The Hour Glass

[Big Toe]

It is precisely because they behave in such a way that they are able to afford the watches. From the few well heeled people I came across, they will spend but when they spend they make sure they get the absolute best deal. And that includes collecting reward miles/points.

And that is why when I hear chatter "to them, it is just small change". I just grin and thought, no it is not.
$100 to a common man and $100 to a very wealthy person is the same. Difference is the wealthier man will try to extract more value when spending that $100. Having said that, the wealthier man would not spend too much time on the extraction process for something worth $100 as time is precious and is better spent elsewhere.

[wj1984]

I will just chime in a little since my friend is a long time THG customer and i got him to sign the AMEX card (even after paying the hefty $1.7k annual fee) to purchase a few watches. He was late to the miles game but it was rewarding.

CY09 is mainly right on the airmiles earned and the extra 'savings' by redeeming first / biz tickets (but these are hard now).

Dydx - A lot of THG customers are smart consumers. They need to purchase a few watches that lose money to get their desired watches. So many of these watches are sold at a loss. The miles that are earned from buying these watches can be offset (you can sell the miles from 16c to 18c per 1k on carousel thus netting you a real cash discount). That is how many are playing the watch game - think holistically.

I think why THG signed with AMEX many years ago was back then many watches go for significant discount from their listed price. So the rewards points are extra sweeteners to the consumers to pull the trigger.

I sus THG is paying approximately 6-8% for the usage of AMEX cards and since the watch market have been on a bull run for the last few years; inelastic good, people will still buy the watch when allocated whether with or without the AMEX card so they are trying to improve their margins?

Lastly when my friend signed the card a few years back THG is very selective on what you can use it for; steel sport watches are not allowed (some branch may allow).

[dydx]

I will just chime in a little since my friend is a long time THG customer and i got him to sign the AMEX card (even after paying the hefty $1.7k annual fee) to purchase a few watches. He was late to the miles game but it was rewarding.

CY09 is mainly right on the airmiles earned and the extra 'savings' by redeeming first / biz tickets (but these are hard now).

Dydx - A lot of THG customers are smart consumers. They need to purchase a few watches that lose money to get their desired watches. So many of these watches are sold at a loss. The miles that are earned from buying these watches can be offset (you can sell the miles from 16c to 18c per 1k on carousel thus netting you a real cash discount). That is how many are playing the watch game - think holistically.

I think why THG signed with AMEX many years ago was back then many watches go for significant discount from their listed price. So the rewards points are extra sweeteners to the consumers to pull the trigger.

I sus THG is paying approximately 6-8% for the usage of AMEX cards and since the watch market have been on a bull run for the last few years; inelastic good, people will still buy the watch when allocated whether with or without the AMEX card so they are trying to improve their margins?

Lastly when my friend signed the card a few years back THG is very selective on what you can use it for; steel sport watches are not allowed (some branch may allow).

Insightful! There is another better way to get the desired watches : Buy some THG shares and take a view on this great business and benefit from being a longer term shareholder in the twice yearly dividends and price appreciation. Do find the time to attend the AGMs and ask the management/EDs nicely for a little help from them in your desire to buy a nice watch. Fair chance you may get some preference and better luck!

[CY09]

As an authorized dealer, selling luxury watches is far from straightforward. Customers often have to wait, especially for Rolexes. While Rolex produces a substantial number of watches each year — over a million units — the high production volume doesn’t necessarily make them easy to obtain. Rolex sells both highly sought-after and less popular models to its dealers.

As WJ has pointed out, dealers often use a “bundle” system: customers may need to purchase several less desirable models before gaining access to the most coveted pieces. Only after buying a few of these unpopular watches might the highly sought-after models become available. Meeting the CEO or attending an AGM is unlikely to secure a shortcut — unless the customer can offer extraordinary value, such as helping the dealer secure exclusive distribution rights in Singapore or providing other strategic benefits. Essentially, the system is built on favors: the dealer profits from the customer first, and only then does the coveted watch become attainable.

In Singapore's second-hand/ pre-owned market, the dynamics have grown large and more transparent. For example, a walk to Far East Shopping Centre, near The Hour Glass store at Tangs Plaza shows numerous entry-level Rolex models available for immediate purchase, highlighting the contrast between perceived scarcity and actual availability. For now, the value sold at this shops is about the same price sold at Authorised Dealers, however, it is now dropping.

From an investor’s perspective, this has implications for The Hour Glass’s balance sheet. The company holds hundreds of millions of dollars in inventory. A significant portion could consist of less popular models, which might depreciate rapidly if Rolex’s “scarcity illusion” erodes. One AGM question is to seek a breakdown of inventory — for instance, how many watches in its inventory have appraised values below S$20,000 versus those above S$20,000.

While borrowings used to finance this inventory are real cash obligations, the inventory itself carries a largely illusory value, driven more by brand perception than by intrinsic worth. Many of the less popular models are simply stainless steel pieces with limited craftsmanship, meaning their resale value is highly dependent on market sentiment rather than material or horological merit. This creates a key investment risk when considering exposure to The Hour Glass.

The reason for focusing on Rolex is that it constitutes a significant portion of the luxury watch market, and its dynamics—scarcity, demand, and brand-driven pricing—play an outsized role in the company’s inventory valuation and overall business performance.

[wj1984]

CY09 yes you are right on all points. A little more insight; Rolex have been withdrawing distribution in Singapore to supply the China Market - theysay.com (if one notice, Emperor used to have 2 outlets selling Rolex and now it has become 1, THG have been reducing store counts in Singapore, Millenia Walk last year and I heard VIVO this year, Parkway Parade previously).

If the big 3 watch makers are not increasing volume, AD can only generate the same revenue yearly with the same amount of watches. Next, the bull market run for watches are ending and I believe THG growth is plateauing thus they would need to find new avenues to increase their profits.

I remembered playing a game during my MBA course that adjusting some parameters will increase NP and I believe THG is doing so for CC rewards to improve their bottom line.

[dydx]

New Patek boutique opened in Siam Paragon, Bangkok....  https://www.thehourglass.com/story/patek...ue-bangkok.  Such grandeur, and strong relationship with Thierry Stern/family behind Patek. This new boutique will likely remain the flagship Patek boutique in Bangkok for many years!

This follows another grand Patek boutique in Tokyo's Ginza district opened in Feb25.... https://www.thehourglass.com/story/patek...o-boutique

[weijian]

If the big 3 watch makers are not increasing volume, AD can only generate the same revenue yearly with the same amount of watches. Next, the bull market run for watches are ending and I believe THG growth is plateauing thus they would need to find new avenues to increase their profits.

hi wj1984,

IMHO, the bull market for watches already ended back in 1Q2022, which was when the subdial index peaked out. Coincidentally, THG share price also topped out about 1-2months later. Since then, the subdial index has dropped close to ~50% before bottoming some time in Jan2025.

Well, for all we know, it is a "new bull market" since Jan2025. But I do remember Dr Henry Tay mentioning that the crypto bros haven't returned despite crypto prices returning to new highs from 2024 onwards.

Actually, if the Big3 are not increasing volume, it would be a net positive for THG.

[wj1984]

hi wj1984,

IMHO, the bull market for watches already ended back in 1Q2022, which was when the subdial index peaked out. Coincidentally, THG share price also topped out about 1-2months later. Since then, the subdial index has dropped close to ~50% before bottoming some time in Jan2025.

Well, for all we know, it is a "new bull market" since Jan2025. But I do remember Dr Henry Tay mentioning that the crypto bros haven't returned despite crypto prices returning to new highs from 2024 onwards.

Actually, if the Big3 are not increasing volume, it would be a net positive for THG.

Hi WJ,

My definition of 'Bull Market' is more on the ground then the sub dial index, back in the early to mid 2010s all Rolex models are available in the display at ADs and sell with a discount with an exception to the steel Daytona and steel green dial submariner.

As long as we don't see Rolex availability in the ADs i would say we are still in a strong market but I understand from a few watch forums that overseas ADs are starting to display precious metal Rolex and some selected steel models.

Btw why would stagnant volume be a net positive for THG since they can sell whatever they are allocated. Wouldn't a slight increase yearly (1-2%) be better for them?

[weijian]

hi wj1984,

Thanks for the clarification. Anecdotal evidence (or "ground" evidence) is useful and provides another dimension. But often we may tend to overweigh them due to availability bias. As for the answer to your question, there are a few parts:

(1) Big3 not increasing total volumes does not automatically translate to THG not having more to sell. The Big3 (at least Rolex) are known to be actively reducing their ADs. If THG continues to provide value to the Big (relatively compared to fellow retailers), then THG will be allocated more despite unchanged production. Therefore, the real question at hand is Will THG win supplier share in this AD reduction trend? THG opened their first Patek Philippe boutique in 2019. The 2nd branch (Ginza) took another ~7years from the first but the 3rd one opened just 1 year after the second. In AR25, Dr Henry Tay mentioned that the Ginza PP boutique (2nd branch) is the "first of several planned upgrades to the Group’s Patek Philippe network over the next 12 months", so I am not surprised.

(2) Inorganic growth: There are some small ADs where the founders have grown old but their descendants may not have the temperament or interest to continue to operate them. The 2025 acquisition of the 4 Aus Rolex outlets from Kennedy Watches & Jewellery is a fine example, with the seller (son of founder) giving a public interview stating Rolex is going to sell direct to consumers as his reason for selling to THG.

(3) Will stagnant Big3 volumes actually aid the bundling effect? If production volumes remain stagnant, it is inevitable that waiting lists get longer. And what other ways to get up that list than buy a few more TAG Heuers or Tudors (no offence to those brands as I can't even afford them! ) for that highly desired Patek or Rolex piece to be on your wrist ahead of your peers or community? From THG's revenue and GPMs, the business roughly bottomed out in ~2017-2018 with GPMs at ~23-24%. Since covid-19, GPMs are comfortably above 30%, with GPM peaking at ~33.5% in FY23 and ending at ~31% in FY25. I would say that the bundling effect had worked wonders.

[weijian]

An interesting CNA piece of Rolex crime. The pre-own market couldn't conclusively confirm the authenticity of the Rolex GMT Saru and end of the day, the police turned to the authorized center to certify that the piece was Rolex authentic and all parts were authentic and original. And the Prosecutor and Court made their calls according to the certification.

Italian man sold 'fake' Rolex that turned out to be real in 'impossible' crime against Singapore watch shop

The court heard that Singh bought a Rolex GMT Saru sometime in February or March 2025 from an acquaintance he knew as "Matteo". There are purportedly only about 20 authentic pieces of this watch in circulation, so Singh's friends advised him to conduct further checks.

A watch shop told Singh that the watch case may have been swapped out and that the serial number of a genuine Rolex GMT Saru may have been laser-engraved onto the watch. Singh thought he may have been cheated and that the watch was fake, so he decided to sell it.

The victim agreed and asked Singh to leave the warranty card with him to run some checks and return after 30 minutes. The victim used an ultraviolet torchlight to check the lettering on the warranty card and was satisfied that it was authentic. Together with his friend, the victim inspected the watch and was satisfied with its condition.

After Singh left the shop, the victim and his friend went to neighbouring watch shops and asked other retailers to examine the Rolex GMT Saru. On the advice of another shop owner, the victim used a loupe - a kind of magnifying device - to scrutinise the serial number engraved on the watch and discovered that the number had been washed off and later laser-engraved. The victim did further checks and felt that the watch was fake.

The police later took the Rolex GMT Saru to the Rolex Service Centre, where a watch technician assessed the watch for authenticity. He certified that all parts of the timepiece were authentic and original.

https://www.channelnewsasia.com/singapor...me-6067846