The Hour Glass

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(23-06-2014, 07:12 PM)pacyfiq Wrote: Today i visit the new Hublot and Rolex shop by Hour Glass at Central Embassy in Bangkok. As always, best location and beautiful shop and service.
http://www.rolex.com/rolex-dealers/deale...ealers.com
http://business.asiaone.com/news/hour-gl...n-thailand

I have similar strong feelings as well. Every time I pass by the hugely popular THG shop located at level 1 Taka SC, I would quite naturally tell myself that if I can, I want to own the whole shop!
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Why is it going into the bakery business then?

(23-06-2014, 08:03 PM)dydx Wrote:
(23-06-2014, 07:12 PM)pacyfiq Wrote: Today i visit the new Hublot and Rolex shop by Hour Glass at Central Embassy in Bangkok. As always, best location and beautiful shop and service.
http://www.rolex.com/rolex-dealers/deale...ealers.com
http://business.asiaone.com/news/hour-gl...n-thailand

I have similar strong feelings as well. Every time I pass by the hugely popular THG shop located at level 1 Taka SC, I would quite naturally tell myself that if I can, I want to own the whole shop!

Finding the Value in a Speculative World
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Goh Eng Yeow
The Straits Times
Tuesday, Jun 24, 2014

BUY PRADA SHARES, NOT PRADA SHOES

When a good friend retired from a high-flying banking career many years ago, I was surprised by the drastic steps he took to adjust to his straitened circumstances.

Gone was the chauffeur-driven Mercedes-Benz as he learnt how to drive a Toyota Corolla. He also had to get used to the cattle class with the rest of us when he flew, after years of enjoying the comforts of first-class air travel.

I was then in my mid-30s, and watching the discomfort he had in adapting to his new lifestyle etched an indelible mark on me. What was supposed to be the best years of my friend's life - as he reaped the fruits of a lifetime of working hard and climbing the corporate ladder - had turned into a nightmare.

My friend might have been an extreme example of suffering from an anxiety attack when confronted with the travails of retirement, but most people are likely to suffer in the same way in varying degrees when they stop working.

It made me decide to live well below my means, if only to minimise the dislocations that I may have to put up with when I eventually make my own exit from working life. In hindsight, that has turned out to be a profitable move.

At one stage, I had been tempted to buy an upmarket Nissan Cefiro car but that would have required me to take a huge loan. Instead, I opted to keep my then trusty old Mazda sedan and used the money, earmarked for the car down payment, to buy shares in Tan Chong International, Nissan's local distributor.

In the 15 years since I made my investment, the stock has paid me a decent dividend every year. That was on top of its price appreciation. Had I succumbed to the temptation of buying the Cefiro, it would have been sold for scrap metal long ago. That would really be throwing a big pile of money down the drain.

I applied the same rationale when I bought Hong Kong-listed Prada shares. Some of my younger friends are decked from head to toe in Prada accessories. But rather than splurge my hard-earned money on Prada shoes, I believed that investing in the stock was a better option. Years from now, I will still have my Prada shares while my friends' Prada accessories would have long been consigned to the bin or second-hand store. Some will say that I am too much of a Scrooge, eyeing the investment opportunity when I should be pampering myself with the material comforts my money can buy while letting the future take care of itself. But that is taking for granted that we are living longer, and unless we save and invest judiciously, we may end up destitute at the end of our lives.

Even though I have done fairly well in my investments, there is still a worry at the back of my mind as to whether I would have accumulated a sufficient nest egg when I stop working. This is not an isolated concern. Going broke in retirement is probably one of the biggest fears for most of us.

A survey last year by British lender HSBC showed that about 17 per cent of Singaporeans said they could not afford to retire. Separately, a survey by insurance giant Manulife last year showed that while Singaporeans expect to be in retirement for about 18 years, they estimate that their savings would last only 12 years.

This probably helps explain the heated debate on the Central Provident Fund (CPF), the Minimum Sum that has to be set aside in a person's CPF retirement account when he turns 55, and whether the returns offered by CPF can outpace the rising costs of living.

But I believe the future is not all gloom and doom and there are plenty of things a person can do to try to build a nest egg on top of the savings in his CPF account. But first, it is necessary to debunk the myth that Singaporeans are not saving enough.

Last month, CIMB Securities did its own cost of living survey and concluded that a high proportion of households - 87 per cent, to be precise - do save part of their monthly income. In fact, saving for retirement is a big theme in Singapore. That does not seem to gel with the impression that we are overstretched and struggling, it said.

The bigger problem here, like everywhere else, is how we can earn a decent return on our savings in the depressingly low interest rate environment, without exposing ourselves to too much financial risk.

This dilemma is best summed up in a survey last year covering nearly 6,000 people around the world conducted by American fund manager Natixis Global Asset Management. It noted that investors have set aggressive investment targets but don't have a realistic way of achieving them.

Instead, they are torn between a desire for high unrealistic returns and insecurity about taking risks. While they like to own investments they understand well, few have in-depth investment knowledge.

Instead, they play the market the way most people bet at the racecourse or in the casino - by relying on their hunches. This can cause them to buy high and sell low as they try to time the market, whether they are trading stocks or investing in property.

I try to avoid such a pitfall by watching other people's spending habits as well as mine for clues to what to invest in. That was how I ended up with shares in Tan Chong and Prada.

Some financial advisers may recoil in horror at how I arrived at my investment decisions, but it sure beats trying to rely on using gut instinct or the hot tips regularly tossed up in the market. Will this strategy provide me with a comfy retirement eventually? I sure hope so.

engyeow@sph.com.sg
This article was first published on June 22, 2014.
Get a copy of The Straits Times or go to straitstimes.com for more stories.
- See more at: http://business.asiaone.com/news/buy-pra...9OhPy.dpuf
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The same goes here: "BUY THE HOUR GLASS SHARES, NOT ROLEX WATCHES." Wink
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Swiss watchmaking in May 2014
Modest growth

The month of May saw further modest growth in watch exports (+1.2%). Their value was 1.9 billion francs. Since the start of the year the total value of watch exports is already more than 8 billion francs (8.7 to be exact) representing an increase of 3.3% compared to the high level of 2013. The rebound in growth remains moderate, but is perfectly in line with forecasts for the first-half year.

Precious metal watches were instrumental in driving up the total value. Steel stagnated and bimetallic timepieces remained close to the average. The number of timepieces exported fell in global terms, due to the decline in the three main groups of materials. The category of other metals recorded a sharp downturn.

Watches costing less than 200 francs (export price) continued to lose ground, albeit less markedly than in previous months. Between 200 and 500 francs a decline was evident in May, which has not been the case for more than a year. However the medium-term trend remains very positive for this segment. The 500-3,000 francs range produced mixed results, with a rise in volumes accompanied by a fall in value. Finally, only watches costing more than 3,000 francs posted an increase both in volume and value terms. The five main export markets of the Swiss watch industry showed little change. Hong Kong recorded a slight downturn in value, as did China. For the former, the recovery has taken the form of a return to positive annualised growth. For the latter, the trend is also positive, since the twelve-monthly variation now shows decline of only -3.9%, up from -12% at the start of the year.The United States, Italy and France gained a few points. Japan once again made a strong showing.

Source: FHS
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The AR2014 is out
http://www.thehourglass.com/pdf/THG%20An...Report.pdf

THG launched Laduree in April 2013, and I was hoping to glean some information from the AR on how well this new business has been doing.

Disappointedly, nothing had been mentioned except on page 16:

“Our plan by financial year end 2015 is the opening of another two stand-alone boutiques at Emquartier in Bangkok and two Laduree points of sales at Siam Paragon.”

The company still holds the view that it has only one business segment

Business segment (page 84)
The Group comprises only one business segment which is the retailing and distribution of watches and jewellery.

This certainly does not make sense to me !

(not vested)
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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Laduree is small and won't move the needle (of which the math has been covered above) so I am not surprised when management said they are still in the retailing and distribution of watches.

What matters will be their strategy ahead and the other luxury products they have in their pipelines. Naturally, I think this is the best way forward. Luxury watch retailing is a slow growth business as you need external capital to grow. Among the other HK retailers, it takes around 8 years for revenue to double. There are exceptions in the case of Hengdeli and Emperor Watch but look at how their balance sheet's leverage and equity base and you get a sense of the capital demand in this business.

HG has proven to be conservative in their approach but with the stock at fair value now, it's difficult for me to pay for growth. Essentially, they can grow through 3 ways: (1) expand more in existing markets; (2) expand into new markets & (3) leverage existing network and expand into new products. (1) is tough since most of the markets are essentially saturated. Places like Singapore & HK carries more risk with operating leverage (i.e. rental) biting them back if their expansion fails. (2) is also not easy as we discussed above. Thailand looks like the natural choice as a tourist destination but even so, you need a lot of trust to engage someone doing business overseas and handling inventories worth millions. Indonesia is out of the question due to import & luxury tax hassle. China is competitive and has a structural disadvantage given their higher consumption tax rate. And we are left with (3) which looks appropriate given management already knows how these market functions which reduces their learning curve. The main hurdle is what kind of products are they planning to launch? In the long term, can they become a luxury brand player like Malaysia's Valiram Group? This is a black box and there is a slight discomfort knowing that their track records do not favor them (i.e. Gems TV).
"Criticism is the fertilizer of learning." - Sir John Templeton
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(04-07-2014, 11:06 AM)dzwm87 Wrote: HG has proven to be conservative in their approach but with the stock at fair value now, it's difficult for me to pay for growth.

Is Mr Market pricing THG at fair value now? If so, there should be more willing sellers at the current $1.80 price level than willing buyers, leading to possibly more short-term range-bound price fluctuations. But the fact is that THG has remained very lightly traded within a very narrow price range in most days, and this is indicative of the THG shares remaining very tightly held even at the current rather high price level. All these also indicate that the current share price level is likely still at a normal discount of 15 to 20% from its fair intrinsic value, usually realised in a privatisation GO offer situation.

I am quite certain that that if a serious buyer puts up a 1,000,000-share BUY order at $1.80 next Monday, he would be considered lucky if he manages to collect 50,000 shares for a day's work. I am also quite certain that if a serious suitor through his investment banker were to make an offer at say $1.90/share for Dr Henry Tay's controlling block in THG next week - which, if accepted, will trigger a GO for all THG shares - Dr Tay would likely ask his CFO to show the banker the door.
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By your logic a value stock should have more willing buyers?

I don't believe in perfect market, theory or otherwise
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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(05-07-2014, 04:57 PM)specuvestor Wrote: By your logic a value stock should have more willing buyers?

Provided there are enough willing buyers who see a good value-price gap at the same time, and especially if it is close to an unfolding catalyst event.
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