24 January 2010

TimeWatch 24012010

Time Watch revenue has been increasing steadily since 2007. Kind of surprised because it’s competitors experienced negative growth in FY2009. Time Watch latest results has already seen an increased in earnings.  However there are some queries from SGX on its Financial reports and I will be scrutinizing it. In addition, what contributed to the strong earnings in FY2009?

He thought that this could also be why Time Watch currently trades at a price to earnings (PE) ratio of about six times, compared to peer stocks which trade for as much as 13 times PE.

Michael Tung Chief executive Time Watch Bussiness Times Jan 19 , 2010

It seems like Mr Tung is correct in saying that its share price does not correctly reflect its growth. For FY 2009, the growth rate was almost 20% yet it’s P/E ratio even at my buy price of $0.20 is only 6.9.  However, it’s peers in Singapore are also trading at that range. Cortina Holdings seems to be the most similar to Time Watch in terms of revenue.  If Mr Tung claims that its peers in Shanghai and HK is trading at a P/E of 13 is true, then a dual list is the best bet for its price to be reflected correctly.

Next is to analyze Time Watch competitors in Shanghai and HK.

21 January 2010

Was contemplating on using all my excess cash to buy Time Watch but decided against it. As this is highly speculative, at the end of the day I want to be able to have a good rest.

Dow is bleeding badly and I am very certain that Time Watch will fall tomorrow. Should I hold, sell or average down? Time Watch represents 8% of my portfolio. A further drop in price may offer an opportunity to pick up more. I expect at least a 20% drop (price before news of dual list) before I evaluate my next step. Hopefully, it will not occur this week so that I have enough time to do more research this weekend.

20 January 2010

I have to admit that I was greedy. I bought this company after reading in the Business Times about the possibility of a dual list.  Knowing how all the share prices surge after the news. I decided to join the crowd.

PE before news of dual list was 5 times and Time Watch claim that its peers are trading at 13 times. The share price has surged 20% after the news.  At my buying price of $0.20, PE based on last FY earnings is still a reasonable 7.6. The latest quarter results seems alright too.

Risk:

• I did a quick check on a local competitor – The Hour Glass and it’s trading at a PE of about 7 which is about right.
• The company claim that its own brand name “Tian Wang” is one of the best selling watch in China. However a quick check in the internet comes out with little information.

• Retailing a variety of products including jewellery, cosmetics, electronic products and dried food products…

  This sounds like diworsification to me. Shouldn’t it be concentrating on its core business – watches?

If what Time Watch claim to be true – it should be trading at a PE of 13, there is still a 80% upside to the price. However, the main driving force will be the successful dual list in either HK or Shanghai.