Cortina Holdings Ltd (SGX: C41) is a luxury watch retailer that operates a network of more than 20 outlets located in Singapore, Malaysia, Taiwan, Hong Kong, and Thailand.
The company has been remarkably consistent in growing its net asset value per share. Unsurprisingly, the company’s valuation has increased as a result, climbing more than 800% since it listed in 2002.
The fact that the company has paid a dividend almost every year since then makes its tremendous growth all the more impressive.
Here are five things investors should know about the specialised watch retailer.
1. It’s growing its shareholder equity
Cortina has grown its shareholder equity from S$152.6 million in fiscal year 2015 to S$199.4 million in fiscal year 2019, which ended on 31 March this year.
This growth was achieved without much increase in the number of shares outstanding. Consequently, net asset value per share grew from S$0.921 to S$120.4, which translates to 5.5% growth per year.
Source: Cortina Holdings Ltd Annual Report 2019
2. It has a steady dividend history and is a consistent cash-flow generator
As mentioned earlier, Cortina Holdings has consistently paid dividends to shareholders every year. Its net dividend per share increased from 5.0 Singapore cents in FY2015 to 9.1 Singapore cents in FY2019.
Its dividend is also backed by robust cash flow. In FY2019, the group generated S$80.2 million in free cash flow, whilst only paying out S$15.1 million in dividends. Its earnings per share for the 12-month period was 17.5 Singapore cents. Based on these figures, its dividend payout ratio was just 52%, and its cash dividend payout ratio (dividends/free cash flow) was just 19%.
This leaves it plenty of room to increase its dividend should it manage to sustain its earnings and cash-flow generation in the future.
3. It’s branching into e-commerce
Cortina Watch officially launched its e-commerce website, Cortinawatch.online, in August last year.
While the bulk of luxury watch sales are still transacted in physical stores, e-commerce sites now make up 10% of the US$400 billion luxury goods market. Many shoppers also used e-commerce sites to research product facts before making their transactions.
With its e-commerce site, Cortina Watch can tap into the growing e-commerce market and increase its visibility to potential clients.
4. It’s anchored by a robust balance sheet
Cortina Holdings is anchored by a robust balance sheet. As of 31 March this year, the group had S$81.3 million in cash and equivalents and just S$24.0 million of debt, giving it a net cash position of S$57.3 million.
5. It has a reasonable valuation
Most importantly, despite a recent surge in its share price, Cortina Holdings still sports relatively reasonable valuations.
As of the time of writing, shares of the retailer change hands at S$1.48 per share. At this price, it has an inexpensive price-to-earnings ratio of 8.4, a price-to-book ratio of 1.2, and an attractive trailing dividend yield of 6.1%.
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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 doesn't own shares in any companies mentioned.