Q2 results out yesterday (11Nov11).....
http://info.sgx.com/webcoranncatth.nsf/V...20039B2D4/$file/THGL_2Q_FY2012.pdf?openelement [results announcement]
http://info.sgx.com/webcoranncatth.nsf/V...20039B2D4/$file/MEDIA_RELEASE_THG_1HFY2012.pdf?openelement [press release]
Without doubt, THG's well-established regional premier watch retail business has done very well in both Q2 and 1H - for 1H (ended 30Sep11), Rev. +20%yoy to $279.9m, and PAT +25%yoy to $20.06m; EPS +23%yoy to $0.0822. Assuming continued good business volume in 2H (ending 31Mar12) - which is seasonally much stronger than 1H because of Christmas/CNY gifts shopping, supported by many employers paying out year-end bonuses - THG is poised to post new record Rev. and PAT in FY12, vs. past record Rev. of $487.6m (FY08) and PAT of $33.48m (FY11).
Assuming THG manages to achieve a PAT of just $20.0m in 2H - i.e. giving a full-year PAT of approx. $40.0m and a NP of approx. $38.5m (after accounting for MI) - based on the latest 235.004m issued shares outstanding, FY12's EPS would hit $0.164, and per share NAV as at 31Mar12 would hit $1.18.
Is there a more profitable and higher quality retail business/company listed on SGX?
Business Times - 03 Jan 2012
Franck Muller's growing love affair with Asia
By SHU-CHING JEAN CHEN
IN HONG KONG
FRANCK Muller is a man with big, warm smiles. Nowadays, much of his cheeriness is intimately tied to Asia, a region to which this world-famous watch designer and maker, now 53, has returned every year since the age of 18.
His close relationship with Asia is revealed in the watch he wears: a blue-coloured limited edition of Franck Muller Cortez King made for Greece two years ago when its economy was surging ahead. 'I wear this one because I go so often in the sea. This one has a rubber band,' he explains in an exclusive interview with The Business Times, while puffing on a cigarette at his luxury watch boutique in Macau's Venetian casino.
The waters he plunges into are off Phuket, Thailand, where he and his family live while he works in Asia, for as much as five months a year. 'Maybe I'll spend more time (here) in future, because I like Asia, because of the weather, because people are nice, and the art. I come here not just because of the watches. I normally go to Thailand. I love Thailand, and Phuket,' he says.
Asia has reciprocated his affection by embracing him in a big way: including Japan, Asia accounts for 35-40 per cent of the global sales of Franck Muller watches. Strip out Japan and the ratio would be about 25 per cent - and growing. Mr Muller says business is growing in Asia, remains stable in Europe, but has weakened a bit in America due in part to a weak dollar.
He has an inkling of how business goes but happily leaves the fine details and the company's day-to-day administration and accounting (things he dislikes) to his business partner of 20 years, Vartan Sirmakes. He has no idea how many shops he has in Asia, nor the number of watches he has sold.
Still, he knows enough of the market to have gone to Hong Kong more than 30 years ago. Franck Muller has five shops there now.
Hong Kong has traditionally been a top market for Swiss watches, which are synonymous with luxury, but in 2008, it shot up through the ranks to surpass the United States as the world's largest market, boosted by strong buying from mainland Chinese tourists.
In the first 10 months of 2011, Hong Kong bought twice as many Swiss watches as the US did, topping near 2.3 billion Swiss francs (S$3.2 billion), according to data from the Federation of the Swiss Watch Industry. China, which is in a league of its own, follows closely in third spot, with 1.2 billion Swiss francs in sales after the US's 1.6 billion Swiss francs. Singapore is the fourth-largest buyer, spending 901 million Swiss francs in the same period.
Six other Asian countries - Japan, South Korea, Taiwan, Thailand, India and Malaysia - also rank among the top 30 markets for Swiss watches, taking Asian sales to 46 per cent of the global total for watches made in Switzerland.
Many Chinese customers travel to Hong Kong, or even Japan, for a Franck Muller watch because of the high price tags at home (typically 20 per cent higher or more) and because of concerns over the authenticity of watches available in China, where piracy runs rampant.
But fake watches, with origins in Chinese factories, can be found everywhere, even in Phuket. 'This is why we have to open our own shops in China - because we want people to know (and) to be sure that they are buying the real one,' says Mr Muller.
Since the opening of the first Franck Muller shop in Shanghai in 2004, two shops and 10 points of sales have been added in China, including one in the far-flung, south-western corner of Kunming. Across Asia (not including Australia), it has 16 shops and 73 points of sales, according to its regional distributor, Sincere Brand Management.
Mr Muller is not so worried about piracy's impact on business. 'If you are a little bit smart, just a little bit, you'd know it's a fake when someone sells you (a Franck Muller watch) at US$500,' he says. 'If people can afford, they will buy the real ones.'
For those who can afford it in Asia, they spend more than a typical Franck Muller consumer elsewhere - between US$25,000 and US$100,000 on a piece, compared to the starting price of a Franck Muller watch of US$10,000 to US$12,000.
'We are doing well in China, and in Asia. We have been in Hong Kong, Singapore, Taiwan, Malaysia, for a long time. Now we go to China, but we need to educate the consumers in China. There's a new generation starting to have money, to be successful. They are the leaders of tomorrow,' he says.
India is another bright spot. 'We sell lots of watches in India, maybe more than in China, because India has low taxes,' he says. He also highlights Latin America and other emerging markets. In Russia, the brand already has an established presence.
Mr Muller aims to take these future leaders in emerging markets beyond their appreciation for simple, classic and often diamond-studded shining gold watches to the next level of sophistication, where they will be able to discern the various ingenuities of a luxury watch, from the tourbillion, the perpetual calendar, to minute repeaters, and, above all, to why they need a luxury watch.
'Basically, you don't need an (expensive) watch to tell you the time. The time is everywhere. You only need a basic watch. After that, the reason you pay much more money is because the watch is giving you much more, because each one is quite unique. The price does not make a luxury watch. It's the quality, the rarity of the watch,' he says.
Swiss watchmaking in November 2011
New absolute record
The very favourable base effect played only a minor role in the development of watch exports in November. Their value rose by 16.0% compared to November 2010, passing the two billion franc mark for the first time to record a monthly result of 2.058 billion. The cumulative value over eleven months rose to 17.4 billion francs, maintaining its very steady growth rate (+19.0%).
Swiss watch exports in November 2011
Gold watches accounted for nearly half of total growth, thanks to a sharp increase. Bimetallic timepieces showed the same trend, further accentuating the overall performance. The increase in steel products was significantly more modest. The total number of timepieces was down slightly, due in particular to the category of other metals, which posted a negative result for the first time in two years. The annual rate remained very buoyant nonetheless (+14.9% to 27.2 million timepieces).
Growth in November was proportional to the price of exported watches. The downturn in volumes affected exclusively timepieces costing less than 200 francs (export price), whereas their value continued to rise. The 200-500 francs category posted a moderate increase in the order of 5%. The 500-3,000 francs segment recorded a two-digit increase. Growth in total value was clearly driven by watches costing more than 3,000 francs, which showed an upturn of 20.6% compared to November 2010.
The three main markets continued the trend begun at the start of the year. Hong Kong saw a slowdown in its growth, which nevertheless remains at a very high level. China did even better than its neighbour and moreover is poised for further growth. Meanwhile, the United States recorded a more modest increase, confirming the onset of a slowdown. European markets showed more volatility. France lost ground, while Germany recorded a sharp increase of nearly 60%. Italy, the seventh ranked market, recorded a two-digit decline. Unusually, Singapore also saw its value fall off.
Source:FHS
Swiss watchmaking in December 2011
Excellent year end
Watch exports remained at a very high level in December 2011, despite an unfavourable base effect. They recorded a strong increase (+21.0%) to attain a level of 1.9 billion francs. For the year as a whole, the value of watch exports achieved a new record of 19.3 billion francs, surpassing the 2010 result by 19.2%.
In December, the main materials showed an upward trend. Watches manufactured from precious metals showed the strongest gains, while steel fell just short of a two-digit increase. In volume terms, steel remained stable. Gold timepieces were particularly buoyant. The categories of other metals and other materials also contributed to the general increase.
Growth in the number of wristwatches in December was proportional to their price. Watches costing less than 200 francs (export price) recorded a slight downturn in volume terms, with their value stable in relation to December 2010. Between 200 and 3,000 francs, value increased by 10.4%. Timepieces costing more than 3,000 francs proved most dynamic with an increase of 27.1% by value and 20.5% by volume.
Strong overall growth was apparent in many markets. Hong Kong, the United States and China did better than average, with rates of increase in excess of 20%. Benefiting from a favourable base effect and very strong demand, Singapore more than doubled its monthly value. The main European markets generally recorded below-average performances: France rose by a few points, Italy (+17.6%) produced the best result, and Germany (+8.0%) remained in decline. In sixth position, Japan continued its gradual recovery.
Source: FHS
A look back on The Hour Glass couple
The end of a 41-year marriage of prominent Singapore couple, Dr Henry Tay, 67, and Jannie Chan, 65, became public when it hit headlines last week.
Dr Tay, the executive chairman of The Hour Glass, had successfully taken out an injunction against his ex-wife to stop her from issuing cheques from the bank account of the Tay family's investment vehicle, TYC Investment.
TYC Investment, set up in 1979 by the couple, was set up to hold the shares of The Hour Glass on behalf of the family.
Ms Chan can also no longer give payment instructions on behalf of the company or make any payments out of TYC funds.
The couple's divorce was mentioned in the court papers seeking the injunction, which was taken out in December.
Their divorce was in August 2010.
According to friends and associates of the former couple who spoke to The Straits Times, it was a long time coming.
For many years, the couple had led mostly separate lives, often attending social events alone and pursuing different interests.
There was suspicion in the air when Ms Chan changed her name (from Mrs Jannie Tay) but the couple never publicly confirmed the divorce.
The Straits Times reported that they were a classic case of 'opposites attract'.
Those interviewed said that it was always clear that Ms Chan and Dr Tay had personalities that clashed each other's.
They described him as stoic, silent and decisive, while she is outspoken, vivacious, flexible, and known for her love of dancing.
While their opposing personalities seemed to be an advantage for their business, it wasn't exactly so in their personal life.
The Hour Glass is now a leading watch retailer in the region with a market capitalisation of $263.2 million.
It has 10 boutiques in Singapore, including the Rolex Centre at Ion Orchard and has a presence in countries like Malaysia, Australia and Japan.
Today, Ms Chan continues to serve as executive vice-chairman.
The couple's son, Michael, 36, and his uncle, managing director Kenny Chan, now manage the day-to-day business of the company. Ms Chan continues to give advice to her son on managing the business.
In 2005, she set up Hypha Holdings, under Save Our Planet Investments, which focuses on biotechnology, wellness and the environment.
She also started the Save Our Planet Foundation, which is focused on reforestation and environmental projects.
The couple have two other children, Audrey, 38, and Sabrina, 31.
Their first-born, Michelle, died at the age of nine from cerebral palsy, and Sabrina, was born a rubella child with a hole in the heart, without ears and with a cleft palate.
Plush presents a look back on the couple's achievements and times in the public eye.
After a quick look at the results, it appears THG has surpassed expectations. Commendable results. Watch retailing is indeed a lucrative business if the management remains focussed on its core business and is prudent. Looking forward to hopefully higher dividends for shareowners later this year.
Based on the excellent Q3 results, and bearing in mind Q4 (including CNY) is also a seasonally strong period for buying watches, it looks like THG is poised to post a new record PBT of close to $70.0m and a NP of close to $55.0m for full-year FY12 (ending 31Mar12). This would also translate into a record FY12 EPS of approx. $0.234 (based on the latest 235m outstanding issued shares) and raise NAV/share to approx. $1.26.
Based on such good profits in FY12, I suppose THG's management and BOD should be quite agreeable to pay out a much higher Final dividend (last FY11: $0.05/share) in coming May!
What should be the fair value of each THG share? Rationally speaking, it should be at a decent premium over its NAV/share. Whatever the fair value may be, I don't think there is a more profitable retail enterprise listed on SGX!
The Hour Glass ($1.25) - The last time a listed retail enterprise that resemble this kind of after tax profit is ROBINSON GROUP, which has been delisted since........ As far as I could remember, Robinson was traded at $5.00 per share......