The Hour Glass

[brattzz]

Yesterday was free, so i went to sit in for,

25/7/2019- Marriot Tangs THG AGM,

1) Jannie Tay attended the AGM!
2) HT confirms that THG is not for sale!
3) MT confirms that Thai JV is based on family to family links
4) Investor KC, said that THG has no stocks to sell at this branch! shortage of watches due to worldwide shortage!
5) FH properties holdings increase 2x!!
6) MT says not keen to go into online sales platforms
7) Jannie Tay say that PRE-OWN biz is NOT THG's core!
8) Jannie Tay say that THG's core is : STOCKs turnover, PEOPLE and MONEY ($160m)
9) Jannie Tay reminds the board that MT lose $40m in USA over GEMSTV...
10) Investor ask HT for dividend policies, HT say not fixed.
11) Investors ask for more dividends payout, and ask rights issues if THG needs the funds to expand later. HT ignored.
12) HT owns 12.6% of Cortina too.

My take-aways:
1) FMR is looking to accumulate a sizeable position
2) THG has got the cash power to further grow/investments
3) This biz is good and steady, as long as HT/MT does not make same mistakes again (GEMSTV...)

[Shiyi]

Point No.2
Did HT drop any hint of privatization, or rule it out completely?

[brattzz]

Point No.2
Did HT drop any hint of privatization, or rule it out completely?

Mmmm... no info on that...😅

[weijian]

It is interesting to note that an ex-insider has flipped to the side of OPMIs, and now actually act as some sort of check and balance against the insiders now?
But i am not sure if it would be purely business or personal?

But OPMIs are advantaged with Jannie Tay on our side, for sure.

[brattzz]

Yeah, now we have a special exboard member speaking up! 👍🤣 definitely personal to HT n MT!! yet money counts, cannot be denied!!! 💪💪💪

[Choon]

Yesterday was free, so i went to sit in for,

25/7/2019- Marriot Tangs THG AGM,

1) Jannie Tay attended the AGM!
2) HT confirms that THG is not for sale!
3) MT confirms that Thai JV is based on family to family links
4) Investor KC, said that THG has no stocks to sell at this branch! shortage of watches due to worldwide shortage!
5) FH properties holdings increase 2x!!
6) MT says not keen to go into online sales platforms
7) Jannie Tay say that PRE-OWN biz is NOT THG's core!
8) Jannie Tay say that THG's core is : STOCKs turnover, PEOPLE and MONEY ($160m)
9) Jannie Tay reminds the board that MT lose $40m in USA over GEMSTV...
10) Investor ask HT for dividend policies, HT say not fixed.
11) Investors ask for more dividends payout, and ask rights issues if THG needs the funds to expand later. HT ignored.
12) HT owns 12.6% of Cortina too.

My take-aways:
1) FMR is looking to accumulate a sizeable position
2) THG has got the cash power to further grow/investments
3) This biz is good and steady, as long as HT/MT does not make same mistakes again (GEMSTV...)

I was at the AGM too.

Discussion on dividend was much less vocal than last year. I have given up on asking for a higher payout ratio. Chairman and CEO reiterated their preference for conservatism when it comes to cash and a 25%-30% payout ratio as can be seen historically. Interesting to note is that this FY will be 40th anniversary, so some SHs hinted for a present. CEO said will prepare a big birthday cake at next AGM.

On the high 27% gross profit margin, CEO attributed it partly to consumers behaviour, that consumers are changing and asking for less discount.

On whether THG has been impacted by US-China trade war, mgmt replied that they are "not unhappy" with the business performance for 1Q2020.

Interesting to note is also that the Sydney investment property acquired many years ago, is in the process of being renovated to be converted into a Rolex boutique. I see this positively. That THG  is executing its stated strategy of acquiring to operate from its owned premises (rather than acquiring to be a landlord). And this could add to earnings in FY20 if not FY21.

Interesting to note is a interest-free loan from THG to an associate, due in 2067, has also been repaid to THG. Red flag thus removed.

On pre-own platform, at last year AGM, mgmt shared that they were looking at a pre-own platform. In this year Chairman's statement, Chairman's views on pre-own were however quite negative. CEO explained that after studying pre-own platforms for a few years, they see that pre-own business model has very low margins, and that the hype surrounding such platforms seems to be created by the platforms themselves as they are in fund-raising mode. Like that mgmt does not just follow the crowd to jump into sexy business models.

Once again, went away with with high confidence and regard for the management. They don have the institutional imperative plaguing many SG companies (dabbling in new and unproven business models, growing for the sake of growing, spending too much time and $ on investor relations). Only hope that they will increase the dividend payout ratio.

The industry characteristics seems to be changing in THG's favours too: tight industry supply now and Asian customers getting more used to lower discounts.

However I don get the sense that FMR is looking to accumulate a sizeable position. Instead seems to be reducing from their orignial 9.99% stake. Now is about 9.7%.

In the final analysis:
- hard to sell because its so cheap (NAV of $0.79 + one year EPS of $0.10= next year NAV of $0.89) 
- hard to buy because the reward to shareholders is too slow (low div payout and low attention from market)

[brattzz]

Thanks Choon! Lots of details noted!! 👍👍👍 more dividends payout pls!!! 💪

[weijian]

The grey market for luxury pieces will expand the entire luxury timepiece market for everyone. Just like how smartwatches will acclimatize a whole new generation to wearing something on their wrists.

Pre-owned, unworn, big business: used watch dealers go big time

YOU might have come across them in the mall. Luxury boutique lookalikes where, behind sleek glass fronts sit models of Rolex, Patek Philippe, Richard Mille and other coveted watch brands. Except that the glistening watches nestled in the display cases are used or pre-owned timepieces. Yet the shops selling these pre-owned watches look so posh they may be mistaken for the brand-name boutiques that they are modelled after: those selling luxe timepieces rolled out fresh from the factory.

For the curious passerby, or the shopper after a new, coveted timepiece, it doesn't help that many of the used-watch shops are found right next door to these high-end boutiques.

These "grey" dealers are in the heart of Singapore's main shopping district on Orchard Road, in Far East Plaza, Far East Shopping Centre, Mandarin Gallery - only a stroll away from Paragon, Ngee Ann City and ION where the big watch brands are concentrated. Other pre-owned watch shops are to be found in clusters in Landmark Shopping Centre on Victoria Street, The Bencoolen on Bencoolen Street and People's Park in Chinatown.

There are around 50 pre-owned watch shops - including pawn shops - in Singapore, more than double the number a decade or two ago, according to estimates.

https://www.businesstimes.com.sg/brunch/...o-big-time

[dydx]

I may be wrong here. Ultimately, the "grey" market and dealers are driven by high-end branded watches becoming more and more popular as an consumption item - mostly for those in the middle-income bracket who can afford them, from many countries across the world - and as an investment item for the rich, passionate collectors across the world, mostly from the rich countries. Among these watch enthusiasts are speculators who trade on those 'hot' models of certain popular brands for shorter-term gains, mainly because of a shortage in supply in such watch models partly caused by their brand owners.

I thought the "grey" market is a good thing, as -
1) it allows the fair market value of pre-owned watches to be determined by open-market supply-demand forces;
2) it serves those who no longer wish to keep their watches to sell and encash them, and those who don't mind owning pre-owned watches - including the older models - to buy them, usually at lower, more reasonable prices; and
3) it allows those who invest or choose to trade in watches, a ready market with rather transparent prices and supply information, especially so now that most established "grey" dealers and prawn-shop chains maintain on-line websites showing their own inventory and selling prices.

In many ways, the "grey" market reinforces and supports the overall global branded watches trade.

[weijian]

Henry Ford basically kick-started the automotive industry with his Model T - because it was cheap and affordable. When the automotive market became big enough, the 2nd hand market started to kick in. Then GM's Alfred Sloan got it right when he guessed that people were now more willing to "pay up" for more expensive models (higher specs/luxury) because of the 2nd hand market. Of course, there were also other factors like the start of credit (paying in instalments) and also people guessed (way before economists like Daniel Kahneman and Richard Thaler made it mainstream) that it wasn't too hard to increase prices when people were already paying alot.

The 2nd hard (grey market) and the luxury AD retailers are definitely in a symbiotic relationship, although it can be argued there is certain degree of overlap and cannibalization. Nonetheless, look at the 2 Lims driving their Ferraris!