Apple watch

Apple's new watch:

• Looks nice, I think normal people would wear it.  Beautiful, with a lot of attention to detail.
• It has new ways to navigate the UI, such as using the crown to zoom.
• The back of the watch provides 'haptic feedback', buzzing or nudging your wrist silently.

• The watch does not fit under a shirt sleeve, so cant be a dress watch.

What can you do with it?

• See incoming messages or calls on your wrist.
• Open hotel doors and act as a boarding pass.
• Use ApplePay.
• Provide turn-by-turn walking directions.  And it could be done silently, by buzzing your wrist.
• You can place your finger on the watch and send your heartbeat to someone.  Not very useful.
• Fitness tracking: calorie counting steps moved - pretty standard stuff.

Why would you use it for?  We're not sure, there's no real reason for its existence yet.  Maybe:

• The watch buzzing on your wrist may prevent phantom phone calls.  (I get this when I'm on call).
• Can it remind you of things?  If you're going outside and its raining (bring an umbrella), or if you're passing buy a shop and need to buy something.
• It can wake you up in the morning.  And not your wife.
• It gives you directions to walk around town without bumping into people because you're looking at your phone.

At the moment, its main use is to stop you looking at your phone so much.  Cut a lot of little annoyances out of your life.

Will this overturn the watch industry?  The threat is not from the Apple Watch itself, but from the continuous innovation (or copying) that this may start.  Someone may write a killer app that makes enough people buy it.  The Apple watch may eventually replace the iPhone.   No matter how timeless, elegant or expensive a wristwatch is, if enough people get used to glancing at and feeling feedback from their smart watches, it becomes a necessity.  Like a smartphone today.

And for pricing, Apple has taken aim at the luxury watch market. It's prices start at $349 for the sports watch.  A stainless steel watch is also being released, and a 18K solid gold (not plated) one.  The last will probably cost over 5K.

Watches have a long history, and are now the only piece of jewelry a man can wear.  But you can only wear one watch at a time.  We need to wait and see if there is a compelling enough reason for mass adoption of smart watches.  Right now, I give it a 50/50 chance. The mechanical watch industry may die in 10 years.

Buying shares in Swatch or Richemont now may be like buying Nokia or Blackberry in 2007.  Even though Swatch is cheap at less than 14X earnings, its too risky. Too bad: I really liked these companies, but have to scratch them off my buy list.

iWatch vs Swatch

Apple's rumored iWatch would not be a watch, but a complement to an iPhone.  Probably some snap around bracelet, with a wireless connection to it.  With, for example: automatic passcode unlocking, NFC for automatic payments, help finding your lost phone, etc.

Samsung has also confirmed they are also working on a watch.

The Swatch CEO has come out to say that he does not think its a big deal.

Yes, luxury mechanical watches and an electronic iPhone-complement device are different products, addressing different markets.  One is an intricate, delicate piece of machinery - the only piece of jewelery men can wear.  The other would be a convenience.

For investors in Swatch and Richemont, if the iWatch does take off like the iPhone did 6 years ago, the key question is: Can you wear both the iWatch and your mechanical timepiece at the same time?  I don't think so.  At best, its redundant.  At worst, you look like a pretentious dick.  Dress watches - for special occasions - may not be affected, but any watch that you wear to the office would be no longer required.

These products may never even see the light of day - large companies have dozens of R&D projects at any time, many of which will die.  It seems a bit extreme to run from a rumor.  However, given Apple's track record, its very difficult to predict how the new products they define will shape our world, when the only thing you know is the old products.  And a reminder of all the companies that Apple has destroyed.

Is the age of mechanical watches coming to an end?

The Swatch Group

Largest watchmaker in the world.  Provides a 'ladder of brands', from low end to high end:

• Swatch and Flick Flak: $30 to $100+
• Hamilton and Tissot: Around $300 to $1500
• Longines: 1.5 to 3.5K per steel watch
• Omega: 3K to 8K: per steel watch
• Breguet, Blancpain, Glashuette Original: starting at 15K

Competes with Citizen/Seiko/Casio and many others at the low end, Rolex and Richemont in the luxury range, Richemont, LVMH and Independents in high end luxury.

Segment breakdown

How much of their sales are from high end watches vs low end?  Swatch gives no breakdown: 70 color pages of rubbish in their Annual Report without a single number!  Have to guess from online snippets.  Out of 2011 revenue of CHF 1.27b, from high end to low:

• Breguet nearly reached 1b (8%).
• Omega is the largest contributor, 2011 estimated revenue will be CHF 3 or 4b, or an estimated 30% of 2010 Swatch Group sales.
• Longines is close to 1b (8%).
• Tissot produces 3-5m watches per year (video from May 12), I'm guessing 1b revenue (wholesale prices), giving (8%).
• Hamilton is now top of Swatch's mid sized brands.  Lets say 1b (8%)
• Swatch has yet to reach 1b (maybe 5%)

Estimated 2010 revenue (from HSBC Research) is:

Revenue accounted for seems to be spread between low, mid and high end.  Based on the above, and the list of Swatch brands, my guess is: 15% high end luxury (Blancpain, Breguet, Glashuette Original), 30% luxury (Omega), 15% high end (Longines, Rado), 25% basic watches (Hamilton, Tissot, Certina), 5% for kids (swatch, flick flak).  Remainder for ETA and electronics.

Swatch Branding

All swatch brands are neatly categorized into a specific price range with certain characteristics.  For example, a Hamilton or Tissot will never release a watch at a Longines price range.  Only Rado will make ceramic watches.  It follows 100% a textbook strategy on price segmentation by branding.

This is a different approach from Richemont, whose brands compete a little, and do sometimes their own thing by releasing watches that are 'out of character'.  For example, up-market JLC released a Navy Seal watch.  Panerai, a sports brand with large luminous dials, made a  torbillion watch.

Hamilton

Has a rich history and tradition. After dying and being resurrected by The Swatch Group, is now a shell of its former self.

Gained fame in the 19th century as a railroad watch.  Official watch of the American Expeditionary Forces in WWI.  In the 20s and 30s, was used by explorers: Commander Richard E. Byrd f;ying over the North Pole in 1926,  Roy Chapman Andrews  in three years' exploration of the Gobi Desert, First Byrd Antarctic Expedition to the South Pole.  Produced a maritime chronometer in WWII: from zero they produced 10,000+ pieces by the end of the war - considered the 'most accurate portable mechanical timepiece ever made'.  Produced the worlds first electric watch in 1957, the Ventura, worn by Elvis Presley in 'Blue Hawaii'.  Went out of business in 1964.

Brand sold to Swatch Group in 1974; production moved to Switzerland in 2003.  Hamilton watches feature in many Hollywood movies.  Still marketed as an 'American' brand, is pigeon-holed at the lower end of the swatch range (U$300 onwards).

Profit breakdown

Personnel costs usually increase steadily (1% down in 03, 4% down in 04, increased all other years).  'Rent, maintenance and Energy' is also probably fixed.  The other costs seem variable, especially Materials, and Marketing/Sales/Admin:

Profit margin (before tax) recently is between 15% in bad years and 23% in good years, similar to Richemont.  But if we look further back:

Richemont is far more cyclical than swatch - Richemont's profit margins are lower in bad times and higher in good times.  As expected, since Swatch also sells lower end products.

Balance Sheet

Quite clean, 1.6bn CHF net cash.

600m contingent liabilities.  700m leases over the next 5 years. 

Comparison to Richemont

Transcripts: In 2011, Swatch tried to sue Bloomberg for secretly recording a conference call with Securities Analysts and selling it to their clients.  Apparently Swatch has never heard of immediate disclosure of public information.  Switzerland is ranked 3 out of 10 in the world bank ranking for investor protection, on par with countries such as Mali, Chad and Iraq.

Richemont has the potential to branch out into other luxury products (leather goods, jewellery).  Swatch will forever sell watches.

Swatch has many competitors in the sub USD 1000 range.   Some of them make excellent watches (e.g.: Seiko), but have not been able to brand their products to successfully move above that range.  Richemont has fewer potential competitors: in the luxury segment (e.g.: Omega/Rolex/Cartier), branding builds most of the product's value, and only large companies can bankroll this.  LVMH is a threat to both companies (Tag Heur competes directly with Omega....I don't think it has the same type of image as Cartier...achievement vs luxury).

Cannot fault the numbers from Swatch, they are profitable in good times and bad, and less cyclical that Richemont.  They are also financially conservative and don't like debt.

But it seems easier to get a feel for how Richemont develops its businesses, and they have greater potential to expand.  Subjectively, I would choose Richemont.

Richemont

Second or third largest luxury goods company in the world, after LVMH and PPR.  Sell mostly watches and jewelery.  Owns Cartier, Van Cleef and Arpels, IWC, Panerai, Jaeger-LeCoultre, A Lange & Sohne, Montblanc, Shanghai Tang and others.

Its a holding company for the South African Rupert family's Luxury goods companies.  The CEO, Johann Rupert, owns 10% of the stock but has majority voting rights.

Some Brand History

Some scattered bits and pieces about their brands....to get a feel for the business they are in.

LMC

In 2000, Richemont sold their media business and bought LMH (Lange & Söhne, Jaeger LeCoultre and IWC), paying 3b Swiss Francs, at the peak of the economic and watchmaking cycle. They were widely considered to have overpaid - LMC sold 91000 watches in 1999 though 15000 retailers, giving a price tag of U$1.2m per retail outlet, none of them exclusive.  Rupert later admitted they overpaid, but said if they could go back, they would do it again, only overpay by less.  It led Richemont to become one of the largest players in the luxury watch industry.

Cartier

The Cartier brand has gone through many transformations, from being 'Jeweller to the Kings' to 'appealing to American secretaries'.  In the 70s and 80s, their 'Les Must de Cartier' line aimed to be affordable to a younger audience, and sold cigarette lighters, perfume, watches, scarves and sunglasses. In 2000, Cartier began to a costly exercise to reposition itself as an exclusive watch and jewelry brand, removing cheaper items in the $1000 to $4000 range, and turning into the brand known today.

Luxury brands may be ephemeral.  It takes a constant effort to build and maintain them, and they can be devalued if they branch into cheaper or inappropriate product lines.  Johan Rupert has said that they do not want to "pick the low hanging fruit".  I think, like what Pierre Cardin did in the 80s and what Armani Exchange is doing now.

Profit Breakdown

Notes:

• Operating Margins below approximate PBT in the period shown, they differ only by (negligible) finance costs.
• Using PBT allows us to ignore BAT associate (divested Nov 08)

The dip in 2010 seems to trail the stock market by one or two years: hard luxury is historically more cyclical than soft luxury.  Operating margins are between 15% (bad times) to 23% (a stellar 2012).

As a percentage of sales:

What costs are fixed and variable?  Looking at the absolute amounts (not percentages):

• Only their Administrative costs seem to be fixed (Only dipped once in the past 7 years, and that was less than 1%).  
• Other costs seem to be variable: Advertising declined 21% in 2010 (its not obvious on the chart) but rose every other year.  
• It takes a fixed investment in staff and equipment to produce and jewelery and watches, but Cartier cut about half their production staff in the last downturn.  Variable....I guess.

 

Balance Sheet

Very clean. Negligible long term debt.  3b Euros cash.

Minimum operating lease less than 600m Euros.  Interesting that about 40% of this is contingent, the real minimum (if they don't sell anything) is under 350m.  They get their landlord to share in their success - first time I have see this in a listed company.

Non-cancellable leases are 900m for the next 5 years.

FCF and Capex

First, looking at CFO and Profits: since COGS is their largest cost. their CFO is most influenced by inventory:  (All charts below exclude BAT)

There is a clear pattern: CFO is usually slightly lower than profits, the difference being mainly inventories and depreciation.  Except for the past two recessions, where they work off inventory (2004 and 2010 were the only 2 years where inventories added to CFO), resulting in CFO being higher than profits.

They have generated free cashflow for the past 10 years (2002 was negative due to high CFI):

Majority of CFI was spent on PPE (mostly) and acquisitions (approximately 1/3rd of it).  Can't determine how much of the PPE was replacement and how much was expansion.

In the 2011 AR, they said they will keep expanding: "Our capital investments are therefore likely to range between 6 % and 8 % of sales in the next two years".

Business Model:

Buy troubled brands on the cheap, then take 5 or 10 years, using cashflow from their existing successful brands, to turn them around.  Examples of troubled brands acquired include Cartier in 1979, Panerai in 1999  - LMC was the exception (...not cheap).  They take time and effort to build their brands.  They mention that their businesses need to reach a critical mass: "it’s a lot harder to get from zero, or from €100 million to €200 million, than it is from €200 million to €600 million. From €500 million to €1 billion is a lot easier than from €100 million to €200 million".  Some of their brands are still loss making (Baume and Mercier) - Richemont did not break down the sales/profits of individual brands.

They are financially conservative.  No debt for the past 10 years.  Cashflow from their successful businesses is used to turnaround the troubled ones, and overall they have been profitable, and generating free cashflow for 10 years.  The CEO has stated that they prefer to build their current brands rather than acquire new ones ("Our job is to create goodwill, and not to pay other people for goodwill").  And that they will not use equity for acquisitions

I think they need to be financially conservative to handle bad times in a highly cyclical industry:

• They prefer, as much as possible, variable costs instead of fixed costs.  e.g.: have a turnover clause when leasing from landlords.
• In 2011, retail sales grew to match wholesale, for the first time.  The CEO previously mentioned that there is no fixed target to increase the percentage of retail.
• CEO previously mentioned that they are one of the fastest in scaling back production when bad times occur. 

Each brand has separate manufacturing facilities: "Our philosophy is based on verticalisation, i.e. each maison has its dedicated manufacturing facilities to guarantee authenticity."  This is important, because serious watch-people care about the components inside their watches.  So they don't try to get 'synergies' or economies-of-scale from combining (the manufacture of) different brands.

The transcripts of the results presentations are very informative. And even entertaining - especially the Q&A sessions.  Really get a feel for how management runs the business.

Conclusion

Like this company: Its long term approach to building brands, clean balance sheet, free cashflows, and financially conservative nature.

And my wife likes their brands.

Risks:

• LVMH. With 3X the revenue and profits of Richemont, and its Bvulgari acquisition - LVMH is moving further into the luxury watch industry.  The barriers to entry are not strong enough to stop a monster like LVMH.
• China.  A downturn would affect everyone else too.  With its cash, the company will survive.

High beta stock, we see it roughly drop and rise 4X from peak to trough (stock price in Swiss Francs):

(Note the chart's y-axis does not start at zero, so looks a little worse than it is).

Dangerous game, playing with highly cyclical stocks.  I don't think I could bear seeing my stock drop 4X....Wait for a recession to buy.

The Luxury Watch Industry

Market Size

As most luxury watches are Swiss made, we take the Swiss watch sales published by FH.  These are export prices; multiply by 2.5 to 3 to get the retail values. The numbers are not broken down into segments: the total covers everything from a million dollar handcrafted luxury piece to a $35 dinosaur watch.

The hard luxury industry is highly cyclical - we have a 22% decline in 09:

2011 export sales were 19.3b Swiss francs, or 16b euros.  Multiplying by 3 for retail price, gives 48b total market size.

China

China is an important source of demand.  29.7% of 2011 Swiss Watch sales went to HK and China, however this does not account for overseas travelers:




Mainland Chinese tourists may account for 40% of all luxury sales in Europe.  This means Mainland China may account for 30-40% of the Swiss Watch market.

China represents a huge growth opportunity and a risk.  Johan Rupert (CEO of Richemont) colorfully likened it to having a black tie dinner on top of a volcano. "There is a volcano somewhere, whether it’s this year, in ten years’ time, or in twenty years’ time. We are exposed to China.  I think they are going to travel more...I think they are going to survive....we are now a ‘China play’...Personally, I don’t think anything’s going to go wrong in China. That’s my view, but I know nothing, and I mean it. I may be too optimistic about China, but if you have differing views, remember, it’s critical."

 

The Players

Looking at the largest players, which price segments they operate in, and guessing their market share:

• Swatch: Multitude of watch brands, from basic watches (like the dinosaur above) to high end luxury.  Best known brand is Omega.  For FY11, (finished timepiece) sales were CHF 5.9b, or 4.9b Euros.  Did not find their percentage of retail vs wholesale sales in the annual report, nor a breakdown of basic vs luxury.  Lets assume 75/25 wholesale/retail with 50% retail margin: gives 8.5b Euros or 17% market share.
• Rolex. A secretive private company, only in the luxury segment.  Estimated to produce 1m pieces a year, lets assume at a retail value of US 8K each, gives total Euro 6.4b a year, or 13% market share.
• Richemont (CH:CFR). Publicly listed company controlled by the Rupert family, owing Cartier (watches and jewelery), Van de Appels (high end jewelery), and several watch brands in the Luxury and High End luxury range.  Richemont's FY11 watch revenue was 3.3b Euros, or 7% market share.  Probably higher, as 58% of the company sales (not necessarily watches) are to wholesalers.  Lets estimate 9% market share.
• LVMH: (Tag Huer, Zenith, Bulgari, Hublot) Lists 1.9b Euros revenue for watches and Jewelery (not broken down).  If 70% of these sales are watches, that gives 4% market share.
• Independents: People who set up their own watch company, e.g.: Frank Muller

As I don't have the numbers, these are really rough estimates...guesses upon guesses.  Would be better to break down into different segments, as basic watches and high-end luxury items are different markets, not competing substitutes.  Except for Swatch, all these players only deal in the luxury market, and Rolex is probably the leader there

ETA Watch Movements

An estimated 2/3 rd of all Swiss made watches use movements from the Swatch group (for example).  As a near-monopoly under anti-trust regulations, it was required to provide to other companies both watch movements (to put them in a watch case and sell) or mechanical ébauches (allowing the buyer to modify the watch movement before assembly).  Swatch objected, and in 2004 was told it could stop selling ébauches after a transition period till 2008.  Swatch announced in 2009 that they would also reduce the supply of completed movements, though this has since been delayed to start in 2013.

Few alternatives Swiss companies could pick up the slack, main one is Selitta.

A harder issue is assortments (e.g.: hairsprings).  Swatch's Nivarox is the only major Swiss supplier, and they are reducing assortments by 5% in 2012.


How do the different players handle this?

• Rolex (brand) watch movements are totally produced in-house, the only mass-market luxury brand to do so.  Although their lower-end brand Tudor may use ETA movements.  Rolex apparently produces 50% of the assortments they use.
  
• Richemont is "comfortable" with the supply: "We don’t really have enemies in the watchmaking universe here, and I want to just keep it like that."
• LVMH is likely the target of these reductions.  Tag Heuer now manufactures the Calibre 1887 movement (based on Seiko design), and has plans to produce a new high-end movement designed by themselves. 
  

Barriers to Entry

There are two main barriers to entry:

First, time and money to build the capacity to produce watch movements and assortments:

“If we have to make assortments one day, we’ll make assortments. Obviously it’s difficult. It will take money. If we have to spend $20 million or $30 million to manufacture hairsprings, we can do it. It will take time. Initially they will cost much more than Nivarox hairsprings because only 50 percent will be good. We will have to go through all the hurdles.”

Second, time and money to start a brand.  Takes years of plastering your advertisements everywhere, as well as getting celebrities to endorse (or better still, to wear because they really like it), and generating buzz to build a brand which is recognizable to 'normal' people (not just watch lovers).

 How do companies enter this business?  Some examples:

• Franck Muller: Started designing/producing individual pieces for private clients in the 80s.  Built a tourbillon watch back when few others were able to do so; dubbed 'Master of Complications'.  House of Franck Muller started in 1993, famous for curvex shaped watch and for putting colorful numbers on the face.  Some watches use ETA movements.  Currently produces 40000 pieces a year.

• Azimuth: Started in 2003 in Singapore, with attention-catching designs (spaceship watch, robot watch).  Very niche.  As of 2009: produce around 1500 pieces a year with selling from SGD 2.5 to 7K.  Most of their watches appear to be modified ETA movements.

• Nomos Glashutte: started in 1990, Germany.  Watches have classical, bauhaus style design.  First watches used ETA movements, after 2005 they start to manufacture (some or all models?) fully in-house.  Very little marketing: may advertise in German watch magazines, and managed to get articles in Forbes and The Atlantic Times.  Few authorized dealers, most sales done online.  Watches cost from 1000 to 5000 Euros.  Don't know their annual production.

From these examples, it seems that either you start at the very high end like Frank Muller, with limited production for individual clients, or at the low end (that is, low end for luxury goods).  Both these sidestep the advertising costs.   At the low end, they all started off using ETA movements: seem to rely on eye catching design for watch-lovers to discover their offerings (probably online).  Azimuth and Nomos are at that stage now - sort of flying 'under the radar', serving a niche market.  Frank Muller has somehow managed to move into the mainstream, where the brand is now recognizable by normal people.

Swatch's restriction on movements and assortments, as well as proposed tougher 'Swiss Made' labeling regulations may make it harder to start a new brand from scratch in the future.

Morningstar gives both Swatch and Richemont a narrow economic moat.  I agree - although hard, its possible for a brand new company to start up and go mainstream within 20 years.

Luxury Watches for Beginners

The watch industry is confusing to newcomers.  So many big words, countless brands to choose from...and why do some pieces sell for 2K and others sell for 20K? 

When you buy a watch, what do you look for? And what are you paying for?  Also useful for when I look at listed watch companies later.

 

Price Segments

See this link for the different price segments.

Scarcity is the main thing determining which segment a brand is in.  For example, the high end luxury brand "A Lange and Sohne" produces 5K pieces annually.  A more popular luxury brand like Rolex is estimated to produce 750K to 1m pieces annually.

 

Brands

The highest luxury brands are only recognized by people 'in-the-know', they mostly have unpronounceable European names - A Lange and Sohne, Vacheron Constantin, Jaeger LeCoultre.... Only the more popular(ist) luxury brands such as Rolex, Cartier, IWC are plastered all over the place.  As my wife said, whats the point of spending thousands of dollars on a watch if no one knows what it is?

Different brands give different images: e.g.: sporty, elegant, technically sophisticated.  You must decide how you want to present yourself to the world: Do you want to be James Bond, Tiger Woods, or some 5th generation European aristocrat speaking in ze funny accent?

Some brands maintain a basic style which is instantly recognizable among all models of that brand (e.g.: the numbers on a Frank Muller or Cartier watch).  Other brands are have no distinguishing characteristics in their lines (e.g.: Omega).

How is a good brand made?  After deciding on the price segment and image, its a long, slow process...5 to 10 years...of stoking demand, creating excitement, always producing slightly less than desired, and raising prices.  The company needs to make sure the goods are never 'on-sale', either by owning their retail outlets, or buying back unsellable goods from retailers to keep them off the grey market.

Origin

Most luxury watches are Swiss made, meaning the at least 50% their components (by value) are from there.  This may increase to 60 or 80% later.

A few luxury watches are German.  There may be some Japanese luxury watches, not sure if they can sell outside of Japan.  I think its possible for the industry to move production to other European countries...maybe even Japan...but they can't produce elsewhere and still maintain their class.

 

Technical

Hand wound, automatic, or quartz: this short video explains.  Quartz is a no-no for men, but OK for women.

In-House or ETA: 80% of the watch industry 'movements' are manufactured by ETA (owned by Swatch group).  Many watches, even for well known brands, simply design a case, put the movement i, and sell it as their own.  Watch enthusiasts prefer 'in-house' movements, where the company creates all parts of the watch by themselves.  You may pay $5000 for a watch which just has a movement slapped inside a case, when the same thing is available under another brand for $500.  Again it has to do with being exclusive.  A Honda is just as good as  a BMW...but, if you pay a BMW price for a Honda, you are being ripped off - and you have more money than taste...So if you have watch collectors for friends, take note.  (Again, it doesn't seem to matter for women.)

More Complications

Every second watch advert I see has a 'tourbillon'.  Here is an interesting 2007 interview by Frank Muller, I like his examples of how changes to the watchmaking industry affect the value of the end product:

"You are buying more of the dream, the image and the magic and less of the technicity. Indeed the technicity serves to primarily to support the reputation of the brand." (...my wife was right).

 "A tourbillon is a dream. It is magic.  Because it is a dream it must be a bit inaccessible....But you make the tourbillon suddenly very accessible, do some degree you destroy the dream and you break the magic."

"A real hand made rattrapante costs minimum 50 thousand Swiss Francs and suddenly you’ve got a guy who has one on his wrist that costs less than 10 thousand Francs. How will that make you feel...? Once the dream has been broken you cannot repair it and this should be the greatest cautionary tale to what is going on with the tourbillon."

In the end, it doesn't matter what a 'tourbillon' or 'rattrapante' is... or even how to pronounce all these big words - the only important thing is that prices are falling.  All these fancy complications in a watch can become obsolete.  The brand is more important, it has a better chance of lasting.

 

A Nice Watch

Long time ago I went to a used watch shop with my wife.  There was row upon row of watches, each one priced from 4K onwards.  Couldn't believe how fugly most were: garish colors, 4 or 5 separate dials cluttering the watch face, studded with diamonds...like something a drunk rapper would wear.

After spending all this time online looking at watches, I've only came across one that strikes me as beautiful.  It looks like a watch, is easy to read, fits nicely with casual or formal wear, and comes without the marketing baggage: you don't have be James Bond or Tiger Woods to wear it:

Probably won't get it though, 5K is too much for a watch. [edit: was only SGD 3K.  A reasonable amount, but no so much that I should have spent on stocks instead...].