The Hour Glass

[pacyfiq]

actually, after Mr Mano talks about family, he says something like "husband, wife, son and brother-in-law" which gets Dr Jannie into the argument, saying it is an insult.

I don't think that THG will be interested in Sincere given that what I heard during the private session is that some big distributors are pulling out of Sincere. Perhaps pianist who has talked with Dr Henry will like to share more?

There's also at least 3 fund managers around who are vested in THG. one of them is from i think lumiere capital and he voiced out some concerns during the agm.

a quick summary of the different markets:

•Japan – not able to expand more due to HR issue. CEO very experienced and had been there for more than 20 years. After the radiation incident, there has been a change in mindset, and Japan start to experience the best growth, driving watch sales

•Thailand – 5 years ago, they were 5th and Prima Time was 6th. Now they are the 1st in market share. Worried that when the king dies, mourning might freeze sales of luxury goods.

•Indonesia - Need to pay duty taxes and goods might get stuck for 4-6 months with some getting stolen. Unless bribery is done, it is hard to go into the market and they are not willing to sacrifice reputation.

•Hong Kong - Intent to expand to hong Kong has always been there, but need to find the right place at the appropriate rent. Rental for hong kong is about 8% of revenue as compared to 3% in Singapore. THG has been lucky to get in at a lower price as compared to what it will have been 12 months ago. Both shops there are specialised shop with Patek phillipe being the main partner.

•China has high hurdle rate and low margin. store in singapore is 10x more efficient than China. It took Emperor 15 years of operation in China to make a profit 2 years ago. 1.5m profit on 100m revenue. His take is that only brand owners should expand in China and not multi-brand retailer. Neither is THG going to focus a lot to attract the Chinese as not many comes to Singapore, in fact there's more going to Dubai than Singapore. They will rather capture through proxy like Hong Kong, Japan and Australia where there's 24m tourist to HK every year.

•Singapore - They have been fighting for 10 years for a store at Paragon before they finally got it. Ngee Ann City not willing to take in new watch retailer or brands as the owner feels the current retailers are sufficient to capture the market.

While there's much more information that I have gleaned from the 1 hr + chat, I think this statement will sum it all.

"the recent Ex-Ceo of Sincere, Stephan Ritzmann, after the release of result asks I don't understand how did you guys manage to achieve this kind of margin because I am not able to"

and if you check the background of this Stephan Ritzmann, he has been in the watch industry for more than 20 years.

The only thing that I am afraid of is that I might be too confident of THG, so I think there is a need to treat my words with some biasness and doubt from now on.

(vested and bias)

Great report, thank you very much