Hour Glass Ltd’s Latest Earnings: Is It Time For A Sustained Recovery?

Hour Glass Ltd (SGX: AGS) is a luxury watch retail group with a presence in nine key cities throughout the Asia-Pacific region. Yesterday, the firm announced its earnings for the second quarter and six months ended 30 September 2017.

Here’s a quick rundown of the financial figures from the latest quarter:

1. Revenue increased 6% year-on-year to S$173 million.

2. Meanwhile, net profit surged 29% to S$10.7 million.

3. As a result, net profit margin increased from 5.1% last year to 6.2% in the latest period.

4. Basic and diluted earnings per share for the quarter was at 1.52 Singapore cents, up from 1.18 cents a year ago.

5. As of 30 September 2017, the firm had a cash hoard of S$120.4 million and S$53 million in total debt. This gives a net cash position of S$67.4 million. In comparison, as of 31 March 2017, it had a net cash of S$73.7 million. Even though the figure has fallen, the balance sheet is still robust.

6. Cash flow from operations was at S$22.7 million, and S$326,000 was spent on capital expenditure. Therefore, the retailer brought in around S$22.4 in free cash flow for the latest quarter, a decline from S$27.6 million raked in a year ago.

For the six-month period, revenue grew 8% year-on-year to S$337.4 million while net profit increased 7% to S$17.7 million. Improved consumer sentiment in some markets in the region and the pickup in overall economic activity in key markets helped to prop up sales and profit. The firm feels that luxury brands still have room for growth despite the current challenging business conditions.

Hour Glass is not resting on its laurels though. Mr Michael Tay, one of the two managing directors of the company, said:

“The underlying economic mood turned positive in the past few months and this contributed to improved performance for the Group. While it is hard to predict sustainable trends in a market that can be prone to swift changes, we continue to remain agile and vigilant in ensuring that we stand ready to meet the new demands of our business.”

Shares of the company are now changing hands at S$0.69. This translates to a trailing price-to-earnings ratio of around 10 and a trailing dividend yield of slightly below 3%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns shares of Hour Glass Ltd.