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The Hour Glass
05-06-2019, 03:27 PM. (This post was last modified: 05-06-2019, 06:30 PM by opmi.)
Post: #961
RE: The Hour Glass
Maybe VBs here can help my question:

Do Watch Distributors have annual quotas from Watch Manufacturers as part of their distributorship agreement?
E.g. THG must buy X amount from Rolex every year whether they can sell or not.

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05-06-2019, 04:02 PM.
Post: #962
RE: The Hour Glass
(05-06-2019, 03:27 PM)opmi Wrote: Maybe VB here can help my question:

Does Watch Distributors have annual quotas from Watch Manufacturers as part of their distributorship agreement?
E.g. THG must buy X amount from Rolex every year whether they can sell or not.


economy of scale sir, i would say it’s a yes! biz wise and relationships wise! being retailers and not producers, not much choice there! 🧐
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05-06-2019, 05:04 PM.
Post: #963
RE: The Hour Glass
@Karlmarx, thanks for the summary of the cashflow. It is illuminating. It reminds me of how Boon presents his analysis on VB at times. I think i found a new way which is to do a first pass analysis by summarizing its cashflow usage to understand a business at the start of any equity analysis. Imitation is the best form of flattery i presume.

@brattzz, with regards to LVMH buying HourGlass, i took a look at the possibility:
- LVMH has a private equity arm setup some time ago. It is now called L Catteron. They bought a partial stake in Sincere Watch a couple of years back but from their website, they seemed to have divested it.
- L Catteron seems to be more interested to taking partial stakes. They follow the traditional PE method with allowing the founder to continue to do their magic, while they try to give provide synergistic opportunities through their brand network. One might ponder whether LVMH did check up on Hour Glass before it went for Sincere Watch but even so, any offer by HourGlass probably will not be extended to minorities i believe.

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05-06-2019, 05:57 PM. (This post was last modified: 05-06-2019, 06:00 PM by dydx.)
Post: #964
RE: The Hour Glass
Don't just look at THG's financial numbers and spend too much time crunching them, as the business is really about the stores - where they are located, and what distinguish them from the competition, including their sales professionals - and what brands of watches are represented by THG and carried in the stores, and also about the company's website as a proactive marketing channel to promote certain brands and their stories, as well as the hobby of collecting branded watches for those who can afford it.

Do spend some time on this article from THG's website about the brand Ulysse Nardin and its "Freak" watch, and you would know better what I mean...

As proven by its long track record of 30 years since IPO in 1989 and especially the last 10 years, there is little doubt THG's business is very well positioned for further growth and delivering superior profitability.

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05-06-2019, 09:21 PM.
Post: #965
RE: The Hour Glass
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.

@weijian, I learnt the bulk of what I now know from 3 men, and one of them is from VB. So I suppose it is fair to return the favour, and continue the spirit of generous sharing, though it comes at some cost.

@dydx, there is no doubt that THG is a lot more than what it appear on financial statements; such as the broad aspects/qualities which you have mentioned. Yet, at the same time, the financial statements/results of THG is a reflection of its qualities. A business with fine qualities will produce good numbers.

@Shiyi, the answers which you are looking for can be found in the earlier part of this thread. Tay wants to consolidate the market (for reasons I have mentioned) but Cortina was unwilling (possibly also for reasons I have mentioned). Tay was not welcome in Cortina.

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05-06-2019, 09:40 PM. (This post was last modified: 05-06-2019, 09:42 PM by Scg8866t.)
Post: #966
RE: The Hour Glass
Just curious why not buy into oriental watch(00398) since luxury watch distributors are commoditised. Both have the same trinity brand dealerships(Rolex, Patek, AP). But oriental watch has more cash per share, stronger consistent fcf and a much larger discount to nta. OW is also more exposed to where the money is(China)

ADs are fully controlled by the watch brands. These watch brands control the supply and the price to generate hype and price appreciation. A rolex Daytona 116500LN cost 16.6k in THG but more than double in the grey market. No one goes to AD to buy sports model anymore, all buying via second hand shops or carousell. Because you can never get rolex sports model or anything valuable or indemand there. Profits are disproportionately transferred to used watch biz owners. Own view.

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