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>Q1 CY23 watch and jewelry sales for HK were up 88% YoY. HK sales for Oriental Watch (30% of revenues but less volatile) will benefit from the recovery in HK.</li>
<li>We estimate China sales will continue to remain resilient as cross-border travel is yet to pick up in a big way. </li>
<li>Trading at 7.5x FY23e and a 14.2% dividend yield, with more than 50% of the market capitalization in cash, the company can pay solid future dividends despite weaker earnings.</li>
</ul>


Q1 CY23 watch and jewelry sales for HK were up 88% YoY. HK sales for Oriental Watch (30% of revenues but less volatile) will benefit from the recovery in HK.
We estimate China sales will continue to remain resilient as cross-border travel is yet to pick up in a big way. 
Trading at 7.5x FY23e and a 14.2% dividend yield, with more than 50% of the market capitalization in cash, the company can pay solid future dividends despite weaker earnings.


Oriental Watch: HK Sales Recovery Continues for Q1 2023,14% Dividend Yield, >50% of Mkt Cap in Cash

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Back on the 23 December, <strong><a href="https://www.smartkarma.com/entities/skyworth-group-limited" target="_blank" data-smartkarma-citation="entities:10941:1" rel="noopener">Skyworth Group (751 HK)</a> </strong><a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2022/1223/2022122301066.pdf" target="_blank" rel="noopener">announced</a> <em>another</em> partial buyback - this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.  </li>
<li>On the 28 March, terms were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0328/2023032800861.pdf" target="_blank" rel="noopener">bumped</a> to $5.00/share. Independent shareholders approved the whitewash waiver on the 5 May.</li>
<li>The Offer closes on the 18 May. The minimum proration is 7.8%. Expect the final proration to be higher. </li>
</ul>


Back on the 23 December, Skyworth Group (751 HK) announced another partial buyback - this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.  
On the 28 March, terms were bumped to $5.00/share. Independent shareholders approved the whitewash waiver on the 5 May.
The Offer closes on the 18 May. The minimum proration is 7.8%. Expect the final proration to be higher. 


<ul>
<li>The census and statistics department data for watches and jewelry showed a sharp rebound for HK in Jan-Feb 2023 (up 63% YoY). China sales, we estimate, continue to be resilient.</li>
<li>Over the last month, secondhand watch pricing has also shown an uptrend of 3-4%. This leads us to believe that demand is having a decent uptick in April. </li>
<li>The stock trades at 7.2x PE FY23e, with &gt;50% of the market capitalization in cash and a 15% dividend yield (assuming a 100% payout ratio). </li>
</ul>


The census and statistics department data for watches and jewelry showed a sharp rebound for HK in Jan-Feb 2023 (up 63% YoY). China sales, we estimate, continue to be resilient.
Over the last month, secondhand watch pricing has also shown an uptrend of 3-4%. This leads us to believe that demand is having a decent uptick in April. 
The stock trades at 7.2x PE FY23e, with &gt;50% of the market capitalization in cash and a 15% dividend yield (assuming a 100% payout ratio). 


Oriental Watch: Recovery of HK Sales in Jan-Feb 2023, Trading at 15% Yield, 50% of Mkt Cap in Cash

<ul>
<li>Over the past 12 months, we have written insights on 14 stocks in the small/mid-cap space with high dividend yields, inexpensive valuations, and a great margin of safety. </li>
<li>We re-examine these to shortlist 3-4 names of our highest conviction amidst the current macroeconomic climate.</li>
<li>Our high conviction shortlist includes <a href="https://www.smartkarma.com/entities/water-oasis-group-ltd" target="_blank" data-smartkarma-citation="entities:17348:1" rel="noopener">Water Oasis (1161 HK)</a>, <a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">Perfect Medical Health (1830 HK)</a>, <a href="https://www.smartkarma.com/entities/the-keepers-holdings-inc" target="_blank" data-smartkarma-citation="entities:23003:1" rel="noopener">The Keepers Holdings (KEEPR PM)</a>, and <a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet (8371 HK)</a>.</li>
</ul>


Over the past 12 months, we have written insights on 14 stocks in the small/mid-cap space with high dividend yields, inexpensive valuations, and a great margin of safety. 
We re-examine these to shortlist 3-4 names of our highest conviction amidst the current macroeconomic climate.
Our high conviction shortlist includes Water Oasis (1161 HK), Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), and Taste Gourmet (8371 HK).


Shortlist of High Conviction Ideas - Income, Value, Margin of Safety

<ul>
<li>We met with the management of <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>.  HK demand continues to be sluggish, while China sales were resilient with single-digit SSSG growth. </li>
<li>The company will continue with its conservative policy of not expanding as Rolex/Patek restrict watch supply. It will only foray into boutique expansions if KPIs on return/brands etc., are met.</li>
<li>With its generous &gt;100% payout ratio, the stock trades at a 15% dividend yield based on our estimated 6.9x FY23 PE, with &gt;50% of its market capitalization in net cash.</li>
</ul>


We met with the management of Oriental Watch (398 HK).  HK demand continues to be sluggish, while China sales were resilient with single-digit SSSG growth. 
The company will continue with its conservative policy of not expanding as Rolex/Patek restrict watch supply. It will only foray into boutique expansions if KPIs on return/brands etc., are met.
With its generous &gt;100% payout ratio, the stock trades at a 15% dividend yield based on our estimated 6.9x FY23 PE, with &gt;50% of its market capitalization in net cash.


Oriental Watch: Management Meet, HK Slow + China Resilient, 50% of Mkt Cap Cash + 15% Yield

Hong Kong

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

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Oriental Watch (398 HK)

Oriental Watch: HK Sales Recovery Continues for Q1 2023,14% Dividend Yield, >50% of Mkt Cap in Cash

Oriental Watch trades at 7.5x PE, with over 50% of the market capitalization as cash and a 14.2% dividend yield. The recovery in HK sales which...

Sameer Taneja

Skyworth (751 HK): Thoughts On Proration

Independent shareholders approved the whitewash waiver on the 5 May. The Offer closes on the 18 May. The minimum proration is 7.8%. Expect the...

David Blennerhassett

Oriental Watch: Recovery of HK Sales in Jan-Feb 2023, Trading at 15% Yield, 50% of Mkt Cap in Cash

The stock trades at 7.2x PE FY23e, with >50% of the market capitalization in cash and a 15% dividend yield (assuming a 100% payout ratio). Data...

Sameer Taneja

Shortlist of High Conviction Ideas - Income, Value, Margin of Safety

We like Water Oasis (1161 HK), Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), and Taste Gourmet (8371 HK) as the businesses are...

Sameer Taneja

Oriental Watch: Management Meet, HK Slow + China Resilient, 50% of Mkt Cap Cash + 15% Yield

With its generous >100% payout ratio, the stock trades at a 15% dividend yield based on our estimated 6.9x FY23 PE, with >50% of its market...

Sameer Taneja

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