The Hour Glass

[weijian]

For THG fanboys on VB, a comparison between AR23 and AR24 of the outlets shows some interesting changes:

(1) Spore: 3 outlets (2 of them WOS) were closed in the heartlands - Parkway Parade/Tampines Mall/NEX. A local horologist now needs to venture downtown or eastwards to Changi Airport Jewel.

(2) Msia: The area around Bukit Bintang Sentral station has already lost its allure for some time. So no surprise that THG finally closed its long-standing Lot10 boutique and opened 2 branches in 1MDB-inspired TRX, in addition to 2 more boutiques in affluent urban areas.

(3) Thailand/Vietnam: Total of 9 new boutiques (1 of them FP Journe mono brand boutique). Plenty of Chinese tourists and a rising Asean middle class, ready to show off I suppose.

A time for an update on THG store network based on AR26 (compared to AR25)

(1) A total of 12 stores closed - 6 monobrands (Tudor-3, Hublot-2, Tag Heur-1) and 6 boutiques (TheHourGlass-5, WOS-1). Besides the expected downsizing expected in SG/Msia/HK, half of the closures are concentrated at Vietnam. It seems like the prior Viet expansion in FY23/24 has been sized back as store rationalization kicked in.

(2) Premiumization continues with a 2nd Rolex store in Spore and a first Rolex store in Msia. In addition, THG opens their first-ever Patek each in Msia and HK, while Thailand has its 2nd outlet. In summary, a total of 5 Big3 monobrands (Rolex-2, Patek-3). From AR26's total store count of 75, 16 of them are now Rolex/Patek/FP Journe monobrands (or 21% of total store count). For context, the % of Rolex/Patek/FP Journe monobrand was just ~7% back in FY23 (4 out of 59 outlets) and 5% coming out of the last luxury watch market bear in 2017 (2 out of 36 outlets).

(3) Excluding Rolex/Patek openings, all geographies are seeing net decreases in outlet count. The only exception is ANZ with a new TheHourGlass boutique.

[weijian]

THG's MOM is out and is a fascinating read. Due to some issues, I did not attend the AGM and my absence now makes me feel like a fool. I will have to correct that in the many years to come.

I also have to admit that I doubled my THG exposure before FY25 results in anticipation of the final dividend. So one could imagine how disappointed I was when the final dividend was cut. But since then, it all made sense. Michael Tay (coincidentally also in charge of IR but doesn't want to do it) also seems to be unapologetic about schooling all the capital efficient investors (me inclusive as well).

MINUTES OF THE 46TH ANNUAL GENERAL MEETING

https://links.sgx.com/FileOpen/Minutes%2...eID=857364

Despite been a THG shareholder since 2020, I only became less foolish this year and attended my 1st THG AGM (the 47th AGM) last week. Over time, owning great investments don't just give great capital returns but also makes one a better investor by reducing foolishness. Arguably, the latter could turn out to be the cake while the former (capital returns) is only the icing.

Some snippets before the official MoM comes out in a months' time:

Most of the new (and upcoming) Patek monobrand boutiques are flagships. The HK and Ginza Patek boutiques opened in the last 1-2years are flagships. There will be one upcoming flagship Patek boutique in each of Australia's biggest cities - Sydney, Melbourne and Brisbane.

Boutique mix will evolve. In 1999 when Michael Tay returned to work at THG, a typical THG boutique carried ~50brands. Now, one only carries ~8-10 brands. Similarly in terms of branch topology, monobrands are expected to eventually dominate multibrands.

You don't give up your Rolex AD unless you are forced to. This sums up the 4 Rolex boutiques acquired from Kennedy Watches and Jewellery. Kennedy has recently also struck a deal to sell their Patek distribution rights to Cortina.

THG's financial disclosures and balance sheet will never be "optimized". Whether is it inventory (by value type) or segmental (different geographies), THG will not improve its current opaque disclosures for investors simply because brand partners whom themselves are private entities, want it to remain private. In addition, cash will always remain excessive because it gives assurance to brand partners. Michael Tay always prefers to err on the side of conservatism.

The good old numbers of Covid are not coming back. At its operational peak, THG had GPM~33.5% and ~130 days of inventory turnover. In previous years, Dr Henry Tay had mentioned that the inventory turnover days was not sustainable (nor ideal). Now, the latest FY26 GPM of ~30% has "reached its potential based on current watch desirability trends".

P.S. Yours truly was one of those who crowded around Michael Tay after the AGM, listening to him answering questions from the OPMI crowd. It lasted for an hour until the customary awkward silence finally came, ie. the crowd had no more questions to ask than Michael Tay had to go. As everyone left together, he was gracious enough to hold the lift door for every OPMI to go in first, before leaving with everyone on the ground floor rather than the carpark floor (I suppose he is walking back to the Tong Building office just cross the street)

[Choon]

THG's MOM is out and is a fascinating read. Due to some issues, I did not attend the AGM and my absence now makes me feel like a fool. I will have to correct that in the many years to come.

I also have to admit that I doubled my THG exposure before FY25 results in anticipation of the final dividend. So one could imagine how disappointed I was when the final dividend was cut. But since then, it all made sense. Michael Tay (coincidentally also in charge of IR but doesn't want to do it) also seems to be unapologetic about schooling all the capital efficient investors (me inclusive as well).

MINUTES OF THE 46TH ANNUAL GENERAL MEETING

https://links.sgx.com/FileOpen/Minutes%2...eID=857364

Despite been a THG shareholder since 2020, I only became less foolish this year and attended my 1st THG AGM (the 47th AGM) last week. Over time, owning great investments don't just give great capital returns but also makes one a better investor by reducing foolishness. Arguably, the latter could turn out to be the cake while the former (capital returns) is only the icing.

Some snippets before the official MoM comes out in a months' time:

Most of the new (and upcoming) Patek monobrand boutiques are flagships. The HK and Ginza Patek boutiques opened in the last 1-2years are flagships. There will be one upcoming flagship Patek boutique in each of Australia's biggest cities - Sydney, Melbourne and Brisbane.

Boutique mix will evolve. In 1999 when Michael Tay returned to work at THG, a typical THG boutique carried ~50brands. Now, one only carries ~8-10 brands. Similarly in terms of branch topology, monobrands are expected to eventually dominate multibrands.

You don't give up your Rolex AD unless you are forced to. This sums up the 4 Rolex boutiques acquired from Kennedy Watches and Jewellery. Kennedy has recently also struck a deal to sell their Patek distribution rights to Cortina.

THG's financial disclosures and balance sheet will never be "optimized". Whether is it inventory (by value type) or segmental (different geographies), THG will not improve its current opaque disclosures for investors simply because brand partners whom themselves are private entities, want it to remain private. In addition, cash will always remain excessive because it gives assurance to brand partners. Michael Tay always prefers to err on the side of conservatism.

The good old numbers of Covid are not coming back. At its operational peak, THG had GPM~33.5% and ~130 days of inventory turnover. In previous years, Dr Henry Tay had mentioned that the inventory turnover days was not sustainable (nor ideal). Now, the latest FY26 GPM of ~30% has "reached its potential based on current watch desirability trends".

P.S. Yours truly was one of those who crowded around Michael Tay after the AGM, listening to him answering questions from the OPMI crowd. It lasted for an hour until the customary awkward silence finally came, ie. the crowd had no more questions to ask than Michael Tay had to go. As everyone left together, he was gracious enough to hold the lift door for every OPMI to go in first, before leaving with everyone on the ground floor rather than the carpark floor (I suppose he is walking back to the Tong Building office just cross the street)

I was also in that inquisitive crowd but left halfway. Its the same every year, his patience is WOW WOW WOW. Just that this year, I came as a retired fulltime retail investor.

My key takeaway from the AGM was the concluding one-liner by the Chairman (Henry Tay) after the CEO (Michael Tay) had finished addressing all the official Q&As. He said,"our [inaudible] are asking us to work more closely with them". It left an impression because the CEO touched on many points but Chairman chose to mainly highlight just this one point.

I left the meeting encouraged. I was uncertain from last year's AGM, whether more monobrand boutiques mean that the role and value-add of the specialist watch retailer is diminishing, whether principal partners are arm-twisting retailers. This AGM gave me the confidence that relationships with PP and Rolex are growing even stronger (that it is an honour to be given the opportunity to operate a monobrand boutique for Rolex or PP).

On Rolex CPO: THG has not launched yet. CEO reckons that if it is launched by THG, it would likely be in AU/NZ where the clientele is Anglo-Saxon. CPO seems to work better with a Anglo-Saxon clientele.

Many praised that the Chairman Statement was once again masterfully written. And indeed, it gave a deep and rich and wide analysis of the industry. But there was zero mentioning of what the Coy did in the year, which should have been the main course in a Chairman Statement.

[weijian]

I was also in that inquisitive crowd but left halfway. Its the same every year, his patience is WOW WOW WOW. Just that this year, I came as a retired fulltime retail investor.

My key takeaway from the AGM was the concluding one-liner by the Chairman (Henry Tay) after the CEO (Michael Tay) had finished addressing all the official Q&As. He said,"our [inaudible] are asking us to work more closely with them". It left an impression because the CEO touched on many points but Chairman chose to mainly highlight just this one point.

I left the meeting encouraged. I was uncertain from last year's AGM, whether more monobrand boutiques mean that the role and value-add of the specialist watch retailer is diminishing, whether principal partners are arm-twisting retailers. This AGM gave me the confidence that relationships with PP and Rolex are growing even stronger (that it is an honour to be given the opportunity to operate a monobrand boutique for Rolex or PP).

On Rolex CPO: THG has not launched yet. CEO reckons that if it is launched by THG, it would likely be in AU/NZ where the clientele is Anglo-Saxon. CPO seems to work better with a Anglo-Saxon clientele.

Many praised that the Chairman Statement was once again masterfully written. And indeed, it gave a deep and rich and wide analysis of the industry. But there was zero mentioning of what the Coy did in the year, which should have been the main course in a Chairman Statement.

Hi Choon,

As a full time retail investor, I will say that your fun is just starting!

From my understanding, timepiece allocations are largely based on locations and historical record of sales/compliance. A monobrand boutique means the location sells only one brand and since staff/rental costs are fixed, it means that the single brand must have sufficiently high inventory turns plus actual inventory to be sustainable. The marque brands are demanding and strict, they are fair too. So while not granted, we can largely conclude when Rolex/Patek give blessings for a monobrand boutique, you will get larger allocations (than before) after meeting their expectations. What more, the added bonus is that THG is opening flagships and flagships get more allocation than other ADs in the same city.

As for the annual Chairman's statement, I generally spend 2-3hours to read/synthesize/expand my thoughts and understanding. Since I like to dive into numbers, I don't need Dr Henry Tay to tell me how the business is doing. But as someone who doesn't buy timeless pieces (yet), his reading of the industry is complimentary and considered gem.

---------------

My biggest takeaway from my 1st AGM attendance was nothing about THG, but about how I should conduct my own investment affairs when Michael Tay says that he doesn't believe in diversification (go in big when u see it) and THG will always err on the side of conservatism to have large cash on its BS.

[Choon]

THG needs no introduction on this forum. I am a long-term shareholder. I recently organised my thoughts on it.

If you're interested, you can read the full write-up here: https://greatcompounders.substack.com/p/...-retailer#

If you find the research useful, I'd be grateful if you subscribe for future write-ups.

***
The Hour Glass' greatest risk—losing its key brand partnerships. How likely is it to materialise?

THG's greatest risk is the loss of the distributorships of its most important brand
partners, which could result in the loss of more than half of its revenue. This risk
deserves far more thorough and balanced consideration than any other point in a
SWOT assessment of the Company.

Overconfidence in THG's enduring relationships with its brand partners overlooks the
possibility that changing technology, economic conditions or societal trends may one
day cause even the longest-standing partners to terminate their distributorships and
operate their own retail networks. Conversely, dismissing THG's business model
simply because this risk exists, overlooks a business that has operated under this
risk throughout its history, and compounded PATMI by 11.5%, 11.8% and 14.2% over the past 5, 10 and 20 years, respectively. Recent developments offer useful
perspective.
***

[weijian]

Luxury brands work on the principle of scarcity, not just with inventory but also providing hospitality via offline experiences that is considerably scarce in current times. Major brands have used hospitality (in this case, dining experiences) to increase customer's mindshare.

For luxury watch retailers, what comes to mind would be Audemars Piguet House (AP House) which also acts as some sort of social club to foster interactions. It is interesting to see that the grey market retail experience is also evolving into a dine/drink-and-buy.

Vintage watches, coffee and cake: Meet the couple behind Singapore’s Reference Room

On a street lined with fine-dining restaurants, cocktail bars and social media darling cafes, the last thing you’d expect to find is a vintage watch retailer.

Since opening in mid-September, Reference Room has attracted a steady stream of visitors – from watch enthusiasts to cafe hoppers in search of their matcha fix.

On the watch side, Chen received support from his existing customers. Through his Instagram account, Reference Room, he has been selling collectible timepieces and, perhaps more importantly, building a community of like-minded enthusiasts.

His experiences at pre-owned watch shops elsewhere in Singapore left much to be desired. In some of those shops, he said, “You see a watch from the external display, you go in and you try it on. After that it’s just about [negotiating] the price. If you don’t want it, you often feel the pressure to leave because otherwise you’d just be lingering.”

Combining a watch retailer with a cafe might seem like a straightforward idea, but it remains an unusual concept among Singapore’s multibrand watch dealers. Luxury brands have explored similar ideas. Tiffany & Co, for example, opened its Blue Box Cafe at Ion Orchard in July 2026, while other boutiques offer refreshments or private hospitality spaces for clients.

One of the challenges, Chen said, was securing insurance. Because Reference Room also operates as a cafe, the pair faced premiums three times higher than those for a standalone watch retailer. They approached more than 10 insurers, but only one provided a quote.

https://cnaluxury.channelnewsasia.com/pe...afe-296061

[Musicwhiz]

Corporate Monitor has published its initiation report on The Hour Glass which can be found in the link below.

https://corporate-monitor.org/the-hour-g...gy-needed/