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: Great 0.39 HKD Final Dividend; With China Closed off from World Expect More of Same

Oriental Watch: Sit Tight and Stay On For Larger Dividends

Oriental Watch - Expect a Positive Profit Alert for H1

Oriental Watch: Deep Value and a Good H1 2021

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

1H21 Shows 108% Sales Growth in China; Bottom Line Hit by Higher Tax; Cash 70% of Market Cap

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> has been a long term favorite of mine as the company was a perennial cheap HK travel play. Chinese residents would come to HK and Macau to buy luxury watches which were cheaper vs the mainland.Since 2020 and the onset of Covid the story has changed with mainland citizens unable to travel to HK, Macau, Europe or the US. Chinese travelers were notorious for spending lavishly in cities across Europe and the US in luxury boutiques. Today's Bloomberg article <a href="https://www.straitstimes.com/asia/east-asia/cautious-china-keeps-borders-shut-despite-mass-covid-19-vaccination-drive" target="_blank" rel="noopener">"Cautious China Keeps Borders Shut Despite Mass Vaccination Drive"</a> again highlights that the opening up of China is going to take much longer than investors expect. This is bullish for domestic luxury players.With no foreign holidays mainland Chinese buyers have gone on a spending spree buying luxury watches in mainland China. While no official data is available we estimate Oriental Watch is the largest importer and reseller of Rolex watches in China. During 1H21, 27% of its sales were generated in HK, 70% came from China, 2.8% from Macau, and 0.2% from Taiwan. Contrast this with pre-Covid times when HK/Macau generated a combined +/-75% of annual revenues.Oriental Watch will report FY21 results later this month. We expect record results and a good dividend (minimum 0.25 HKD/share). The question is how much is already discounted with the stock up 60% YTD. As highlighted by fellow insight provider <a href="https://www.smartkarma.com/profiles/sameer-taneja-a0539e0c-84dd-4e66-9c40-6e598edfb4c5" target="_blank" data-smartkarma-citation="accounts:352" rel="noopener">Sameer Taneja</a> in March the stock is still not expensive on a SOTP basis.

Oriental Watch (398 HK) has been a long term favorite of mine as the company was a perennial cheap HK travel play. Chinese residents would come to HK and Macau to buy luxury watches which were cheaper vs the mainland.Since 2020 and the onset of Covid the story has changed with mainland citizens unable to travel to HK, Macau, Europe or the US. Chinese travelers were notorious for spending lavishly in cities across Europe and the US in luxury boutiques. Today's Bloomberg article "Cautious China Keeps Borders Shut Despite Mass Vaccination Drive" again highlights that the opening up of China is going to take much longer than investors expect. This is bullish for domestic luxury players.With no foreign holidays mainland Chinese buyers have gone on a spending spree buying luxury watches in mainland China. While no official data is available we estimate Oriental Watch is the largest importer and reseller of Rolex watches in China. During 1H21, 27% of its sales were generated in HK, 70% came from China, 2.8% from Macau, and 0.2% from Taiwan. Contrast this with pre-Covid times when HK/Macau generated a combined +/-75% of annual revenues.Oriental Watch will report FY21 results later this month. We expect record results and a good dividend (minimum 0.25 HKD/share). The question is how much is already discounted with the stock up 60% YTD. As highlighted by fellow insight provider Sameer Taneja in March the stock is still not expensive on a SOTP basis. 

Oriental Watch: Buying a Rolex in Milan or New York? No, Thanks We Will Get It in Shanghai & Beijing