KGI Research has started coverage on luxury watch retailer The Hour Glass with an “outperform” recommendation and a target price of $2.32.
The target price is based on a discounted cash flow model, taking into account a weighted average cost of capital rate of 10.5% and terminal growth rate of 2%, according to analyst Megan Choo.
Choo points out that The Hour Glass’s revenue rose 63% y-oy-y to $472 million for the half year ended Sept 30, 2021, while net profit surged 110% y-o-y to $63.5 million in 1H22. This is mainly due to improved gross margins at 29.3% in 1H22, compared to the previous period at 26.2%.
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