Editor’s note: This is the latest edition in the “Company Notes Series”, where we periodically share our notes on companies we’ve studied in the recent past but currently have no vested interest in (we may invest in or sell shares in the companies mentioned at any time). The notes are raw and not updated, and the “as of” date for the data is given at the start of the notes. The previous edition in the series can be found here. If you have any thoughts on the series you would like to share, feel free to do so through the “Contact Us” page; we appreciate any feedback. Thanks in advance!
Start of notes for Oriental Watch Holdings
Data as of 22 September 2026
Oriental Watch Holdings (HK:0398) is a pureplay luxury watch retailer listed in Hong Kong.
With a trailing dividend yield of 10.9%, PE of 9 and PB of 0.91, the company screens very well. I originally wanted to do a deep dive into the business, but fellow investment writer Michael Fritzell already published a solid write-up. Rather than repeating what was written, I decided to present a brief overview of the industry, outline the company’s background, and analyze the key considerations for potential investors.
The Industry
Luxury Swiss watch brands traditionally did not operate their own retail outlets. Instead, brands such as Rolex and Patek Philippe partnered with trusted local operators who managed multi-brand stores or dedicated mono-brand boutiques on their behalf.
Unlike traditional distributorship agreements, however, authorized dealer status is granted on a store-by-store basis. Every single store expansion requires separate negotiations with the brand itself.
This setup allows brands like Rolex to maintain tight control over their overall retail footprint.
Despite the rise of smartwatches and digital devices, the luxury watch market has remained resilient. In 2025, Swiss watch exports totaled CHF 25.6 billion across approximately 14.6 million units.
Oriental Watch Holdings
Oriental Watch Holdings operates 39 stores in total: 24 in Mainland China, 11 in Hong Kong, and 2 each in Macau and Taiwan. Founded in 1961 by Dr. Yeung Ming Biu, the company grew from a single shop into a major regional retailer.
Initially operating primarily in the mid-tier segment, Oriental Watch acquired La Suisse Watch Company in 1973. This strategic acquisition secured authorized dealership rights for Rolex and its sister brand, Tudor—two of the industry’s most prestigious brands.
This move laid the foundation for a 50-plus-year relationship with Rolex. In 1993, the company was publicly listed on the Hong Kong Stock Exchange.
Today, the business is led by Dr. Yeung Him Kit, Dennis (son of Dr. Yeung Ming Biu). He served as co-managing director alongside his father starting in 2003 before assuming sole leadership in 2021 following his father’s passing.
Dynamics of Authorized Dealers
Authorized dealers hold an enviable market position due to insatiable demand for top-tier timepieces, which frequently sell out before even reaching the showroom floor.
To secure a spot on waitlists for highly coveted models, clients often build relationships with dealers by purchasing less sought-after inventory. This dynamic enables retailers to move slower-selling stock effectively.
This arrangement is equally advantageous for the watch brands themselves.
Authorized dealers cannot simply order high-demand stainless steel sports models (such as the Daytona or Submariner); they must also accept deliveries of less popular models, such as smaller-diameter two-tone pieces. By moving this broader selection, authorized dealers boost total sales for the brand without diluting the prestige of flagship models.
While Oriental Watch is estimated to carry around 100 brands, its business is heavily anchored by Rolex and Tudor, which together generate an estimated 70%-80% of total sales.
Rolex Certified Pre-Owned Program
Rolex recently launched its official Certified Pre-Owned (CPO) program, marking its first formal entry into the secondary market.
The initiative was designed to provide secondary-market buyers with authenticity guarantees in a market flooded with counterfeits.
Through partnerships with authorized dealers like Oriental Watch, trade-in watches are processed through Rolex’s authentication system and resold with an official Rolex CPO guarantee and seal.
This initiative offers reassurance to pre-owned buyers while providing Oriental Watch with a valuable new revenue stream in the pre-owned segment.
Rather than taking a share of resale profits, Rolex charges service fees for authenticating the watches and issuing official certifications.
Operational Transformation Under Dennis Yeung
While founder Dr. Yeung Ming Biu built the company’s base, his son Dr. Dennis Yeung has significantly transformed its operations.
His leadership—first as co-CEO from 2003 and then as sole leader from 2021—stands out across three key strategic areas:
1. Streamlining Operations and Rightsizing Inventory
At its peak in 2013, the group operated over 100 retail locations, including 89 in Mainland China. However, government crackdowns on conspicuous consumption led to severe inventory accumulation across the region. In response, Dennis Yeung streamlined operations, closing underperforming branches to focus heavily on core high-performing brands like Rolex and Tudor. Today, the store footprint stands at an optimized 39 locations. Inventory fell dramatically from HK$1.8 billion to HK$460 million, significantly boosting liquid cash assets.
2. Opportunistic Share Repurchases
When the stock traded at a deep discount to book value and low P/E multiples around 2020–2021, Dennis Yeung executed a bold share buyback strategy. Rather than making small daily open-market purchases constrained by low stock liquidity, he initiated a tender offer at HK$3.00 per share when market prices hovered near HK$2.00. This HK$250 million authorization successfully retired 14.6% of outstanding shares.
With shares now trading around HK$3.38, that buyback added clear value. Furthermore, distributing total dividends across 487 million shares instead of 570 million has directly boosted dividend per share metrics over the past six years.
3. Highly Shareholder-Friendly Capital Return
Since taking sole leadership in 2021, Dennis Yeung has maintained a payout ratio of roughly 100% of profits in dividends.
With his two sisters holding substantial direct and indirect stakes in the firm, this generous dividend policy serves as an effective mechanism to unlock value for all shareholders. Backed by a strong balance sheet holding HK$961 million in net cash and zero debt, the group can comfortably sustain high payout ratios without risking operational stability.
The Rolex Distribution Landscape
As noted, Rolex remains the key anchor brand for Oriental Watch Holdings.
Across the industry, Rolex has been gradually consolidating its dealer network, favoring larger regional partners capable of opening dedicated mono-brand boutiques. This may be good for Oriental Watch Holdings as most of its 24 stores in Mainland China are mono-brand boutiques.
According to an industry analysis by Grey Market, 437 out of 578 remaining retail partners operate only a single store. These smaller partners are more at risk of losing their partnership with Rolex.
Official Rolex points of sale have dropped from a peak of over 1,800 in 2022 to around 1,300. Given that Hong Kong has a high density of authorized dealers (24 locations), Oriental Watch could capture additional market share if smaller competitors lose their authorised dealer agreements.
However, risks exist regarding Rolex’s direct-to-consumer (DTC) expansion. In 2023, Rolex acquired major retailer Bucherer after 87-year-old chairman Jörg G. Bucherer chose to sell in the absence of direct family heirs. This acquisition gave Rolex a direct retail presence across Bucherer’s multi-region store network.
Today, around 41 Bucherer locations sell Rolex watches directly.
While Bucherer mainly operates in Europe, it recently opened its first store in China, placing it in direct competition with authorized dealers in the region. There is an ongoing risk that Rolex could favor its own Bucherer stores when allocating highly sought-after models.
Nonetheless, industry observers believe Rolex is unlikely to dismantle its third-party dealer network entirely.
Independent dealers have built decades of localized client relationships, established brand presence, and funded expensive store refurbishments required by Rolex. Abruptly severing these relationships could cause unnecessary operational friction for the brand.
Because this partnership structure has proven mutually successful for decades, drastic disruptions remain unlikely in the short-to-medium term.
Current Status of the Swiss Watch Industry
Dr. Henry Tay, Chairman of Singapore-based retailer The Hour Glass, shared insightful observations in his 2026 Chairman’s Letter.
He highlighted structural shifts in the industry, specifically how market profits are increasingly concentrating among top-tier, highly disciplined luxury houses.
The four main privately held giants—Rolex, Patek Philippe, Audemars Piguet, and Richard Mille—have consistently outperformed by prioritizing craftsmanship, brand perception, and tight supply management over volume expansion.
Rather than increasing production during demand booms, these brands raised prices and embraced scarcity, further cementing their market dominance.
Together, these four private brands now command nearly 50% of total Swiss watch market revenue (up 1,240 basis points since 2019) and an estimated 76% of total industry profits.
With approximately 70-80% of sales derived from Rolex and Tudor, Oriental Watch is well-positioned to benefit from this flight to quality and brand concentration.
However, because the company lacks authorization for Audemars Piguet and Richard Mille and has minimal access to Patek Philippe, it is increasingly dependent on its singular relationship with Rolex.
Valuation and Financials
Operating income has moderated from a peak of HK$433 million in FY22 to HK$312 million in FY26.
Management attributes this softness to broader macroeconomic shifts, with consumer spending moving toward experiences rather than traditional retail goods.
Simultaneously, pre-owned secondary market prices for Rolex models have normalized following their 2022 peaks.
When secondary market premiums compress, authorized dealers face greater friction selling less-demanded models to buyers seeking waitlist priority.
However, secondary market prices have stabilized recently, which could provide a modest operational tailwind moving forward.
Investment Thesis
At the current share price of HK$3.38, Oriental Watch commands a market capitalization of HK$1.6 billion. Backed by HK$961 million in cash and zero debt, the net enterprise value (EV) stands at just HK$650 million.
For FY26, the company declared dividends of HK$0.37 per share, translating to a trailing twelve-month (TTM) yield of 10.9%.
Total dividend distributions amounted to HK$180 million, representing roughly 100% of full-year earnings after tax.
While performance remains tightly bound to Rolex, management’s 50-year plus relationship with its key supplier provides a level of stability.
Assuming the company continues distributing ~100% of earnings, income-focused investors should enjoy strong yield generation.
Conclusion
Oriental Watch Holdings presents a compelling valuation case for income investors. Under Dr. Dennis Yeung, management has demonstrated exceptional capital allocation—rightsizing the store network when needed and executing aggressive share buybacks when valuations plummeted.
A net cash position of HK$961 million offers a strong buffer to support the 100% dividend payout policy. Even if the group sees an opportunity to open a few new stores, the expansion could be easily supported with cash on the balance sheet.
Although heavy reliance on Rolex is the primary risk factor, Rolex’s long-standing track record of supporting key retail partners provides some reassurance.
Overall, Oriental Watch offers attractive potential for yield-focused investors. While annual profits may fluctuate with broader luxury demand cycles, the company’s moat and capital discipline suggests near to mid term results should remain fairly consistent.
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