HG SP / AGS.SI
Worth the waitlist
Apparel & Accessories Retailers
The Hour Glass’s multi-decade partnerships with Rolex, Patek Philippe, Audemars Piguet and F.P. Journe provide access to allocation-constrained inventory that is difficult for new entrants or e-commerce platforms to replicate. This positioning supported 15% revenue growth and 32% profit-after-tax growth in FY26 despite weakness across the broader luxury sector.
With 87% of FY26 revenue derived from South East Asia and Oceania, The Hour Glass is exposed to a growing concentration of private wealth in Singapore and the wider region. Singapore manages approximately US$4.6trn in AUM, while its US-dollar millionaire population rose 2.2% YoY to 244,000 in 2025. These trends provide a supportive, although indirect, demand backdrop for premium watches.
The group ended FY26 with zero bank borrowings and S$157.5mn of cash, while generating S$219.9mn in operating cash flow. It also permanently cancelled 59.4mn treasury shares previously repurchased for S$112.3mn. We conservatively forecast DPS of 6.0 cents, leaving upside if management raises the payout or undertakes further buybacks.
We initiate coverage on The Hour Glass Limited with an OUTPERFORM rating and a 12-month target price of S$3.94, based on a DCF valuation using an 8.8% WACC and 2.0% terminal growth rate. The current valuation does not fully reflect the durability of the group’s premium-brand allocation advantages, bank-debt-free balance sheet and recurring cash generation. Re-rating may be gradual, with FY27 gross-margin stabilisation and further capital returns representing the principal near-term monitoring points.
Key downside risks include (i) weaker demand in the premium-watch segment; (ii) further gross-margin compression; (iii) reduced allocations or increased direct retail by brand principals; (iv) adverse foreign-exchange movements; (v) low trading liquidity.
