The Hour Glass FY17 Q1 results

As expected, the revenue and profit declined. FY17 Q1 (April – June) revenue declined by 7% yoy. While most of the expenses fell, the rental expense increased by 10% yoy and depreciation by +12% yoy. Hence, net profit fell by 22% yoy.

Hour Glass - Financials FY17 Q1.png

Source: The Hour Glass FY17 Q1 result

I am not going into the details of the quarterly result and operations as quarterly result can fluctuate widely. Also, quarterly result does not affect the overall value of the company much since most of the values are generated in long term.

What I want to highlight is that Swiss Watch Export to Singapore continues to fall substantially. See the statistics here. In my last post on Hour Glass, the export numbers to Singapore for the first four months of 2016 were -14.6% yoy. The exports for the three months following that were just as bad. The exports for July and first seven months of 2016 were -14.6% yoy and -13.1% yoy respectively.

Swiss Watch Export - 2016 July.PNG

Source: http://www.fhs.ch/eng/statistics.html

Since the export to Singapore fell by 13.1% for the first seven months of this year and The Hour Glass, being the largest player in luxury watch sector, experienced only 7% fall in revenue, I believe other smaller players were suffering a larger amount of decline. Some might report a better revenue for that quarter by selling their inventories. But, when the overall luxury watch export to Singapore drops substantially, the impact to the players cannot be avoided.

How long and how far the decline will take place, I have no insight and will not forecast. I prefer to monitor as the story develops.

I sold my shares in Hour Glass at 0.745 in April. The share price rose to 0.80 in late May and stayed at that level until end of July. So, I didn’t have a good timing. If I sold it one month later, I could gain another 7%, but it can’t be helped. I can’t time this stock and will not attempt, thus I don’t feel bad for missing the peak. Today, the share saw a sharp fall by 6.5% and dropped to 0.72. No surprise if it bounces back the next day since daily fluctuation is a random move.

What I think is in the short term, the price will fall further as the headwinds are quite strong. The Hour Glass should report declining revenue and profit in Q2 too.

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3 thoughts on “The Hour Glass FY17 Q1 results

  1. Hi there,
    After a few shares-spliting exercises, THG is still as dead as a log on most of the days. We saw some institutional interest but that does not translate into cash-out opportunities for investors as they bought in married deals at price which was lower than the market price.
    My worries are that these “long term investors” might decide to wake up one day and start selling. THG will get more liquid but it will be for the worst as the selling will press down the price. The vicious cycle will force many into la la land holding its shares that might only worth 20-30c then.
    And the most scary of this is that this might happen in just a few trading days once the selling is set in motion.
    All the best and stay safe

    Like

    1. Hi Dave,
      That aspect (selling from long term investors) is something that I didn’t think about. Thanks for pointing that out.

      I’ve sold my position in THG. If the long term investors start selling and press down the price substantially, I will consider that opportunity to accumulate back at lower price. But given current low liquidity, I think the probability of them cashing out is low.

      Like

  2. Good for you. Silly me accumulated near to 300000 shares of THG since early last year as I bought into the idea that this is a quality company. However since I started buying, its liquidity dries up after SG50 celebration.
    Now I really no horse run and facing hefty paper losses for investing in a quality company.

    Like

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