Value Investing in Asia, Oriental Value

Oriental Value

Value Investing in Asia

Equity Bottom-Up

<ul>
<li>A Review on Final Results Oriental Watch recently announced its earnings for the fiscal year, and the results were quite impressive.</li>
<li>On June 20, 2023, the company reported a revenue of HKD3.7 billion and a net profit of HKD295 million.</li>
<li>These figures surpassed our initial estimates of HKD3.</li>
</ul>


A Review on Final Results Oriental Watch recently announced its earnings for the fiscal year, and the results were quite impressive.
On June 20, 2023, the company reported a revenue of HKD3.7 billion and a net profit of HKD295 million.
These figures surpassed our initial estimates of HKD3.


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

<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 a steady result, with 2023 earnings &lt;18% YoY ( adjusted for one-time gains in 2022 &lt;5% YoY), which was broadly in line with our expectations. </li>
<li>The DPS for FY23 was 61 cents (FY22: 74 cents) lower than our expectation of 65 cents, a 100% payout ratio equating to a 14% dividend yield.</li>
<li>Cash at 1.07 bn represents &gt; 50% of market capitalization. We believe the management will dip into reserves when it requires to manage a decent payout for shareholders.</li>
</ul>



Oriental Watch (398 HK) reported a steady result, with 2023 earnings &lt;18% YoY ( adjusted for one-time gains in 2022 &lt;5% YoY), which was broadly in line with our expectations. 
The DPS for FY23 was 61 cents (FY22: 74 cents) lower than our expectation of 65 cents, a 100% payout ratio equating to a 14% dividend yield.
Cash at 1.07 bn represents &gt; 50% of market capitalization. We believe the management will dip into reserves when it requires to manage a decent payout for shareholders.


Oriental Watch: Steady FY23, Dividend Yield 14%, Cash >50% of Market Cap

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dickson-concepts-intl-ltd" target="_blank" data-smartkarma-citation="entities:5052:1" rel="noopener">Dickson Concepts Intl (113 HK)</a>, an HK distributor of luxury goods, is a classic example of a Graham net-net with a &gt;40% discount to NCAV (Net Current Asset Value). </li>
<li>The company has 4.7 bn HKD of cash against total liabilities of 2.3 bn HKD (on a market cap of 1.6 bn HKD), thus representing deep value. </li>
<li>With an economic environment in HK for retail sales improving + an existing 8% dividend yield, we could make a case for higher dividend payments.</li>
</ul>



Dickson Concepts Intl (113 HK), an HK distributor of luxury goods, is a classic example of a Graham net-net with a &gt;40% discount to NCAV (Net Current Asset Value). 
The company has 4.7 bn HKD of cash against total liabilities of 2.3 bn HKD (on a market cap of 1.6 bn HKD), thus representing deep value. 
With an economic environment in HK for retail sales improving + an existing 8% dividend yield, we could make a case for higher dividend payments.


Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV

<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. 


Hong Kong

Glorious Sun Enterprises Limited, through its subsidiaries, retails and exports casual wear apparel.  The Company also manufactures casual wear products and trades fabric.

Dickson Concepts (International) Limited, through its subsidiaries, sells watches and fashion products.  The Company also trades luxury goods, and provides management and technical services.

Goldlion Holdings Limited, through its subsidiaries, distributes and manufactures garments and accessories.  The Company also invests in properties and operates a commercial center with restaurants and a business center.

Emperor Watch & Jewellery Ltd retails luxurious branded watches, and offers design and sales of jewellery products.

International Housewares Retail Company Limited operates retail houseware retail stores. The Company offers customers a variety of houseware products in Hong Kong, Singapore, West Malaysia, China and Macau.

International Housewares Retail (1373 HK)

Symphony Holdings Limited, through its subsidiaries, manufactures and trades footwear products.  The Company also invests in properties.

Sa Sa International Holdings Limited, through its subsidiaries, retails and wholesales cosmetics. The Company also provides beauty and health club services to members.

Mulsanne Group Holding Limited offers omni channel branding and marketing services. The Company offers online advertising, social media campaign, and other services. Mulsanne Group Holding provides its services throughout China.

Auto Italia Holdings Limited distributes brand-name products including motor vehicles. The Company serves customers in Hong Kong, Macau, mainland China, and elsewhere in Asia.

Giordano International Limited, through its subsidiaries, retails and distributes casual apparel and accessories under theGiordano, Giordano Ladies, Giordano Junior, BSX and Concepts One brands.

Adairs Limited operates as a retailer of manchester and homewares. The Company offers bed linen, bedding products, towels, cushions, throws, books, homewares, wall art, and furniture.

NISSAN TOKYO SALES HOLDINGS CO., LTD sells new and pre-owned passenger cars and commercialvehicles produced by Nissan Motor mainly in central Tokyo area. The Company also sells car parts and provides maintenance service. NISSAN TOKYO SALES HOLDINGS also operates office building rental, car leasing service, and insurance service.  The Company's subsidiaries sell Jaguar and Renault cars.

Bell-Park Co., Ltd., is an independent primary dealer of Softbank mobile telephones and the related service subscription contracts.  The Company also markets land line and ADSL services and provides employment services.

Beijing Digital Telecom Co., Ltd. is a communication company that services The People's Republic of China.  The Company is a distributor of communications terminals and related services. It also retails mobile communications and digital products.

Hallenstein Glasson Holdings Limited owns and operates retail stores that sell men's, women's, and young men's apparel products and sportswear. The stores are located throughout New Zealand and Australia.

CHIYODA CO., LTD. operates specialty store chains including shoes stores, toy stores, and also casual clothe stores nationwide.  The Company sells its shoes under a number of store chains including The SHOES, Kutsu Chiyoda, and SHOE PLAZA.

FTGroup Co., Ltd. develops and sells telecommunication equipment such as business phones, facsimiles, and CTI (Computer Telephony Integration) products. The Company also provides maintenance services for its products. FTGroup works as an agency for telecommunication service carriers and also sells mobile phones through its franchises.

HARD OFF CORPORATION Co., Ltd. operates a chain of secondhand goods stores based in Niigata.  The Company buys and sells PCs, audio & visual products, cameras, musical instruments, watches, CDs, and game software.  HARD OFF operates its own stores and also franchise stores.

Singer Thailand Public Company Limited assembles and distributes Singer brand household appliances such as sewing machines, refrigerators, televisions, washing machines, stereos, VCRs and gas stoves.  The Company has its own retail network and offers installment financing to its customers.

LS Networks Co., Ltd. manufactures leather and athletic shoes, sports apparel, golf accessories, and leisure items.  The Company also operates a building leasing business.

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

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Oriental Watch (398 HK)

An Update on Oriental Watch (398 HK)

A Review on Final Results Oriental Watch recently announced its earnings for the fiscal year, and the results were quite impressive.

Oriental Value

Oriental Watch: Steady FY23, Dividend Yield 14%, Cash >50% of Market Cap

Oriental Watch trades at a dividend yield of 14% FY24e with 50% of the market capitalization in cash. Current demand trends point to a trend of...

Sameer Taneja

Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV

Dickson Concepts Intl (113 HK), an HK distributor of luxury goods, is a classic example of a Graham net-net with a >40% discount to NCAV (Net...

Sameer Taneja

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

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