The Hour Glass

The Hour Glass: decent set of FYMar12 results. Revenue increased by 17% to $607m, mainly due to the full year contributions from the new boutiques at Knightsbridge, Raffles Place and Marina Bay Sands. Gross margin improved to 24.1% from 22.4%, driven by a more dedicated focus on its portfolio of brands. Net profit increased 29% to $54.7m. The group’s balance sheet continues to be in good shape, with net cash of $50.6m (or 21.5cts/ sh). While mgt remains cautiously optimistic of its outlook for FY13, it notes the weak economic conditions and slowdown of luxury goods industry in Asia, could translate to downward pressure on consumer sentiment. But says it will continue its efforts to enhance its premium retail network and explore new businesses. In addition to refreshing its boutique environments and improving merchandize mix, it plans to add more retail stores, eg. a new multi-brand boutique at Paragon, and two new boutiques in Brisbane and Central Hong Kong later in Nov ‘12. The group declares 6cts div (+20% yoy), translating to a payout ratio of 25.7% and yield of 4.5%. The stock trades at 1.06x P/B, 5.7x P/E, based on $1.32 last done.