September 19, 2007 / 11:33 AM / 12 years ago

Hour Glass says time not ripe for China, India

SINGAPORE (Reuters) - Singapore luxury watch retailer The Hour Glass plans to open more stores in Hong Kong, Japan and Thailand but will steer clear of mainland China and India and will not sacrifice profit growth for market share, a company official told Reuters.

The Hour Glass — which sells luxury watches from brands such as Patek Philippe and Rolex at prices ranging from $1,000 to $1 million — also expects sales and earnings for the first half of the financial year to March 2008 will “easily” beat the results for the same period last year.

“We expect to post extremely positive results from our first half,” Executive Director Michael Tay, 31, told Reuters in an interview on Wednesday. First-half results are due in October.

Tay also said that he expected full-year revenue would grow faster than in fiscal year 2007. “We believe that we will comfortably outpace 15 percent,” he said.

In the last fiscal year, Hour Glass’ sales rose 15 percent to S$407.2 million ($269 million), while net profit jumped 50 percent to S$18.6 million.

Shares of the firm have gained about 90 percent over the past year.

The Hour Glass, which has a market value of $111 million, is the second-biggest player in Singapore’s crowded luxury watch retail sector and competes with Sincere Watch and Cortina, which have market caps of $225 million and $40 million respectively.

CASINO STORE

In Singapore, where the company is based, Tay said The Hour Glass has submitted a proposal to open a store in Singapore’s first casino — The Marine Bay Sands, which will open in 2009.

“We should expect an answer (about the proposal) to come in 6 to 12 months,” said Tay.

Tay’s father Henry is the executive chairman of the company and his mother Jannie Tay, is the vice chairman. Collectively they hold 62 percent of company shares.

Singapore’s UOB Kay Hian said in a research note released in July that Asia accounted for 43 percent of Swiss watch exports in 2006.

The Hour Glass has 23 stores in the Asia Pacific, including 7 in Singapore, 3 in Malaysia, 3 in Australia and stores in Hong Kong, Tokyo and Bangkok.

Tay said the firm’s new stores want to capitalise on Asia’s fast-growing wealth, but he added that the company is not willing to expand too quickly into other developing Asian economies.

“We are more focused on bottomline growth than on market share,” Tay said.

He said the Hong Kong store is The Hour Glass’s proxy for China, but said the company was not in a rush to expand into mainland China and India due to the number of risks involved.

“The market in China is still in its infancy...once the market is built, we’ll make our entry,” he said.

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