executives on edge, for the Japanese and Arab markets account for about 15 per cent of Swiss exports. Worse, the troubles in these markets could have derailed the unsteady global economic recovery on which the industry's fortunes hinge.

Longtime Rolex executive Jacques Duchene, chairman of Baselworld's Exhibitors' Committee, echoes the disquiet. 'Let us avoid the pitfall of being too certain of victory,' he was quoted as saying in WatchTime, a US bi-monthly watch magazine. 'Although the movement appears to be heading in the right direction, our uncertain geopolitical situation still makes it imperative for us to be cautious.'

A cloud of uncertainty still hangs over the industry as bankruptcy threatens America and parts of Europe, a threat if it turns out true will make the Lehman Brothers fallout look trifle by comparison.

Meanwhile, the crisis that Lehman's fall triggered has burnt the pockets of enough consumers to alter radically spending patterns. And this has been perhaps most marked in the purchase of luxury timepieces. People still buy watches, as the sales figures tell. But watch retailers say customers have become more discerning and are asking a lot more questions. They are taking longer to decide. And when they make up their minds, the tendency now is to splash on fewer but more expensive timepieces.

Says Caroline Scheufele, Chopard's vice-president: 'People are saying I would rather have one amazing piece. I know I have the value and the pleasure, rather than having lots of smaller things that come and go.'

Back to classic

Customers in the high-growth Asian market led by China are turning back to watches that look more like a watch - slim, classic with smaller cases. So virtually all the big names in the business like A Lange & Sohne, Audemars Piguet, Vacheron Constantin, Piaget, Cartier and Jaeger-LeCoultre have produced 'ultra-thin' or 'extra-thin' models for this year's watch shows in Geneva. Even independent Richard Mille, which has made its name in big, macho timepieces, has jumped on the bandwagon with an 'extra flat' watch.

The trend towards non-traditional case metals also stood out at SIHH and Baselworld this year, where there was an abundance of watches that featured ceramic, carbon fibre and coatings that included PVD (physical vapour deposition) and DLC (diamond-like carbon). Zenith unveiled its own exclusive house alloy called Alchron, a blend of steel and aluminium which has high resistance to corrosion. This is one of the attractions of the brand's new El Primero Stratos Flyback.

Another key trend is the big shift towards complications in ladies' timepieces - and this year's hot complication for both sexes seems to be the GMT and world-timer watches. Patek Philippe is encouraging the trend. Following its First Lady Chronograph 2010, the brand offered its first-ever ladies' world-time watch this year. Patek also introduced a ladies minute repeater and a ladies' split-second chronograph.

The greater appreciation of the inner beauty of timepieces among lady-watch lovers has not sounded the death knell for the bling-bling models that have come to symbolize the excesses and extravagance of the past decade. Diamond-watch demand remains strong - and even men have started to fall in love with them.

As demand shoots up and grows more complex, the industry is struggling to meet orders. And this doesn't help when there's a shortage in components and skilled craftsmen. Swatch is pumping SFr65 million (S$98.6 million) to nearly double production at Breguet and earmarking SFr85 million for a new Omega assembly line. It also plans to hire up to 1,500 workers - or 6 per cent of its workforce - in Switzerland alone.

Raw material prices, notably gold, have meanwhile soared. How hard this will hit the bottom line depends on how much the industry can pass on the price rises to consumers. A super stronger Swiss franc and a weaker US dollar help to cushion the spikes in precious metal and diamond prices which are mostly priced in dollars.

Still, many regard the strong currency, which reached a new high against the dollar in March, as the biggest threat to the industry in the near future.

Nicole Brandle, a Credit Suisse analyst who predicts strong sales for the Swiss watch trade in 2011, warns in WatchTime: 'The Swiss franc could spoil the party. If the franc remains so strong, pressure on exporters' margins will rise and they will be forced increasingly to cut costs.'

[dydx]

The great things about mechanical watches are their supposedly long-lasting value - with proper care and regular servicing, of course - and their being hand-made. Of course, the smart designers have added a trend of constant changes in design and innovation, including the uses of new materials. This has made consumers and collectors wanting to buy more.

Of course, we have the smart marketing by the brands which has expanded the consumer demand for buying/keeping branded Swiss-made watches over time. And of course, we have to thank the credit cards which have made buying luxury items so much more easier and 'affordable' nowadays.

[FFNow]

Business Times
Published August 26, 2011

Selling more than just a timepiece

Michael Tay of The Hour Glass wants to promote watches as works of art that are rich in heritage, ingenuity and complexity. By CHUANG PECK MING


'WELCOME to our new home,' greets the press release unveiling The Hour Glass' new watch boutique, the Malmaison. And the man who thought of Singapore's 'first residential inspired luxury emporium' sure looks at home in the posh, two-storeyed shop.


Thirty-six-year-old Michael Tay is ensconced in a luxurious sofa under a high-ceilinged, brightly lit room on its upper level. The decor and most of the furniture surrounding him came from his and his parents' house, including a Steinway baby grand piano at the top of the stairs and the soft carpet where the sofa rests.

The press release says the design and layout of the 8,000 square feet outlet, located in the heart of Orchard Road and tastefully done with the help of homegrown interior design consultancy Distillery Studio, tries to recapture the key features of Chateau de Malmaison, the famous 19th century French abode of Napoleon and Josephine Bonaparte, the taste-setters and purveyors of luxury in their time.

The cozy and opulent setting is intended to make well-heeled shoppers feel at home - and entice them to open their wallets wide. And there are more than high-end timepieces to splurge your money on. The Malmaison also sells rare jewellery, handmade shoes, sophisticated tailored clothes, pricey French perfumes and limited edition books.

Yet Mr Tay, whose parents Henry and Jenny are the founders of The Hour Glass, is aware that you can't keep pulling in customers with just an impressive-looking store, especially when it comes to watches.

'(In fact) you don't need a watch anymore,' he says, pointing out that the ubiquitous handphone, the portable tablet and the computer on your desk also display time - and they are on hand everywhere, anytime.

Soft sell

The suggestion is that you have to sell timepieces as more than instruments to tell time, if you want to stay and thrive in the business for the long haul.

Not quite visible is the soft sell at Malmaison. Mr Tay says the boutique is designed and its staff trained to promote timepieces as works of art and ingenuity that are rich in history, heritage, tradition, beauty and complexity. Customers who walk into a watch shop in Singapore are largely indifferent to such intangibles, according to him. He sees The Hour Glass leading the charge to change that - and educate watch buyers to appreciate timepieces more deeply.

'Our mission is to be the watch world's leading cultural retail enterprise - and that's a mantra we all in the organisation share,' says Mr Tay, who is executive director at The Hour Glass.

The eventual goal, of course, is to get customers hooked on buying timepieces. 'We're not fighting for a share of the market,' says Mr Tay, who lists timepieces as his passion, along with art and biking. 'We're fighting for a share of the wallet. The more we share our passion with clients and collectors, the more they understand the rich heritage and history, the watchmaking tradition, the more excited they will be about buying into it.'

He believes The Hour Glass is right on track. 'The numbers will come when we get our work right and our message gets across. One can argue that the recent numbers we released are a testimony to that.'

The company turned in a record profit for the year ending March 31, 2011, with the bottom-line jumping 29.1 per cent from $32.8 million to $42.4 million.

Mr Tay, who is also a fine watch ambassador for the Foundation de la Haute Horlogerie, has been pushing for The Hour Glass to take the cultural route since he joined the company in 1989, spearheading such path-breaking watch shows like Tempus, which opened the world of timepieces to the larger public, showcasing not only watches but also the skills and creativity that go into making them.

He and his team put more thought into opening boutiques with themes and designs to match. The L' Atelier in ION, which houses what he claims to be the world's biggest collection of Patek Philippe electronic clocks, speaks of the tradition and passion of watchmaking. The Malmaison conveys the best in 'authentic luxury', in the form of skilled craftsmanship, exclusivity and longevity.

A main draw of the boutique is its vintage collection of Rolex sports watches, valued at about $2.5 million. But these watches are not for sale.

The L' Atelier and Malmaison are The Hour Glass' latest boutiques - the company now has 25 in the Asia-Pacific region - and they bear Mr Tay's stamp. Yet he denies the two shops are paving new trends for the company.

'Our retail design strategy is premised on the idea that everyone of our property is unique with its own identity, its own philosophy,' Mr Tay says. 'But there's still an umbrella approach where we focus on the quality of merchandise, quality of service - these are basics that cut across all the stores.'

Still, he says the recent shut-down of The Hour Glass' first boutique in Lucky Plaza, after 30 years, marked 'the end of an era' for the company - and the opening of Malmaison this year signalled 'a new beginning'. Does it also hint at a change of leadership in the not too distant future?

Front man

Many see him as the heir apparent but Mr Tay, while acknowledging that he's the 'front' man for the company, points out that The Hour Glass is publicly-listed.

'And it's not a one-man show,' he says. 'We have a management team, I got to sell my ideas to them. It's not just me. Everyone who's not as visible as I am is a tremendous contributor to how we formulate policies.'

If not for the Asian financial crisis of 1997, Mr Tay might not have joined The Hour Glass. After graduating with a First Class (Honours) in Business and International Management from Oxford Brooks University in England, in mid-1998, he got an investment banking job in London. His parents were okay with it, at first. But after the impact of the crisis hit home, halving The Hour Glass's revenues, they told him it's time he came home to help.

'On that note, you really can't say no,' Mr Tay recalls. 'But in retrospect, it was probably the best decision I ever made. Had I joined the business when it was boom-time Charlie, I guess I wouldn't have learnt as much.'

So after a three-month crash course in learning the ropes of selling watches on the shop floor, he was shipped off to Switzerland for a year to figure out what's going on in Swiss watch manufacturing, which was then going through a period of consolidation. In particular, his mission was to find out what to do with The Hour Glass' two Swiss acquisitions - Gerald Genta and Daniel Roth - which were facing production woes. After Mr Tay's return, The Hour Glass decided to sell them.

Then he was sent to New York to help wind down the Gerald Genta and Daniel Roth distribution operations there and to pass them on to Bvlgari, the new owner.

'I was a complete virgin in the world of commerce and dealmaking,' Mr Tay says of that experience. 'You know, when you come from Singapore, you are relatively sheltered. You come to believe people are trustworthy. You know not everybody is quite like that after you get to the big wide world.'

Those early experiences, along with what the company had gone through during the Asian financial crisis, have come to shape his thinking and approach in business.

'Among the key lessons I learnt was, never be complacent,' Mr Tay says. 'You never rest on your laurels. If you want to maintain market leadership, it's tough work. You have to continue to be innovative. You have to continue to be highly creative and harness the collective intelligence of the organisation in order to continue propelling yourself forward.'

Another key lesson was to stick to one's knitting. 'Our core competence is really specialty watch retailing,' he says. 'We need to create a new culture in the world of watch collecting.'

While The Hour Glass seems to have issued a blank cheque to open high-end boutiques like L' Atelier and Malmaison, the company watches its overall finances like a hawk - and guards against overspending.

It keeps its antenna up for signals of storm clouds. So when incipient signs of trouble which later blew up into a full-blown recession appeared in late 2007, The Hour Glass cut back on orders and inventories - even when others in the industry were still expanding.

'When Lehman Brothers tanked, we're probably the calmest guys around,' Mr Tay recalls. 'What happened in the Asian crisis taught us to be a lot mindful of external factors. When things overheat, when things started looking too good, you have to watch out. We can never be complacent, we always have to buttress ourselves.'

Cash pile

Thanks to the cutbacks, the company was then sitting on the biggest cash pile in its history. That not only provides a cushion, but also the confidence for The Hour Glass to map out plans to re-position its shops and open new ones in the depths of the Great Recession in 2008.

'We're long-termists, we don't just react to situations,' Mr Tay says. 'We like to be in control, very much like what we did with Malmaison. We like to be in control of the rules of the game. The moment our competitors catch up, we change the rules again. That's what market leadership is all about.'

Yet there are some things The Hour Glass can't control, like earthquakes. Its boutique's business in Ginza took a heavy beating when a big earthquake shook Japan in March. Mr Tay thinks the effects of the earthquake 'will be felt for years'.

Meanwhile, there's the fast-growing Chinese market to hit on. Mr Tay let on that the company was initially sceptical that Chinese consumers could keep up with their shopping binge, propped up - as The Hour Glass management then believed - by a bubble economy. Now it's convinced that the boom in Chinese consumption is here to stay.

But while the company doesn't have a direct presence in the mainland, Mr Tay says The Hour Glass is well-positioned to catch Chinese tourists in the region, including Japan and South Korea. Yet it is wary of over-relying on one market.

Again, that's a caution born out of the company's experiences in the Asian financial crisis. 'Back then, we had one client who accounted for 40 per cent of our turnover,' Mr Tay discloses. 'That's why we were hit so hard. So this time round, we decided to be rather balanced.'

---

BT
Published August 26, 2011

Sales to hit all-time high?

The watch industry is now safely out of the woods after the 2009 financial crisis. By CHUANG PECK MING


A GLORIOUS future lies ahead for the watch industry, still led and shaped by the Swiss. Yet caution is the watchword on the lips of many in a business that has just gone through its darkest hour since the quartz invasion in the 1980s.


There is even uneasiness as sales pick up against the backdrop of a shaky recovery in the wider economy, with changing customer tastes and buying habits. The thought that's on the minds of many watch executives now is probably this: You can never tell.

For it was just three years ago, in 2008, that they were riding on a new high with the best sales ever. Then suddenly within a year, almost without warning, their world came crashing down when the Great Recession wiped out up to a third of sales.

However, business has returned with a promise of more to come. Shipments of Swiss timepieces bounced back last year (2010) at a 22.7 per cent clip from the year before to hit a near-record of SFr 16.2 billion (S$25.7 billion). The big turnout this year at the key SIHH and Baselworld watch shows in Geneva - Baselworld saw visitor numbers jump 10 per cent from 2009 - is further proof that the industry is out of the woods.

A happy Baselworld show director Sylvie Ritter declared that the watch business is back in 'full health'. Observers say there was a positive spirit at the annual fairs, with brands unafraid to offer big ticket items.

Sales growth of the Richemont Group, owner of names like Vacheron Constantine, IWC, Jaeger-LeCoultre and Cartier, rose 33 per cent to 6.9 billion euros (S$11.9 billion) for the year ending March 2011, while profits were up 63 per cent. The Swatch Group, which has in its stable Omega, Breguet, Glashutte, among others, reported that January 2011 was its best January on record and the fourth best month ever for sales.

The sentiment of many - both observers and those in the trade, including The Hour Glass' Michael Tay - is that this year is on course to set new sales records for timepieces. Analysts are seeing growth of at least 10 per cent, as Asian buying - the Chinese especially - stays strong.

Swiss watch shipments to China jumped 40 per cent in the first quarter, catapulting the Chinese market from 10th in 2010 to the third largest in the first three months of 2011 for Switzerland. Hong Kong, at No 2 last year, knocked off the United States to become the biggest market, while Singapore jumped from eighth to fifth biggest.

Wealthy Chinese are said to now own an average 4.4 luxury timepieces each. Some Swiss watch executives estimate that Chinese customers account for up to six of every 10 Swiss watches sold in the world. 'The Chinese market is only at the beginning,' Hublot boss Jean-Claude Biver told The Financial Times. 'We probably have another 20 years before we should worry.' But after that, he pointed out, there will be the South American market, the Indians, the Vietnamese and Indonesians.

In any case, Swiss export sales through March this year - up 14.7 per cent - have raced past those in the peak year of 2008 for the industry. And many, notably high-fashion names traditionally not in the watch business, are jumping into what they see as a business with still plenty of room to grow.

LVMH, the world's biggest luxury group, is expanding its watch line by snapping up smaller sized pushers. At the same time, it's pushing on in beefing up its Louis Vuitton timepieces, reinventing Zenith and raising the profile of TAG Heuer. Hermes is opening more watch boutiques and unveiling new models. Zegna, the Italian men's apparel house, has inked a 10-year deal with Girard Perregaux.

Still, the rosy picture in the early part of the year was tainted by the huge earthquake and tsunami in Japan and the political uprisings in the Middle East. These kept watch executives on edge, for the Japanese and Arab markets account for about 15 per cent of Swiss exports. Worse, the troubles in these markets could have derailed the unsteady global economic recovery on which the industry's fortunes hinge.

Longtime Rolex executive Jacques Duchene, chairman of Baselworld's Exhibitors' Committee, echoes the disquiet. 'Let us avoid the pitfall of being too certain of victory,' he was quoted as saying in WatchTime, a US bi-monthly watch magazine. 'Although the movement appears to be heading in the right direction, our uncertain geopolitical situation still makes it imperative for us to be cautious.'

A cloud of uncertainty still hangs over the industry as bankruptcy threatens America and parts of Europe, a threat if it turns out true will make the Lehman Brothers fallout look trifle by comparison.

Meanwhile, the crisis that Lehman's fall triggered has burnt the pockets of enough consumers to alter radically spending patterns. And this has been perhaps most marked in the purchase of luxury timepieces. People still buy watches, as the sales figures tell. But watch retailers say customers have become more discerning and are asking a lot more questions. They are taking longer to decide. And when they make up their minds, the tendency now is to splash on fewer but more expensive timepieces.

Says Caroline Scheufele, Chopard's vice-president: 'People are saying I would rather have one amazing piece. I know I have the value and the pleasure, rather than having lots of smaller things that come and go.'

Back to classic

Customers in the high-growth Asian market led by China are turning back to watches that look more like a watch - slim, classic with smaller cases. So virtually all the big names in the business like A Lange & Sohne, Audemars Piguet, Vacheron Constantin, Piaget, Cartier and Jaeger-LeCoultre have produced 'ultra-thin' or 'extra-thin' models for this year's watch shows in Geneva. Even independent Richard Mille, which has made its name in big, macho timepieces, has jumped on the bandwagon with an 'extra flat' watch.

The trend towards non-traditional case metals also stood out at SIHH and Baselworld this year, where there was an abundance of watches that featured ceramic, carbon fibre and coatings that included PVD (physical vapour deposition) and DLC (diamond-like carbon). Zenith unveiled its own exclusive house alloy called Alchron, a blend of steel and aluminium which has high resistance to corrosion. This is one of the attractions of the brand's new El Primero Stratos Flyback.

Another key trend is the big shift towards complications in ladies' timepieces - and this year's hot complication for both sexes seems to be the GMT and world-timer watches. Patek Philippe is encouraging the trend. Following its First Lady Chronograph 2010, the brand offered its first-ever ladies' world-time watch this year. Patek also introduced a ladies minute repeater and a ladies' split-second chronograph.

The greater appreciation of the inner beauty of timepieces among lady-watch lovers has not sounded the death knell for the bling-bling models that have come to symbolize the excesses and extravagance of the past decade. Diamond-watch demand remains strong - and even men have started to fall in love with them.

As demand shoots up and grows more complex, the industry is struggling to meet orders. And this doesn't help when there's a shortage in components and skilled craftsmen. Swatch is pumping SFr65 million (S$98.6 million) to nearly double production at Breguet and earmarking SFr85 million for a new Omega assembly line. It also plans to hire up to 1,500 workers - or 6 per cent of its workforce - in Switzerland alone.

Raw material prices, notably gold, have meanwhile soared. How hard this will hit the bottom line depends on how much the industry can pass on the price rises to consumers. A super stronger Swiss franc and a weaker US dollar help to cushion the spikes in precious metal and diamond prices which are mostly priced in dollars.

Still, many regard the strong currency, which reached a new high against the dollar in March, as the biggest threat to the industry in the near future.

Nicole Brandle, a Credit Suisse analyst who predicts strong sales for the Swiss watch trade in 2011, warns in WatchTime: 'The Swiss franc could spoil the party. If the franc remains so strong, pressure on exporters' margins will rise and they will be forced increasingly to cut costs.'

[pianist]

today there was an announcement for Transfer of 3,000,000 THG shares from DBS Nominees Pte Ltd (as nominee) to The Central Depository (Pte) Limited (A/c: TYC Investment Pte Ltd).

I just wonder what will be motivating reasons for such transfer?

[dydx]

Just checked my bank account and noted a very nice credit from THG's $0.05/share Final dividend for FY11 (ended 31Mar11). Feeling great!

It is worth noting that this time round the Tays as the controlling shareholders have taken their dividends in cash.

Following the positive Q1 (ended 30Jun11) results....
http://info.sgx.com/webcoranncatth.nsf/V...800151138/$file/THGL_1Q_FY2012.pdf?openelement
I guess it is still reasonable to expect THG to do reasonably well in FY12 (ending 31Mar12), bearing in mind there is still a lot of discretionary and impulsive spending by the rich from PRC, India, Indonesia, etc., as well as by tourists and locals across Asia. The ubiquitous credit cards have also supported consumer spending - especially by the young PMEBs - on branded watches as a sustainable thing!

[Musicwhiz]

The Straits Times
Oct 14, 2011
What S'pore's rich want
They prefer gems to fancy cars

By Melissa Tan

A FANCY car, customised yacht or private jet might sound like just the ticket for a millionaire with bucks to burn. Not in Singapore.

When it comes to investing in luxury items, Singapore's millionaires much prefer small items: gems, watches and other jewellery, a new report has found.

Luxury vehicles including cars, boats and aircraft were the top investment pick of most wealthy Asians, but not those here.

Jewellery, gems and watches accounted for 41 per cent of total investment in luxury goods by millionaires here last year, said the 2011 Asia-Pacific Wealth Report released yesterday by Merrill Lynch Global Wealth Management and Capgemini. The proportion was the highest across the Asia-Pacific region for that category of luxury items.

The luxury investments covered in the report included race horses, art pieces, rare coins and even sports clubs.

'That number surprised me because 41 per cent is very high compared to the average of 24 per cent across Asia,' said Ms Ong Yeng Fang, managing director of market management for Merrill Lynch's South Asia unit.

'Maybe it's because Singaporeans are getting affluent, and they are able to appreciate more the aesthetic and cultural value of these pieces. At the same time, I think it's also a hedge against inflation and currency risk.'

Dr Kenny Chan, group managing director of high-end watch retailer The Hour Glass, told The Straits Times he had seen more people investing in luxury watches. 'The Hour Glass has dedicated two concept stores to cater for the watch connoisseurs and collectors.' They had been specially built to promote the 'watch culture' in Singapore.

It opened the first at Ion Orchard in 2009 and the second, an 8,000 sq ft duplex store, at Knightsbridge this year.

Singapore millionaires' heavy investment in items like high-end watches came at the expense of boats, cars and aircraft. Millionaires here devoted a paltry 6 per cent of their total luxury investments to such vehicles last year.

It was the lowest proportion of investment in this category in Asia.The wealthy in Malaysia, for instance, spent 46 per cent of their luxury investments on these various types of posh conveyances.

'Cars are extremely expensive in Singapore, so people who buy luxury cars here are in a completely different bracket compared to people who buy luxury cars in other countries like America and Europe,' said a spokesman for Ferrari agent Ital Auto.

The number of millionaires in Singapore has climbed to its highest level yet at 99,000 last year, according to the report - having surged 21.3 per cent from 82,000 in 2009.

Together, Singapore millionaires held about US$453 billion (S$580 billion) worth of financial assets last year, or an average of about US$4.6 million per millionaire here.

About a third of their assets went to property, a third to equities, and another third to cash, fixed income and other financial instruments.

The report defined high net worth individuals as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables and consumer durables. The results also suggest Singapore may have the largest number of such individuals per capita in Asia as of last year.

The rise in the number of these millionaires here last year coincided with a strong year of growth as the economy roared to life after the recession. GDP growth last year was a record 14.5 per cent.

The report noted however that economic expansion was likely to 'abate slightly in 2011 and 2012 as economies absorb the withdrawal of fiscal and monetary stimulus, rising inflation, constrained capacity, and the macroeconomic imbalances prompted by large foreign-capital inflows'.

melissat@sph.com.sg

[Musicwhiz]

The Straits Times
Oct 23, 2011
Have designer bag, will travel
Luxury goods market is benefiting from rise in tourist numbers and spending: Report

By Magdalen Ng

Global travel will buoy the luxury goods market in the coming months, making equities of these big brands still a favourable investment strategy, according to a new report.

According to researchers Erwan Rambourg, Antoine Belge and Sophie Dargnies at HSBC, this is despite the weakened market conditions in recent months.

Demand from Europe and the United States is likely to slow, and many have expressed concern that a possible China slowdown might be a bigger drag on the industry.

High-end consumers in the US will be the hardest hit by the recent market slump, they said.

However, tourism inflows to Europe more than offset the slackened domestic demand. Up to half of luxury goods sales are generated by foreigners.

Tourist numbers are growing, totalling 940 million last year, a 6.6 per cent increase from the year before. The better news is probably that tourists are spending more than ever, outpacing the growth in tourist numbers.

One reason for this is the easing of travel restrictions, with many countries party to bilateral or multilateral agreements on visas.

Already, the estimates are that travellers account for as much as 30 per cent of sales of the luxury goods market and that one-third of these sales are to travellers from China and Hong Kong.

Furthermore, the Boston Consulting Group expects China to surpass Japan as the second-largest travel and tourism market in the world by 2013.

In terms of spending, the Chinese are third, behind only the Germans and Americans.

This trend is likely to continue, based on HSBC's assumption that the Chinese economy will not experience a sharp decline this year.

Given that displaying wealth has been ingrained into Chinese culture, it will translate into growing purchases of luxury goods.

The report also estimates that sales of global luxury brands in China have grown by 30 per cent in the last year.

As such, the Asian traveller should provide a floor under growth in the luxury sector, especially for brands that are bigger, more global and Asian-driven.

This dependence on travellers may mean that the luxury goods players cater specifically to them, which may threaten the universal nature or exclusivity of luxury goods.

Also, excessive spending on stores and fast-paced expansion by smaller players to target this specific crowd may be detrimental.

For example, Piaget has become too Asia-dependent in its design and communication, losing some of its distinctive attributes.

A top pick by HSBC is luxury group Richemont, which owns brands such as Jaeger-LeCoultre, Vacheron Constantin and, in particular, Cartier, which it touts as the Louis Vuitton of watches and jewellery.

The researchers said: 'While we acknowledge that playing the Chinese consumer equates to putting many eggs in the same basket, we think for now that the visibility on growth is good.'

songyuan@sph.com.sg

[crabcrab]

Swiss watchmaking in September 2011
No signs of weakness

For the fourth time in the year, watch exports registered a rate of monthly growth in excess of 20%. In September, their value stood at 1.8 billion francs, an increase of 21.0% compared to September 2010. Momentum within the industry therefore shows no sign of slowing.

Gold and bimetallic watches were major engines of growth. Steel timepieces meanwhile rose half as fast as the average rate of increase. In volume terms, the category of other materials accounted for half the general increase. Steel watches lost ground, but nonetheless made a significant contribution to the overall result.

The month of September was favourable to all prices segments, all of which registered two-digit growth both in value and volume terms. The highest rate of growth was achieved by timepieces costing more than 3,000 francs (export price), whose value increased by 23.9%.

Once again, Asia stood out with the highest rates of variation. Hong Kong and China recorded a monthly growth rate of almost 50%. Meanwhile the United States, continuing to improve, were situated below the average. The main European markets showed more mixed results: France attained the same level as in 2010, Italy recorded moderate growth and Germany registered two-digit growth. Singapore followed the strong Asian dynamic and Japan continued to build on past results, albeit from a relatively low base.

Source: FHS

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Did anyone here own a significant stake in THE HOUR GLASS SHARES???