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.
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.
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.