Hour Glass

Hour Glass: CIMB has an unrated report. House believe that the co is worth around 9-10x P/E as it is more profitable than other watch retailers that are currently trading at 6x P/E. House recently met up with mgt following Non-rated note earlier this yr. The key takeaway from the meeting was that although there is weaker sentiment for luxury spending this year, broader positive structural trends are in place from which The Hour Glass is poised to benefit. Singapore and Hong Kong, among the fastest growing watch markets in the world, are cities where the company has significant retail presence. The Hour Glass is still the best performing retailer with one of the fastest inventory turns. In the near term, mgt will be focussing on driving up the yields of the five new stores opened in the last two yr. Further, the co is in net cash. House however do not cover the stock due to the low free float and trading vol. Estimate that about 80% of the shares are locked up with insiders.