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

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<li>Oriental Watch (398 HK) went ex-dividend on the 30th of December, post which there was a slight correction, and now the stock is 7x PE FY23 (~15% dividend yield).</li>
<li>There is a substantial margin of safety with assets worth 4+ HKD/share ( 2 HKD/share of net cash + 1 HKD/share of inventory and &gt;1 HKD of real estate).</li>
<li>Trends point to a year of decent profitability as SSSG continues remain stable in China in November/December 2022. HK sales trended lower due to outbound travel.</li>
</ul>


Oriental Watch (398 HK) went ex-dividend on the 30th of December, post which there was a slight correction, and now the stock is 7x PE FY23 (~15% dividend yield).
There is a substantial margin of safety with assets worth 4+ HKD/share ( 2 HKD/share of net cash + 1 HKD/share of inventory and &gt;1 HKD of real estate).
Trends point to a year of decent profitability as SSSG continues remain stable in China in November/December 2022. HK sales trended lower due to outbound travel.


Oriental Watch: Ex-Dividend, 7x PE + 50% of Mkt Cap in Cash + >15% Dividend Yield

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

Thematic (Sector/Industry)

<ul>
<li>The 2022 vintage of "5 High Conviction Ideas" had the weakest performance since 2017, with only China Shineway posting a positive return</li>
<li>Olam, Rex and Starhub all declined approximately 16% in FY22</li>
<li>Our 2023 vintage will hopefully perform better with 4 out of 5 favorites in the commodity space</li>
</ul>


The 2022 vintage of "5 High Conviction Ideas" had the weakest performance since 2017, with only China Shineway posting a positive return
Olam, Rex and Starhub all declined approximately 16% in FY22
Our 2023 vintage will hopefully perform better with 4 out of 5 favorites in the commodity space


Overview of My Winners and Losers in 2022...And 5 High Conviction Ideas Going into 2023

<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> paid a 31-cent dividend in its H1FY23 result on the 16th, equating to an annualized dividend yield of 15% on the current share price.</li>
<li>The outlook for the rest of the year is much brighter, given the recovery in China and the inability of the Chinese to travel. October numbers were strong.</li>
<li>The stock trades at a 6.7x PE, with more than 50% of the market capitalization in cash.  In slightly better market conditions, this could be a 6 HKD stock.</li>
</ul>



Oriental Watch (398 HK) paid a 31-cent dividend in its H1FY23 result on the 16th, equating to an annualized dividend yield of 15% on the current share price.
The outlook for the rest of the year is much brighter, given the recovery in China and the inability of the Chinese to travel. October numbers were strong.
The stock trades at a 6.7x PE, with more than 50% of the market capitalization in cash.  In slightly better market conditions, this could be a 6 HKD stock.


Oriental Watch Mgmt Call: Big Dividend Yet Again, 50% of Mkt Cap in Cash with >15% Yield Post Rally

<ul>
<li>We remain cautious on <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> despite the recovery in sales in June this year. Wealth destruction in financial markets could impact sales in the short term.</li>
<li>Having said that, the stock is extremely cheap at 6.7x FY23 earnings (-32% YoY from FY22), with more than one bn HKD in cash (60% of market capitalization). </li>
<li>With a generous payout ratio of &gt;100%, the stock trades at &gt;17% yield. We believe the company will dip into cash reserves to maintain a high yield.</li>
</ul>


We remain cautious on Oriental Watch (398 HK) despite the recovery in sales in June this year. Wealth destruction in financial markets could impact sales in the short term.
Having said that, the stock is extremely cheap at 6.7x FY23 earnings (-32% YoY from FY22), with more than one bn HKD in cash (60% of market capitalization). 
With a generous payout ratio of &gt;100%, the stock trades at &gt;17% yield. We believe the company will dip into cash reserves to maintain a high yield.


Oriental Watch: Trading at 17% Yield, 60% Mkt Cap in Cash

<ul>
<li>After a disastrous April and May due to lockdowns resulting in &gt;-50% SSSGs, the company is seeing the situation stabilize in June and July.</li>
<li>We remain cautious on H1 2023, as margins and revenue will likely decline, with gross margins likely to drop 300-400 bps and revenues down 10-15% YoY.</li>
<li>Expect a generous dividend with over a 100% payout. Since &gt;50% of the market cap is in cash, a special dividend could also be expected. </li>
</ul>


After a disastrous April and May due to lockdowns resulting in &gt;-50% SSSGs, the company is seeing the situation stabilize in June and July.
We remain cautious on H1 2023, as margins and revenue will likely decline, with gross margins likely to drop 300-400 bps and revenues down 10-15% YoY.
Expect a generous dividend with over a 100% payout. Since &gt;50% of the market cap is in cash, a special dividend could also be expected. 


Oriental Watch Update: June and July Improve, Cautious H1 FY23

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: Ex-Dividend, 7x PE + 50% of Mkt Cap in Cash + >15% Dividend Yield

Oriental Watch (398 HK) trades at 7x PE FY23 (~15% dividend yield). There is a margin of safety assets worth 4+ HKD/share, including 50% of the...

Sameer Taneja

Overview of My Winners and Losers in 2022...And 5 High Conviction Ideas Going into 2023

Our FY22 vintage of High Conviction Ideas had its weakest performance since FY17. We hope for better returns for our commodity-focused FY23 selection.

Nicolas Van Broekhoven

Oriental Watch Mgmt Call: Big Dividend Yet Again, 50% of Mkt Cap in Cash with >15% Yield Post Rally

Oriental watch trades at a 6.7x PE with a >15% dividend yield and more than 50% of the market cap in net cash. Management was upbeat about H2 FY23...

Sameer Taneja

Oriental Watch: Trading at 17% Yield, 60% Mkt Cap in Cash

Oriental Watch is extremely cheap at 6.7x FY23 earnings (-32% YoY from FY22), with more than one bn HKD in cash (60% of market capitalization) and...

Sameer Taneja

Oriental Watch Update: June and July Improve, Cautious H1 FY23

Oriental Watch is an attractive investment in the luxury watch space with >50% of its market cap in cash trading at a 15.4% dividend yield on FY23...

Sameer Taneja

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