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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.

 

 

OUE Hospitality Trust 1Q2017 Results – Signs of Recovery?

OUE Hospitality Trust Logo

Recently, I noticed the share price of OUE Hospitality Trust has gone up slight by a bit. It even broke above $0.70 on 5th April 2017. While research reports published by analyst says that hospitality sector is improving and the worst may be over for 2017, I still have doubts. Since OUE Hospitality Trust makes up 5% of my current stock portfolio, I decided to take a brief look at its 1Q2017 financial results.

Below are some notes I took from the OUE Hospitality Trust 1Q2017 financial results presentation. (more…)

Kingsmen Creatives Turning Around in 1Q2017

Kingsmen Creative Logo

Kingsmen Creatives have just released their 1Q2017 results.

  • Kingsmen Creatives recorded a revenue of S$66.2 million in first quarter of 2017 which is an increase of S$4.7 million or 7.7% compared to S$61.5 million in 1Q 2016.
  • Gross profit in 1Q 2017 increased by S$2.2 million or 16.2% to S$15.6 million compared to S$13.4 million in 1Q 2016. The increase was a result of higher revenue and gross profit margin recorded. Gross profit margin was higher at 23.5% in 1Q 2017 compared to 21.8% in 1Q 2016.
  • Cash and cash equivalent decreased to S$58.5 million. In my previous post, I mentioned they have cash and cash equivalent of S$74.6 million. I feel that there is nothing to worry about as Kingsmen Creatives have an increase in working capital requirements of S$12.6 million and they are still cash rich.

(more…)

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