Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Was on the buyside for 15 years, most recently at a medium-sized boutique asset management firm. I grew up in Europe, went to university in the US and have been living in Singapore for the last 7 years which has given me a broad scope on the world and investing in general.

Consider myself a generalist investor with a preference for small and mid-cap companies and special situations. However, a large cap that has gone temporarily out of favor might also pique my interest. 

My style of investing could be categorized as more of value investor, rather than growth at any cost. Learning from Charlie Munger on the importance of quality of a company has been of tremendous value over the years.I like businesses with real earnings, cash flows, dividends, book value and insider ownership.

Insight Provider

Oriental Watch Gap Support and Then Higher

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Oriental Watch (398 HK): Conditional Partial Offer

Oriental Watch: Bet on Rolex Demand in China/HK and Collect 12% Dividends While Waiting

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

Equity Bottom-Up

<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 href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0914/2020091400003.pdf" target="_blank" rel="noopener">announced</a> it is proposing to buy back a maximum of 83 million shares at 3 HKD (249M HKD). This represents a premium over 57% vs the average 30-day closing price on HKex. Once the shares are bought back they will be canceled which will reduce total shares outstanding from 570 million to 478 million. A Special General Meeting (SGM) will be needed to approve the transaction, details of which are pending an official Offer Document. The full transaction has been covered by <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett </a><a href="https://www.smartkarma.com/insights/oriental-watch-398-hk-conditional-partial-offer" target="_blank" data-smartkarma-citation="insights:42872" rel="noopener">Oriental Watch (398 HK): Conditional Partial Offer</a><a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener"> </a>As long-time Oriental Watch followers let's step back and assess what this means:<ul>
<li>The controlling family's stake will rise over 30% (depending on uptake 30.85-36.10%) but they won't have to make a mandatory general offer as they have requested an exemption from HKex. Minority investors need to approve the transaction: we would advise minorities to vote IN FAVOR.</li>
<li>The founding family upping its stake at a significant premium to the latest stock price is bullish. </li>
<li>Even at 3 HKD, the shares trade far below their latest book value of 4.04 HKD.</li>
<li>With increased ownership management is now more incentivized to keep on paying large dividends going forward. </li>
<li>Mr. Market has been perenially mispricing Oriental Watch at negative enterprise value or barely above net cash over the last 5 years. As discussed at length in various previous insights we think this is wrong and the latest transaction again highlights the underlying value.</li>
<li>The company has returned 0.885 HKD/share in dividends over the past four years. When judging Oriental Watch's share price performance please make sure you look up the total return on your Bloomberg.</li>
<li>Mainland China Rolex sales have been seeing YoY SSS increases of 40-80% since April (depending month to month). Once HK opens up SSS comps become very easy after 2019 (riots) and 2020 (Covid-19). Please re-read our insight on Oriental Watch being a way to play Rolex in China <a href="https://www.smartkarma.com/insights/oriental-watch-bet-on-rolex-demand-in-china-hk-and-collect-12-dividends-while-waiting" target="_blank" data-smartkarma-citation="insights:40803" rel="noopener">Oriental Watch: Bet on Rolex Demand in China/HK and Collect 12% Dividends While Waiting</a> 
</li>
</ul>

Oriental Watch (398 HK)announced it is proposing to buy back a maximum of 83 million shares at 3 HKD (249M HKD). This represents a premium over 57% vs the average 30-day closing price on HKex. Once the shares are bought back they will be canceled which will reduce total shares outstanding from 570 million to 478 million. A Special General Meeting (SGM) will be needed to approve the transaction, details of which are pending an official Offer Document. The full transaction has been covered by David Blennerhassett Oriental Watch (398 HK): Conditional Partial Offer As long-time Oriental Watch followers let's step back and assess what this means:
The controlling family's stake will rise over 30% (depending on uptake 30.85-36.10%) but they won't have to make a mandatory general offer as they have requested an exemption from HKex. Minority investors need to approve the transaction: we would advise minorities to vote IN FAVOR.
The founding family upping its stake at a significant premium to the latest stock price is bullish. 
Even at 3 HKD, the shares trade far below their latest book value of 4.04 HKD.
With increased ownership management is now more incentivized to keep on paying large dividends going forward. 
Mr. Market has been perenially mispricing Oriental Watch at negative enterprise value or barely above net cash over the last 5 years. As discussed at length in various previous insights we think this is wrong and the latest transaction again highlights the underlying value.
The company has returned 0.885 HKD/share in dividends over the past four years. When judging Oriental Watch's share price performance please make sure you look up the total return on your Bloomberg.
Mainland China Rolex sales have been seeing YoY SSS increases of 40-80% since April (depending month to month). Once HK opens up SSS comps become very easy after 2019 (riots) and 2020 (Covid-19). Please re-read our insight on Oriental Watch being a way to play Rolex in China Oriental Watch: Bet on Rolex Demand in China/HK and Collect 12% Dividends While Waiting 



Oriental Watch: Forget the Tender, Management Is Bullish and Dividends to Accelerate