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3 Highlights From Hour Glass Ltd’s Latest Results

Hour Glass Ltd (SGX: AGS) released its full-year financial results this week. Revenue for its financial year which ended on 31 March increased by 4% while earnings per share soared 41%. Here are three highlights from its latest earnings update.

Strong operating performance

Buoyed by positive consumer sentiment and growth in its regional network, the luxury watch retailer returned to growth this year. Revenue rose to S$720.9 million for the year, while profit after tax increased 41% to S$71.4 million.

The surge in profit after tax was also due to higher gross margins, which improved from 24.2% in the last financial year to 27.0%. In its earnings report, management said that the trend for luxury watch retailers in Asia has picked up after a few sluggish years.

Mr. Michael Tay, Group Managing Director of The Hour Glass, said:

“The Group’s journey to transform itself began about three years ago and these efforts continue to bear results. We have remained steadfast in our goal to tighten coordination and improve our operational effectiveness and this is reflected in our overall performance. In tandem, initiatives to tailor services to meet the needs of an increasingly sophisticated market are yielding returns.”

Robust balance sheet

Cash is king and Hour Glass has plenty of it. The group ended its financial year with net assets of S$560.2 million and a net cash position of S$166 million. Its net cash position itself represents around 31.2% of its entire market cap as of the time of writing.

In addition, Hour Glass is a cash generative business that has been generating plenty of cash from operations every year. In the reporting financial year, Hour Glass generated S$66.0 million from cash from operations after working capital requirements.

Rewarding shareholders

Perhaps the most satisfying aspect of the latest results was management rewarding its shareholders with a dividend boost. In light of the strong performance, management increased its dividend by 50% to 3 Singapore cents per share.

The dividend payout ratio is around 30%, which means that management still has the potential to increase its dividend should it see fit. Nevertheless, at its current share price of S$0.76 per share, the dividend jump brings the group’s dividend yield to a respectable 3.6%.

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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 Jeremy Chia owns shares in Hour Glass Ltd.