SINGAPORE (Apr 29): Dr Henry Tay Yun Chwan, executive chairman of watch retailer The Hour Glass, bought 0.5 million shares via an off-market deal on April 3. Less than a fortnight later, on April 15, he bought more than 9.72 million shares from the open market. He paid 67 cents a share on April 3 and 71 cents a share on April 15.
Tay, founder of the company, last bought shares in 2018. He bought 9.982 million shares on May 28 at 66 cents each from the open market. He later paid 65.5 cents apiece for 12.993 million shares on Aug 17 via an off-market deal.
With the most recent purchase on April 15, Tay now holds a combined direct and deemed stake of 66.39%, up from 65.011%. He holds a direct stake of 89.9 million shares and, via an entity called TYC Investments, holds a deemed stake of 378.2 million shares.
This year, the company will be celebrating its 30th anniversary. The Hour Glass runs more than 40 boutiques in nine cities across Asia, including Hong Kong and Bangkok.
Tay’s April 15 purchase was disclosed in a Singapore Exchange filing after market closed on April 17. The company’s share price closed at 79.5 cents on April 22, a -52-week high. Year to date, The Hour Glass shares have gained 28%, outperforming the Straits Times Index’s 9.42%. At 79.5 cents, the shares are trading at a historical price-to-earnings ratio (PER) of 8.8 times, compared with the STI’s 13.9 times.
The gain in the share price is backed by better earnings. For the three months to Dec 31, 2018, the company reported revenue of $188.9 million, up 3% y-o-y. Earnings improved 29% to $18.6 million over the same period. For the nine months to Dec 31, 2018, the company generated revenue of $544.3 million, up 5% y-o-y. Earnings, meanwhile, jumped 44% y-o-y to $46.8 million, which can be attributed to better gross margins of 25.5% for 9MFY2019, versus 22.7% for 9MFY2018.
The Hour Glass is one of many watch retailers that have enjoyed a good run since the start of the year, as the industry is experiencing steady growth. For March, the total export value of Swiss watches to other markets increased 4.4% y-o-y, marking another month of growth this year.
Several Hong Kong-listed watch and jewellery retailers are trading at similar valuations to The Hour Glass, even with recent gains. Emperor Watch & Jewellery, for one, is up 7.17% year to date to close at 24.8 HK cents on April 22. Its PER is 6.41 times. -Oriental Watch Holdings, up 14.49% year to date to close at HK$2.35 on April 22, has a PER of 8.55 times. Market leader Chow Tai Fook Jewellery Group has staged a healthy rally of its own. It closed on April 22 at HK$8.76, up 33% year to date. It is valued at 20.58 times historical earnings.
Fellow SGX-listed watch retailer -Cortina Holdings has been doing well too. For the three months to Dec 31, 2018, the company reported earnings of $9.2 million, up 64% y-o-y. For the nine months to Dec 31, 2018, earnings improved 46% y-o-y to $21.1 million. Year to date, Cortina shares have gained 45.26% to close at $1.38 as at April 22, which values the company at 7.87 times.
On Feb 19, an entity called Ming Yaw, controlled by Cortina’s founding Lim family, bought 430,000 Cortina shares at $1.12 each. Incidentally, Tay of The Hour Glass is Cortina’s second-largest shareholder, with more than 21 million shares.
