Compared to past two years, outlook is dimmer. With current high interest rate and option to travel, consumers are more selective in discretionary spending.
That was the outlook guidance given during last year’s AGM.
After attending the AGM last year, I was expecting a drop of both top and bottom lines in the teens range. I am glad that it turned out to be better.
The company has managed to eke out a 1% increase in revenue. Net profit dropped by 10% but with the regular share buyback, the drop in earning per share (EPS) is lower at 8%.
With EPS at 23.87 cents, it could easily maintain its 8 cents dividend this year. The dividend payout ratio is just 34%. At current price of around $1.60, the yield is about 5%.
“Ongoing geopolitical tensions and conflicts and a high interest rate environment are expected to continue impacting consumer sentiment in the specialty watch industry. An industry-wide slowdown is
anticipated. The Group expects to remain profitable in the next financial year.”
The outlook continues to appear dim but without much information, it’s hard to quantify the impact of the slowdown.
My sense (non-objective) is that it won’t be too drastic. Maybe a maximum of 20%?
Hopefully, the management can provide a bit more colour in the coming AGM.
With the low payout ratio and strong balance sheet, I still think it is likely to maintain its dividends next year.
Hence, I will continue to hold on to my current stake.