The Hour Glass

The Hour Glass (THG): Unrated rpt on counter by UOB Kay Hian today. THG is a leading premier luxury watch retailer with more than 30 boutiques across Asia. It carries over 50 internationally renowned luxury watch brands and has primary dealerships with Rolex, Patek Philippe and Hublot. Leveraging on its experienced management, THG recorded an impressive revenue CAGR of 7.9% from 2004 to 2014 with a corresponding 24% CAGR for its adjusted net profit of $54.9m. The number of boutiques under THG grew from 17 outlets in FY04 to 26 as of FY14. (Excluding stores from its Thai associate and new acquisition of Watches of Switzerland) UOB KH cites that THG has consistently outperformed the market, returning +18% vs FSSTI +5.5% in 2014. Despite being in a cyclical industry, THG has displayed its ability to consistently maintain profitability by effectively managing costs and store expansions. While house likes THG for its experienced management, strong cashflow generation and robust balance sheet, it is also cautious on the challenging macro-economic landscape.