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Kingsmen Creatives Undergoing a Period of Changes

Kingsmen Creative Logo

Kingsmen Creatives announced a net profit increase of 19.4% from the previous corresponding period (“1H 2016”).

Both the Retail & Corporate Interiors division and Alternative Marketing division reported revenue increases. This shows that there is slight recovery of the luxury industry as luxury brands starts advertising and decorating their stores to attract customers.

The Exhibitions and Thematic division and Research & Design division reported revenue decreases. This can be due to less exhibitions and events being held in the Asia pacific and Middle East region.

Based on my previous post ( Can Kingsmen Creatives Still Hold the Fort? ) the bulk of Kingsmen Creatives revenue comes from the Retail & Corporate Interiors division and the Exhibitions and Thematic division. If both the divisions reported revenue decreases, this will have a negative impact on Kingsmen Creatives. Fortunately, in 1H 2017, the decline in earnings from the Exhibitions and Thematic division is complemented by earnings increase from the Retail & Corporate Interiors division. (more…)

Boustead Building Up Net Cash Position to Ride through the Storm

A year ago, I mentioned in my post that Boustead has a net cash position of S$165.6 million. At the end of 1Q FY2018, Boustead has a net cash position of S$212.2 million. This was an increase of 28.1%. Thus, I consider Boustead is still in a healthy net cash position. Net cash position is very important to companies in a cylindrical industry such as oil and gas. Only with sufficient net cash position, it will be able to ride through the storm.

Although Boustead’s 1Q FY2018 financial results do not look so promising, I noted that in its latest press release, it has mentioned that Boustead’s revenue is largely derived from project-oriented businesses and as such, quarterly results would not accurately reflect the full-year’s performance. (more…)

The Hour Glass – Digitalise or Die

At a backdrop of lower revenue and lower profit after tax, The Hour Glass has proposed a first and final dividend of 2 cents. At current closing price of S$0.66, this translates to a dividend yield of 3.03%. I am not surprise by the financial results but I was surprised by how well The Hour Glass manages the economic downturn.

We all know that The Hour Glass deals with luxury watches and given the current economic headwinds, the company should do very badly. But it didn’t.

The management reduced the company’s debt to equity ratio from 14.4 percent to 10.7 percent.

FY2017 FY2016 FY2015 FY2014 FY2013
Debt/equity ratio (%) 10.7 14.4 15.0 10.9 12.5

The company’s free cash flow is still positive with hoards of cash. The Hour Glass has a free cash flow of 57 million.

FY2017 FY2016 FY2015 FY2014 FY2013
Free Cash Flow ($’000) 57,113 10,453 (13,026) 53,066 1,505

Below is a quick glance of its financials. Revenue fell by 2%.

Profit after tax fell by 7%.

Net Asset Value (“NAV”) increased by 9% most likely after reducing its debt.

Omni-Channel Strategy

In the annual report, The Hour Glass mentioned about Omni-Channel Strategy. This is the first time I heard of such term. I googled for the term “Omni-Channel Strategy”.

Omnichannel is a cross-channel business model that companies use to improve their customer experience. – Wikipedia

Companies that use omnichannel contend that a customer values the ability to be in constant contact with a company through multiple avenues at the same time. – Wikipedia

The Hour Glass will be rolling out their customer experience management platform in September.

Summary

The management of The Hour Glass seems to know the impact of digital watches (android and apple watches) against traditional watches or luxury watches. At this moment, I am not sure if the customer experience management platform will have an eCommerce component to compete with online shopping platforms such as Qoo10 or Shoppee. My personal opinion is that The Hour Glass is still at the early stage of digitalising its business and I hope it is on the right track.

In the event The Hour Glass is able to transform its business, this should unlock further value within this company. The Hour Glass currently makes up 4% of my stock portfolio.

 

 

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