This is a tale about the fate of one multi-generational luxury watch retailer and how it became intertwined with that of another storied luxury watch purveyor. Sincere Watch was founded by the Tay family and was listed on the Singapore Exchange (SGX) in the early 2000s. It was subsequently owned by several others like the now defunct Peace Mark Holdings, which bought the controlling stake from then-owner Tay Liam Wee in 2007 to be privatised. When Peace Mark was liquidated, Tay, via a consortium, bought back the watch retailer, which had grown beyond its Singapore base and expanded into three other markets — Malaysia, Thailand and Australia.
In 2012, Hong Kong businesswoman Pollyanna Chu took over ownership of Sincere and the company was listed as Sincere Watch (Hong Kong) on the Hong Kong Stock Exchange (HKSE).
In 2020, leading listed watch retailer Cortina Holdings took control of Sincere Watch in Singapore for $84.5 million, separating the entity from Sincere Watch (Hong Kong), which retained its own operations and listing in Hong Kong.
Just like how the Lim family had founded and managed Cortina for multiple generations, Sincere Watch is now being nurtured by a new parent company.
“I believe that Sincere has found its forever home with Cortina and it is very likely that we will never be put on the market again,” says Ong Ban, CEO of Sincere Watch, in an interview with The Edge Singapore.
The way Ong sees it, Cortina, which is also very involved in the business, has provided Sincere with a stable platform to grow by harnessing its unique strengths.
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Up until Cortina’s acquisition, the constant changing of hands of Sincere Watch was a cloud over the company’s future. “Cortina, a true-blue watch company, has provided us the security to make plans and invest,” explains Ong. “There was this constant uncertainty, making it hard for us to execute any growth plans,” he adds.
According to Ong, the Tay family are still very involved in the business. With the new ownership, Sincere can now go about creating new concepts and further expanding its footprint across the region.
Time for growth
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Jeremy Lim, CEO of Cortina Watch, says there are synergies between the two former rivals. Before acquiring Sincere, Cortina had already won distributorship to some of the largest luxury watch brands out there, including Rolex, Patek Philippe, Montblanc and Breguet.
The addition of Sincere brings with it exclusive distributorship rights to another major brand, Franck Muller, in 12 countries within Asia Pacific. This was one of the key reasons for Cortina’s decision to acquire Sincere. Besides Franck Muller, Sincere is also known for its portfolio of other luxury brands, especially those belonging to so-called independent watchmakers such as Bell & Ross, Mido and Roger Dubuis.
In addition, Sincere’s acquisition brings with it the physical presence of over 40 boutiques. These include Sincere-branded boutiques in Singapore and Malaysia as well as the Pendulum brand in Thailand. Apart from these multi-brand retail outlets, it also runs single-brand boutiques for Franck Muller in Singapore and Australia, A. Lange & Söhne in Malaysia, as well as A. Lange & Söhne, Breitling and IWC in Thailand.
There are no plans to do away with the Sincere branding. Rather, Lim believes that while the two entities can derive operational efficiencies, the two brands are the platforms for their respective business partners and customer bases. “We did not acquire Sincere because it was different, but we did it because it is a complementary business,” says Lim, referring to the acquisition that was completed in March 2021. “We want to provide the necessary resources for Sincere to carry on,” he adds.
Ong further explains that the watch market is both growing and getting increasingly diverse. “No one retailer can serve all the customers,” he reasons. Customers will have different tastes in watches and will prefer different brands. While some chase big and popular brands, others seek the “more underground” independent brands. With the combined forces of Cortina and Sincere, they now can capture a larger slice of the market.
Finding a foothold
With the support of Cortina, Sincere has identified new market segments to break into. Sincere has reintroduced Sincere Haute Horlogerie (SHH), which was first established in 2005 when Sincere was still listed and Cortina was a rival.
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SHH was launched back then at the former premises of Hilton Hotel in Singapore. It served as a one-stop destination for watch collectors to experience the best brands and best offerings from the world of independent watchmaking.
As Ong reminisces, it was a different era back then, when the appreciation and acceptance of independent brands was still in its infancy. Although there were also some of the big and popular brands found in the old SHH, Sincere gave up the shop space when the lease ended and SHH went into hibernation.
Today, SHH has made a comeback with its new home in Marina Bay Sands. “The independent brands that we choose to offer in SHH have enormous potential in time to come. SHH aims to be a touch point for greater things to come and I believe that it is critical to start something like this to ignite the passion of today’s watch consumers,” says Ong.
The reopening of SHH is a response to collectors across Asia who are more sophisticated than before, along with the increasing demand for more depth in the experience of independent brands. This specialised store will elevate the established reputation of the former boutique and offer a purer experience, raising the bar for the quality of the retail experience for watch collectors, explains Ong.
“As a premier watch specialist, we understand well the art of fine-watchmaking since it is something that is deeply entrenched in our DNA … With this new boutique concept, we hope to deliver to the sophisticated watch collector, an even higher level of enjoyment for the craft, passion and creativity of independent watchmaking,” says Ong.
There are now 19 brands carried at SHH, each chosen for its unique attributes and craftsmanship. These include Arnold and Son, Chopard LUC, Corum, H. Moser & Cie., Laurent Ferrier and Moritz Grossmann.
“The investment that has been put into SHH reflects the core competency of Sincere,” says Ong. There are plans to expand the SHH concept and bring it to Malaysia, Thailand and other locations within the region, he adds.
Future plans
Cortina’s acquisition of Sincere has been positive for its books. In its latest 2HFY2022 ended March, Cortina boasted a 49.2% y-o-y increase in revenue to $392.2 million, while FY2022 saw revenue jump by 64.5% to $716.9 million. Cortina attributes this increase in both periods to both the easing of Covid-19 restrictions within the region as well as the additional revenue from the completion of the acquisition of Sincere in March 2021.
Earnings for both periods also saw healthy growth, with 2HFY2022 experiencing a 72% y-o-y jump to $43.3 million and FY2022 increasing by 73% y-o-y to $68.8 million.
Cortina turns half a century old
As Cortina celebrates its 50th anniversary this year, it is rewarding shareholders with total dividends of 12 cents per ordinary share, comprising 2.0 cents final dividend, 5.0 cents special dividend and an additional 5.0 cents special 50th-anniversary dividend. This is almost double that of the 6.5 cents declared in the previous year.
Currently, Cortina lacks analyst coverage, but it is quite clear that its share price has been on an upward trend since the completion of the acquisition of Sincere. Since last March, shares in Cortina have gained over 80.3% to trade at $3.75 on Oct 5, valuing the company at 9.02 times earnings and giving it a market value of $620.9 million. In the same period, the STI has gained 4.6% and 11.8% with dividends reinvested.
In a sign of how the company is committing to the business, it has made a recent property investment. On Oct 4, Cortina announced it has been granted the option to buy the entire fourth level of 15 Scotts Road for $49 million from the Singapore Institute of Management. The total size of the space is 1,276 sq m. As Cortina rents its offices in Singapore, some of those leases will be expiring soon. The company, citing organic growth seen in the near term, wants to increase its requirement for more office space.
“Instead of renting such office space, we have been considering acquiring the same. The property would be able to satisfy our group’s need for office space in the near term when the existing tenancies to which the property is subject terminate at the end of their terms,” Cortina says. According to the company, the acquisition will cause net tangible assets to rise by 1 cent to $1.90 while net profit is expected to inch higher to $69.096 million from $68.773 million on a pro forma basis.
Looking ahead, Ong is upbeat about the overall watch sector. “Consumers today see watches as a lifestyle. Fashion has changed and so have watches, reflecting the changing lifestyle of people. Hence, we are always on the lookout for brands. Our core competency is being able to bring the latest and the best to the market. That has been our modus operandi since we started in 1992 and that will not change,” says Ong.
Photo: Albert Chua/ The Edge Singapore
