- RE-ITERATE BUY Entry – 2.30 Target – 2.55 Stop Loss – 2.20
- The Hour Glass Limited is a specialty luxury watch retail group with multi-brand and standalone boutiques in the Asia Pacific Region. The group also owns Watches of Switzerland, a watch retail chain in Singapore that deals in mid-tier to high-end Swiss timepieces.
- Stellar 2H22 results. The company announced its 2H22 results (YE March). Revenue increased by 23.8% YoY to S$561mn. Net profit attributable to the company shareholders jumped by 75% YoY to S$92.1mn. The company proposed a final dividend of 6 SG cents for the full FY22.
- Benefiting from the in-time reopening. Singapore has eased travelling restrictions since March. According to the Singapore Tourism Analytics Network, the number of visitor arrivals significantly improved in April, reflecting the onset of recovery of tourism. Therefore, we expect the ongoing recovery of tourism to uphold the upbeat outlook of the company.
Visitor Arrivals (VA) YoY Trends
Source: Singapore Tourism Analytics Network
- Asia’s road to recovery. Geographically, Southeast Asia and Oceania (Australia and New Zealand) contribute over 80% to the company’s total revenue. Singapore registered strong growth in consumer spending power despite the ongoing pandemic, evident from the retail sales index for watches and jewellery maintaining at pre-covid level in March 2022. Thailand and Malaysia on the other hand, are expected to catch up in 2022 with the reopening of foreign borders.
- Technical buy TP of S$2.55 and a fundamental outperform rating with a TP of S$2.32. Our TP is based on a discounted cash flow, taking into account a WACC rate of 10.5% and terminal growth rate of 2%. The last closing price was above our TP, and we will give an update accordingly. Read our previous fundamental report here.
(Source: Bloomberg)