The Hour Glass

[Salty]

a quick question on the properties / investment properties under the fixed assets.
Does HR Glass owns their shop or rent their shops?

thank you!!

[shanrui_91]

a quick question on the properties / investment properties under the fixed assets.
Does HR Glass owns their shop or rent their shops?

thank you!!

their hq is a freehold space while they have rented out most of their other freehold unti in SIngapore. Therefore, most of their shops are all rented from others

[Salty]

Hi Shanrui

thanks for the information.
Clarifies alot.

Looks like their balance sheet is very clean.
The stocks on hand i would take it as cash because even during fire sales, i believe they are able to still sell at cost.

Are you 21 years old by the way?
Wow when i was 21, i didnt even have the money to buy computer games / pay internet subscriptions!!

You will be a millionaire before 30!
bright prospect!

[shanrui_91]

Hi Shanrui

thanks for the information.
Clarifies alot.

Looks like their balance sheet is very clean.
The stocks on hand i would take it as cash because even during fire sales, i believe they are able to still sell at cost.

Are you 21 years old by the way?
Wow when i was 21, i didnt even have the money to buy computer games / pay internet subscriptions!!

You will be a millionaire before 30!
bright prospect!

The stocks on hand will be for approx 4-5 months using inventory turnover.

I manage to save up quite a bit during NS as I hardly spend. As for being a millionaire, still very very far away. I will be very happy if I can get out of a great bull unscathed and get in a bear without fear. Fear and Greed, I am still having a very tough struggle with them

[paullow]

Hi Shanrui

thanks for the information.
Clarifies alot.

Looks like their balance sheet is very clean.
The stocks on hand i would take it as cash because even during fire sales, i believe they are able to still sell at cost.

Are you 21 years old by the way?
Wow when i was 21, i didnt even have the money to buy computer games / pay internet subscriptions!!



i agree too. at 21, i was still studying and know literally nothing abt company n eur financials. well done, young man!!!

You will be a millionaire before 30!
bright prospect!

The stocks on hand will be for approx 4-5 months using inventory turnover.

I manage to save up quite a bit during NS as I hardly spend. As for being a millionaire, still very very far ahead. I will be very happy if I can get out of a great bull unscathed and get in a bear without fear. Fear and Greed, I am still having a very tough struggle with them

[dzwm87]

Quite surprised but I was expecting a jump in today's price.

Was the FY12 performance below expectations? I thought it was good and trading at 5x P/E is pretty cheap.

[shanrui_91]

Quite surprised but I was expecting a jump in today's price.

Was the FY12 performance below expectations? I thought it was good and trading at 5x P/E is pretty cheap.

I think some might be disappointed that profit growth is only 30% as compared to 9m2012 where profit growth is at 42%.

For Q4 2012, total revenue gain is 14.3% while profit growth is 10% yoy. However, 9m and FY 2012 total cost and expenses growth remain the same at 16% increases. Therefore, as revenue gains by 14.3% and cogs grows by a faster rate of 15%, total profit growth has been affected.

Is this shrinking of gross margin in Q4 2012 a cause of concern and which will continue going forward?

http://www.tititudorancea.com/z/chf_to_s...dollar.htm

I supposed the above is the main reason for the shrink in gross margin in Q42012. As THG's inventory turnover is at 4.5 months, cogs are counted for goods bought in during Mid July to End of November. CHF has strengthened tremendously during the period as a result of the turmoil ongoing in Euro and US, appreciating by 19% during that period. While CHF has depreciated from the peak, it is still at a level of Jan 2011 till date.

This is of course my personal opinion and may not be what that actually happen.

(vested)

[KopiKat]

Quite surprised but I was expecting a jump in today's price.

Was the FY12 performance below expectations? I thought it was good and trading at 5x P/E is pretty cheap.

Perhaps Watch Retail Industry PE = 5.x
Or perhaps current prices is factoring in an economic slow-down going forward which'll hit the retailers ie. Earnings had just peaked

Extracts fm OSK-DMG report (pg2),

Hour Glass posts record full-year profit and sales (BT)

The news: The Hour Glass registered a full-year net profit attributable to equity holders of S$54.7m, a 29% jump year on year, driven by double bonanza of record sales and widening of gross margins. Revenue for the year grew 17% to a record S$607m, fattened by full-year contributions from the group’s new boutiques at Knightsbridge, Raffles Place and Marina Bay Sands. Gross margins stood at 24.1%, up 22.4% than the previous year, attributed to a “more dedicated focus on its portfolio of brands.” The Group has recommended a first and final cash dividend of six cents per share, up from five cents in the previous year.

Our thoughts: At last close of S$1.31, stock is trading at 5.6x historical earnings and offers investors a decent 4.6% yield. Comparatively, its competitor Cortina is trading at a historical 5.4x offering a 1.8% yield.

[dydx]

We know THG has a solid operating track record including steady yoy growth in business volume and PBT, and even in all key measurements of profit margin or profiability. The key underlying assumptions and drivers for THG's solid business growth and financial success in the past 5 or more years include: (1) the steady increase in demand for and actual buying of high-end branded watches across all the country markets in Asia engaged by THG, backed by rising disposal income of their domestic residents and strong growth in international tourism, especially wealthy tourists from PRC and India; and (2) THG's proven superior and very competent management team, which is focussed and driven to grow the business in a steady manner together with prudent finances, as well as raising its profitability. So going forward, there is enough and more business opportunities out there in the regional luxury branded watch trade for THG to go after, and there are good reasons to believe that THG under the present management will be able to grow the business further on a profitable basis.

Rationally speaking, a well-established and healthy business like that of THG should be worth (i.e. intrinsic value wise) a lot more than its corresponding NAV - the latest (as at 31Mar12) being $1.25/share - and Mr Market should be willing to anticipate its future (say up to 2 years) earnings/EPS and dividends, and price the stock accordingly. Will THG trade at the $1.50 level closer to the 'XD' date for the declared $0.06/share Final dividend for FY12? We shall see how Mr Market would like to behave this time round.

[Choon]

Hour Glass is the largest position in my portfolio, so for the past year I have thought a lot about its poor share price performance despite excellent profit growth.

I guess the reason why its PE is so low is because its dividend payout is low, about 25% payout ratio. And one big contributing reason it's dividend payout is low is because a lot of profit is locked up in inventory (see the increase in inventory on cash flow statement).

Per Buffet's "owner earnings" concept, he will deduct this increase in inventory from net income.

So I guess unless Hour Glass sells it's inventory faster and have more cash to pay out more dividend, PE ratio could always be low. It does make a significant difference (I feel it acutely) to a shareholder between receiving 25% profit and 75% profit as dividend say for a period of 5 years.