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>Oriental Watch reported H1 FY25 revenues/profits down 2.6%/-13.7 % YoY despite the tough retail sales environment, especially in HK (25% of revenues).</li>
<li>The company declared a 24.6 HKD cents dividend, equivalent to a 14% dividend yield annualized on the current price.</li>
<li>With 62% of the market capitalization in cash, a 7x PE, and a 14% dividend yield (assuming a consistent 100% payout), this is a name to look at.</li>
</ul>


Oriental Watch reported H1 FY25 revenues/profits down 2.6%/-13.7 % YoY despite the tough retail sales environment, especially in HK (25% of revenues).
The company declared a 24.6 HKD cents dividend, equivalent to a 14% dividend yield annualized on the current price.
With 62% of the market capitalization in cash, a 7x PE, and a 14% dividend yield (assuming a consistent 100% payout), this is a name to look at.


Oriental Watch (398 HK)  H1 FY25 and Mgmt Meeting: Resilient 14% Yield Despite Tough Environment

<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> will report its H1 FY25 result in mid-November. We expect earnings to be down 5-10% YoY, as SSSG would be flattish for the period.</li>
<li>We expect a 25-26 cent dividend ( ~14% yield annualized). With the stimulus measures in place, we expect China's mood to be slightly more upbeat.</li>
<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> goes ex-dividend today (23.5 cent/share dividend). As we enter trading today, it may be available at a higher yield. </li>
</ul>



Oriental Watch (398 HK) will report its H1 FY25 result in mid-November. We expect earnings to be down 5-10% YoY, as SSSG would be flattish for the period.
We expect a 25-26 cent dividend ( ~14% yield annualized). With the stimulus measures in place, we expect China's mood to be slightly more upbeat.

Oriental Watch (398 HK) goes ex-dividend today (23.5 cent/share dividend). As we enter trading today, it may be available at a higher yield. 


Oriental Watch 398 HK Earnings Preview H1 FY25: Resilient at 7.2x PE, 14% Yield, 52% Mkt Cap in Cash

<ul>
<li>Hong Kong's watch and jewelry sales were weak in Q2 CY24 (-24% YoY) as dampened sentiment continues to plague overall retail sales across regional sectors. </li>
<li>However, <a href="https://www.smartkarma.com/entities/oriental-watch-holdings" target="_blank" rel="noopener">Oriental Watch (398 HK)</a>, with its Rolex and Patek Phillipe portfolio, is expected to be more resilient than the rest of the watch industry. </li>
<li>The company is still a very good dividend play, trading at 7.6x FY25 PE, with 60% of the market cap in cash and a 13.5% dividend yield. </li>
</ul>


Hong Kong's watch and jewelry sales were weak in Q2 CY24 (-24% YoY) as dampened sentiment continues to plague overall retail sales across regional sectors. 
However, Oriental Watch (398 HK), with its Rolex and Patek Phillipe portfolio, is expected to be more resilient than the rest of the watch industry. 
The company is still a very good dividend play, trading at 7.6x FY25 PE, with 60% of the market cap in cash and a 13.5% dividend yield. 


Oriental Watch (398 HK): Sluggish Sales But Deep Value And Rolex Resilience

<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> reported revenue/profits down 2%/15% YoY for the full year (vs our expectation of 10%). H2 revenue/profitability fell 12%/22% YoY due to a weak Q4. </li>
<li>Cash and investments fell from 1.1 bn to 920 mn HKD, owing to dividend payments, increased inventories, and reduced payables.  Cash represents 55% of market capitalization. </li>
<li>The company maintains a 100% dividend payout, but dividends declined in line with earnings to 51.5 cents (FY23: 60 cents), representing a 15% dividend yield. </li>
</ul>



Oriental Watch (398 HK) reported revenue/profits down 2%/15% YoY for the full year (vs our expectation of 10%). H2 revenue/profitability fell 12%/22% YoY due to a weak Q4. 
Cash and investments fell from 1.1 bn to 920 mn HKD, owing to dividend payments, increased inventories, and reduced payables.  Cash represents 55% of market capitalization. 
The company maintains a 100% dividend payout, but dividends declined in line with earnings to 51.5 cents (FY23: 60 cents), representing a 15% dividend yield. 


Oriental Watch FY24: Weaker H2, Value Intact But Outlook Challenging

<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

Hong Kong

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

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Oriental Watch (398 HK)