Chow Sang Sang (0116.HK)

[cyclone]

Real-life bracelet from Honour of Kings video game for Valentine’s? Tencent and Chow Sang Sang think so
* World’s top-grossing mobile title announced partnership with Hong Kong jewellery retailer Chow Sang Sang
* More than 100 million women play the game, according to estimate

Zheping Huang
PUBLISHED : Monday, 11 February, 2019, 1:18pm
UPDATED : Monday, 11 February, 2019, 2:44pm

Game developers usually sell virtual goods from character skins to costumes to weapons to make money. Tencent Holdings, which runs the world's biggest video games business, is taking it one step further by selling real products.

Tencent’s blockbuster mobile title, Honour of Kings, is now offering its own gold and silver accessories in partnership with Hong Kong jewellery retailer Chow Sang Sang, the Hong Kong-listed internet giant announced on the Chinese microblogging site Weibo on Sunday.

Inspired by five heroes in the game, the Honour of Kings-themed jewellery products are now available via Chow Sang Sang’s online stores as part of a Valentine’s Day marketing campaign. The most expensive item is a 1,980 yuan ((US$292) bracelet with a gold pendant of Daji, a Chinese concubine-turned-magician character with destructive powers in Honour of Kings.

The video game tie-up with the jewellery retailer comes after an earlier collaboration with Canadian cosmetics brand MAC. Last month, Honour of Kings and MAC launched five co-branded lipsticks, featuring colours on the lips of the game’s popular female characters. Some colours sold out within an hour, local media reported.

While jewellery and make-up brands have always had tie-ins with cartoon characters, such as Hello Kitty and Disney princesses, it is a relatively new trend for traditional retailers to launch products with gaming themes. In Japan, Pikachu beauty products have been made possible through partnership between local fashion brand Its'Demo and the Pokémon franchise since 2014.

More details in https://www.scmp.com/tech/apps-social/ar...encent-and

[bmann025]

Hasn't traded below HKD 10 since early 2010.

P/B: 0.65, PE 6.7, PB much lower than peers Chow Tai Fook and Luk Fook
http://www.aastocks.com/en/stocks/quote/...mbol=00116

Expansion into mainland China continuing and Mainland China now contributing significantly more to earnings than HK.

(CSS does not report separate earnings for HK/Mainland. However from 2018 taxes paid (HK 61 mill at 16.5% tax rate, Mainland+Macau 219 mill at approx 25%), I would estimate that HK now only contributes around 30% or less. This ratio is then very similar to Chow Tai Fook. )

Chow Tai Fook also reports that its Mainland profitability is now higher than HK/Macau (11.8% vs 8.1%), hence current issues in HK may be compensated by Mainland growth.

Very stable business, even during 2008/09 financial crisis making healthy profits and paying good dividends.
http://www.aastocks.com/en/stocks/analys...mbol=00116

Another factor point is the rise in the price of gold.

P/B 0.65, CSS's inventories (HKD 7.45 bill) alone are now higher than its book value (HKD 6.77 bill) and jewelry assets are kind of similar to cash, priced at acquisition cost of raw material + labour. On top of that, the price of gold increased significantly since last report.

There is one negative point though: currently approx. 40% of inventories are hedged:
http://www.thestandard.com.hk/breaking-n...8896&sid=2

So here we have an extraordinarily defensive company with value & growth, valued below book value, significant portion in cash similar assets, while the stable and profitable business is valued at less than nothing.

[jaco]

Sales dropped more than 10% for Chow Sang Sang Jewellery, one of the largest jewelers in Hong Kong, during June and July, said Lau Hak-bun, general manager of retail operations. The chain operates more than 50 stores in Hong Kong.

https://asia.nikkei.com/Business/Retail/...retailers2

We may expect a larger drop in sales for august with the protests intensifying. With these figures, I can see why the Chow Sang Sang share price keeps dropping. I believe it's not so much the protest itself, as rather the risk that the People's Liberation Army or other PRC forces get involved. This will likely be the end of Hong Kong as a shopping haven, following this reasoning.

Chow Sang Sang is doing well in the PRC as well. Could they not simply pivot their sales away from Hong Kong into China, a trend that has been developing organically anyway? This is likely, however Chow Sang Sang still owns over a billion HKD in properties (including improvements/fixtures) , both for self-use and rented out, within Hong Kong. It will be hard to assess the loss in value of these properties in a Hong Kong doom scenario. I am also not sure whether Chow Sang Sang has a 'Hong Kong' -nese image and might be boycotted by PRC customers after escalations.

I will keep researching this company, but will also wait for some level of resolvement considering the protest issues.

[hh488]

So will be the same for those watch companies like Oriental Watch (0398), Hengdeli (3389) etc? Saw OW dropped quite a bit but not Hengdeli.

[jaco]

So will be the same for those watch companies like Oriental Watch (0398), Hengdeli (3389) etc?  Saw OW dropped quite a bit but not Hengdeli.

Yes, I would expect disastrous sales for these companies too. The Nikkei article suggest a 17.1 % drop for june in the sales category covering jewelry, watches and valuable gifts as a whole. Other shares that dropped: Luk Fook Holdings (International) Ltd , Time Watch Investments Ltd . Also food retailers like Tsui Wah Holdings Ltd and Ajisen (China) Holdings Ltd. And cosmetics Sa SA International Holdings Ltd , Bonjour Holdings Ltd.

I don't know why Hengdeli Holdings Ltd bucks the trend. It's always a complex set of factors determining the price. Hengdeli was already a very cheap share before the protests. Maybe some third party or the company itself is actively buying its shares?

[opmi]

No leh...Hengdeli or boss never buys back shares.
Hengdeli boss chao kuan one....buys back PRC watch business early on. Then get JD.com invest in it. Then planning to go IPO.
Basically screwed OPMIs one.

Tsui Wah. cannot get PRC business up. Had founders infighting a few years back. Some founders left.

[karlmarx]

Wouldn't Emperor Watch be even cheaper (or cheapest), on a p/b comparison? Plus, the company should be well-protected with Albert Yeung's political and triad links. Though, the company may be further abused for related party transactions.

Tsui Wah was almost abused by RPT, but was not saved from poor management and results. The founders were probably up to their neck with some matters, to want to sell their asset to the company, and then allow operations/profits to decline. Meanwhile, other cha chaan tengs were doing just fine.

[dreamybear]

Yes, I would expect disastrous sales for these companies too. The Nikkei article suggest a 17.1 % drop for june in the sales category covering jewelry, watches and valuable gifts as a whole. Other shares that dropped: Luk Fook Holdings (International) Ltd , Time Watch Investments Ltd . Also food retailers like Tsui Wah Holdings Ltd and Ajisen (China) Holdings Ltd. And cosmetics Sa SA International Holdings Ltd , Bonjour Holdings Ltd.

I don't know why Hengdeli Holdings Ltd bucks the trend. It's always a complex set of factors determining the price. Hengdeli was already a very cheap share before the protests. Maybe some third party or the company itself is actively buying its shares?

If the share prices' deterioration continue, we can soon aim to be mini Aggregate Asset Mgmt - "In the last three years, we could find stocks that paid 7 per cent dividends, with a net book value of S$1, a share price of 40 cents and PE in single digit" (https://www.valuebuddies.com/thread-3828...#pid153315)  

Speaking of which, there is an old article :

Charlie Munger: China’s best companies cheaper than those in the US
(UPDATED MON, MAY 7 2018)

- “The best companies in China are cheaper than the best companies in the United States,” Berkshire Hathaway’s Charlie Munger tells CNBC.
- “I don’t think it would be all that hard for any smart person to find four or five great companies in China to invest in,” he says.
- Munger says his family is “substantially” invested in China, where they began investing 14 years ago.
.......

Details : https://www.cnbc.com/2018/05/07/charlie-...an-us.html

SSE was around 3000+ in May 2018, compared to 2800+ now. Happy hunting in SSE / HKEX !

[dreamybear]

Hasn't traded below HKD 10 since early 2010.

P/B: 0.65, PE 6.7, PB much lower than peers Chow Tai Fook and Luk Fook
http://www.aastocks.com/en/stocks/quote/...mbol=00116

Expansion into mainland China continuing and Mainland China now contributing significantly more to earnings than HK.......

So here we have an extraordinarily defensive company with value & growth, valued below book value, significant portion in cash similar assets, while the stable and profitable business is valued at less than nothing.

With the current situation in HK, 
- valuations has gone further north. 
- I think the numbers for HK for 2H2019 might be very bad*.  

It is now P/B : 0.54, PE 5.57, positive operating cash flow & yielding some 7%(based on 40% div payout ratio).
According to interim rpt(1H2019), mainland revenue of HKD5.1b vs HK/Macau revenue of HKD4.3b. 

Balance Sheet : HKD1b borrowings + HKD1b bullion loans(dunno what's this) + HKD1b of lease liabilities vs HKD1b cash + HKD1b right of use assets(also dunno what's this) + HKD1b financial assets + HKD8b inventories.

Assuming the above HKD3b liabilities and HKD3b assets offset each other, the book value of inventories wld be HKD11.8(HKD8b/677m) vs HKD8.x(share price) 

Is the mkt discounting the inventory by some 30% ? 

The current share price is lower than Yr2016** levels but interestingly, it traded as low as HKD3.11 near end of Yr2008.

*https://www.channelnewsasia.com/news/asia/hong-kong-protests-august-retail-sales-worst-on-record-11963286

**https://en.wikipedia.org/wiki/2015-2016_Chinese_stock_market_turbulence

[gemini]

Hasn't traded below HKD 10 since early 2010.

P/B: 0.65, PE 6.7, PB much lower than peers Chow Tai Fook and Luk Fook
http://www.aastocks.com/en/stocks/quote/...mbol=00116

Expansion into mainland China continuing and Mainland China now contributing significantly more to earnings than HK.......

So here we have an extraordinarily defensive company with value & growth, valued below book value, significant portion in cash similar assets, while the stable and profitable business is valued at less than nothing.

With the current situation in HK, 
- valuations has gone further north. 
- I think the numbers for HK for 2H2019 might be very bad*.  

It is now P/B : 0.54, PE 5.57, positive operating cash flow & yielding some 7%(based on 40% div payout ratio).
According to interim rpt(1H2019), mainland revenue of HKD5.1b vs HK/Macau revenue of HKD4.3b. 

Balance Sheet : HKD1b borrowings + HKD1b bullion loans(dunno what's this) + HKD1b of lease liabilities vs HKD1b cash + HKD1b right of use assets(also dunno what's this) + HKD1b financial assets + HKD8b inventories.

Assuming the above HKD3b liabilities and HKD3b assets offset each other, the book value of inventories wld be HKD11.8(HKD8b/677m) vs HKD8.x(share price) 

Is the mkt discounting the inventory by some 30% ? 

The current share price is lower than Yr2016** levels but interestingly, it traded as low as HKD3.11 near end of Yr2008.

*https://www.channelnewsasia.com/news/asia/hong-kong-protests-august-retail-sales-worst-on-record-11963286

**https://en.wikipedia.org/wiki/2015-2016_Chinese_stock_market_turbulence

Its most recent reported book value is HK$16 per share, isn't it ...