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>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

<ul>
<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

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)

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

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

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