Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/oriental-watch-holdings" target="_blank" data-smartkarma-citation="entities:19950:1" rel="noopener">Oriental Watch (398 HK)</a>  has begun Q4 2024 slowly, with its SSSG dropping by double-digit levels in all its major markets (HK/China and Macau).</li>
<li>As the year almost draws to a close, we expect profits to drop 10-15% YoY for FY24 and the company to pay out 100%, resulting in a 14% dividend yield.</li>
<li>The company also has 1.2 bn HKD of net cash, representing 70% of its market capitalization. Additionally, it has 700 mn HKD of investment property. </li>
</ul>



Oriental Watch (398 HK)  has begun Q4 2024 slowly, with its SSSG dropping by double-digit levels in all its major markets (HK/China and Macau).
As the year almost draws to a close, we expect profits to drop 10-15% YoY for FY24 and the company to pay out 100%, resulting in a 14% dividend yield.
The company also has 1.2 bn HKD of net cash, representing 70% of its market capitalization. Additionally, it has 700 mn HKD of investment property. 


Oriental Watch 398 HK: Slow 4Q FY24, Resting On A 14% Yield, With 70% of Mkt Cap in Cash

<ul>
<li>
<a href="https://www.smartkarma.com/entities/oriental-watch-holdings" target="_blank" data-smartkarma-citation="entities:19950:1" rel="noopener">Oriental Watch (398 HK)</a> went ex-dividend on the 4th of October. The stock gapped down more than what it paid out and now trades at 6x trailing PE.  </li>
<li>Cash at 1.1 bn HKD is greater than 50% of market capitalization, with a high trailing dividend yield of 16.2% and a rich history of paying chunky dividends. </li>
<li>We monitor the sales environment for HK/China, which shows a reasonably good pick-up in HK but lackluster for China.</li>
</ul>



Oriental Watch (398 HK) went ex-dividend on the 4th of October. The stock gapped down more than what it paid out and now trades at 6x trailing PE.  
Cash at 1.1 bn HKD is greater than 50% of market capitalization, with a high trailing dividend yield of 16.2% and a rich history of paying chunky dividends. 
We monitor the sales environment for HK/China, which shows a reasonably good pick-up in HK but lackluster for China.


Oriental Watch: Gone Ex-Dividend, Higher Yield, But Sales Softening in The Short-Term

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>Oriental Watch's 1H22 results again demonstrate the company remains a prime beneficiary of <strong>China's isolationist zero-Covid policy</strong>. Revenues +36.8% and Profits +188% YoY. Net Margin of 9% highest ever achieved.</li>
<li>With no outbound Chinese tourism allowed, the internal consumption of luxury watches remains strong. Worldwide shortages of Rolex and Patek Philippe watches drive higher ASP  enhancing margins.</li>
<li>Rock-Solid balance sheet and high dividend payout as reliable as a Swiss Watch. Stock up +110% YTD but the company is still on a 13% annual dividend yield.</li>
</ul>


Oriental Watch's 1H22 results again demonstrate the company remains a prime beneficiary of China's isolationist zero-Covid policy. Revenues +36.8% and Profits +188% YoY. Net Margin of 9% highest ever achieved.
With no outbound Chinese tourism allowed, the internal consumption of luxury watches remains strong. Worldwide shortages of Rolex and Patek Philippe watches drive higher ASP  enhancing margins.
Rock-Solid balance sheet and high dividend payout as reliable as a Swiss Watch. Stock up +110% YTD but the company is still on a 13% annual dividend yield.


Oriental Watch: Living in Isolation with My Patek and Rolex Is Just Fine

<ul>
<li>Rolex acquisition of Bucherer signals the company's intention to own retail distribution and gain access to what its competitors are doing, with the battleground currently being Europe.</li>
<li>We believe it will take years for Rolex to digest this acquisition before foraying into other markets, but with a similar approach, potentially making <a href="https://www.smartkarma.com/entities/oriental-watch-holdings" target="_blank" data-smartkarma-citation="entities:19950:1" rel="noopener">Oriental Watch (398 HK) </a>a target.  </li>
<li>Trading at 6.9x PE with 50% of the market cap in cash and a ~15% dividend yield, the company presents a great investment opportunity. </li>
</ul>


Rolex acquisition of Bucherer signals the company's intention to own retail distribution and gain access to what its competitors are doing, with the battleground currently being Europe.
We believe it will take years for Rolex to digest this acquisition before foraying into other markets, but with a similar approach, potentially making Oriental Watch (398 HK) a target.  
Trading at 6.9x PE with 50% of the market cap in cash and a ~15% dividend yield, the company presents a great investment opportunity. 


Oriental Watch: Addressing the Rolex Acquisition of Bucherer

<ul>
<li>
<a href="https://www.smartkarma.com/entities/oriental-watch-holdings" target="_blank" data-smartkarma-citation="entities:19950:1" rel="noopener">Oriental Watch (398 HK)</a>  went ex-dividend on the 4th of January and has settled at an appetizing valuation of 6.8x PE with 60% of the market cap in cash.</li>
<li>The market post-golden week and into the new year has been tepid.</li>
<li>We expect the company to continue paying out 100% of its profits as dividends, based on which the dividend yield is close to 14% at the current share price.</li>
</ul>



Oriental Watch (398 HK)  went ex-dividend on the 4th of January and has settled at an appetizing valuation of 6.8x PE with 60% of the market cap in cash.
The market post-golden week and into the new year has been tepid.
We expect the company to continue paying out 100% of its profits as dividends, based on which the dividend yield is close to 14% at the current share price.


Oriental Watch (398 HK): Ex-Dividend, Cash Levels To Mkt Cap at 60%, 6.8x PE, 14% Dividend Yield

Hong Kong

Oriental Watch Holdings Limited, through its subsidiaries, trades watches and invests in properties.

Oriental Watch (398 HK)