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Business

Hong Kong SME Leading Business Index hits 3-year high in Q3 as business confidence returns

  The overall Standard Chartered Hong Kong SME Leading Business Index rose by 4.4 to 46.6 in the third quarter this year, the highest since Q3 in 2018, as small and medium enterprises (SMEs) regained business confidence amid the gradual easing of the COVID-19 situation in the city, said the Hong Kong Productivity Council (HKPC). Edmond Lai, Chief Digital Officer of HKPC, said in a news conference on Tuesday, “The survey shows that SMEs are flexing their muscles to pick up their business as fast as possible by increasing investment and expanding staff size.”  Kelvin Lau, senior economist of Greater China at Standard Chartered Bank Hong Kong Limited, expected the positive momentum to remain intact in the second half of 2021, backed by further development in the IT industries and a recovery in the real estate sector. The overall index, which is compiled by HKPC and sponsored by the Standard Chartered Bank, rose for three consecutive quarters despite it was still below the neutral mark of 50.  All five component sub-indices were up and among which the “global economy” recorded the most significant growth to 52.8 from 43.6 a quarter earlier, said Mr. Lai. It was followed by recruitment sentiment of 50.9 and investment sentiment of 49.1. Talking about SME’s perspective and planning in response to the economic recovery this year. The business performance of information and communications was the best as 56% of the SMEs surveyed said that their business returned to the levels before the pandemic or fared better than that, while accommodation and food services were the most affected, with 81% of SMEs reporting a setback in business.   The retail industry index also recorded a surge, rising by 10.7 to 46.9 quarter on quarter due to the continued unwinding of social distancing measures since the first quarter …

Business

Fairwood’s annual profit doubles due to government subsidies

Hong Kong’s second largest fast food chain Fairwood Holding Ltd (00052) reported net profit attributable to shareholders of HK$153.6 million in the financial year ended Mar 31, 2021, more than doubled from a year ago due to government subsidies. This was 152.4% above its yearly net profit of HK$60.9 million the previous year. However, its annual revenue dropped 12.7% to HK$2.65 billion under COVID-19. Shares of the company rose about 1% to close at HK$18 after the results were announced while the Hang Seng Index lost 0.97% to 28,983.89. Basic earnings per share of the company increased 152.2% to 118.59 HK cents, from 47.03 HK cents a year ago, it said in a statement. Fairwood, which operated fast food restaurants, institutional catering and property businesses, said mandatory social distancing policies and restricted opening hours for restaurants led to a significant reduction in restaurant patronage during the reported period. However, the increase in take-away services offset part of the loss in revenue. Businesses in mainland China were also affected with same-store sales down by nearly 27% in local currency. But the company was optimistic that its businesses in Hong Kong will recover as the pandemic is kept under control, and it will continue to expand in the mainland. With the completion of a bakery production line in April this year, the company would offer various bakery products and reduce costs, it said.  

Business

Hong Kong Disneyland Suffers Record Net Loss of HK$2.7 Billion in Fiscal 2020

Hong Kong Disneyland Resort reported on Monday a record net loss of HK$2.7 billion in fiscal year 2020 ending September 30, dragged by a plunge in non-local tourists during the coronavirus pandemic. The theme park had remained closed until February, 2021, which took up 60% of the fiscal year. Even the local guest reaction has been positive since reopening, the income cannot cover the high operation costs. Hong Kong Disneyland Managing Director Michael Moriarty said that the pandemic “is unpredictable” and their business strategy now focuses more on the local market. Park attendance was only 1.7 million during the reported period, a drop of 73 percent compared to prior year. Per capita spending dropped 18%, while the average hotel occupancy declined by 59 percentage points to only 15%, it said in a statement. Hong Kong Disneyland celebrated its 15th anniversary in November last year while the park only had 3 years in net profit since 2005. The net loss is the worst-ever on record and compared with a loss of HK$105 million a year ago.  In order to reduce cost, Disneyland adjusted operation days to only 5 days per week and about 4000 employees have been on unpaid leave since September, 2020.

Business

BNO migrants sell Hong Kong properties for UK tax reasons

  • The Young Reporter
  • By: Kwok Chiu Tung 郭昭彤Edited by: Zhu Zijin Cora 朱子槿
  • 2021-05-11

Hong Kong British National (Overseas) (BNO) passport holders moving to Britain tend to sell their properties in the city to avoid related taxes charged by the UK government on overseas properties and that may trigger a capital outflow of up to HK$280 billion from Hong Kong, based on banks and media estimation. BNO migrants will be subject to the UK's global tax system, under which their rental income from Hong Kong will be taxed and if they want to buy a residential property in Britain without selling their Hong Kong residence they have to pay an extra 3% of stamp duty. Therefore, Hong Kong residents emigrating to the UK are pondering what to do with their Hong Kong flats. Chan Siu-yi, 36, who moved to the UK several months ago with a BNO visa, has decided to sell her property in Hong Kong to avoid extra taxes. “The global taxation policy might charge us about €2000 (HK$18,717) every tax season if we don’t sell our property in Hong Kong after moving to the UK within 9 months,” she added. The British government launched a new policy after China passed a national security law last year, to allow Hong Kong BNO holders to live and work in the UK for up to five years and eventually seek citizenship. The policy is expected to spark a new wave of immigration. The British Home Office said in January that the number of immigrants via HK BNO visas is expected to reach between 258,000 and 322,400 over five years. Based on the estimation of Bloomberg Intelligence Research, up to 16,300 Hong Kong households may move to Britain via BNO visas this year and a maximum of HK$150 billion worth of properties from these families could be on sale in 2021 alone. A Bank of …

Business

US-listed Chinese firms rush to HK despite lukewarm welcome

  • The Young Reporter
  • By: Zhu Zijin Cora 朱子槿、Zhou Yichen Gloria 周奕辰Edited by: Zhu Zijin Cora 朱子槿
  • 2021-04-30

Erica Lam, a 30-year-old broker eager to buy new shares of technology companies for profit, saw the Hong Kong secondary listing of online entertainment company Bilibili Inc. (9626) a great opportunity and bought 3,000 of its new shares.  However, the stock price of Bilibili fell as much as 6.8% on the first day of trading, translating into a loss of HK$165,000 for Ms Lam. Before Bilibili, search giant Baidu also briefly fell 0.2% below its Hong Kong IPO price and ended the first day of trading unchanged. "The listings of Baidu and Bilibili came amid a cooling market when Asian investors showed less enthusiasm for IPOs and worried about the increasingly high valuation of technology stocks in recent years," said Wang Hui, a portfolio manager at Haitong Securities. "On top of that, the rise in U.S. bond yields has also caused many investors to sell tech stocks." Higher interest rates are particularly damaging to high-growth tech companies as investors value them based on expected earnings over the next few years, she said. The Hang Seng Tech Index of top technology companies has dropped 22.3% from its Feb.17 high to 8500.13.  Also, China set its 2021 GDP growth target at above 6%, lower than the market’s expectation of  8% growth, which made investors worry about a tightening in monetary and fiscal policies. "Such a conservative GDP forecast would undermine investor confidence," said Ms Wang.   Booming home-coming trend under increasing Sino-US tensions Bilibili, like many Nasdaq-traded Chinese companies, jumped on the homecoming bandwagon by listing their stocks in Hong Kong with tech heavyweight Alibaba taking the lead in late 2019 due to growing Sino-US tensions. The two countries have played tit-for-tat with increased tariffs, imposed sanctions and targeted regulations. To hedge against rising risks, more mainland tech companies chose to seek secondary …

Society

Ethnic minority entrepreneurs break the glass ceiling

It was almost 8 pm when Anushka Purohit walked into a bakery in Tsim Sha Tsui. Fixated at the smell of freshly baked, glossy and sweet bread that lingered hours after it came out of the oven, she hoped to buy a piece before the store closed.  As she was getting ready to pay, the cashier said to the rest of the staff, “Last order of the day.”  On her way out, Anushka noticed a tall pile of trays, with each one separated by a layer of assorted breads. “What are you going to do with all this bread,” she asked, curious to know what will happen to all the leftovers.  “Throw it,” the cashier said while the other staff prepared black garbage bags. Anushka was shocked by the amount of fresh bread that was going to waste.  Days later she saw someone drinking beer. That got her thinking about how to turn one fermented product into another and that’s when Breer was born.  Anushka and her three co-founders of Breer use unwanted bread to make beer.   In 2019, Hong Kong saw 109.5kg of domestic food waste and 51.5kg of commercial and industrial food waste per person, according to the Environmental Protection Department. With craft beer and breweries becoming increasingly popular in Hong Kong alongside what seemed like a never-ending food waste problem, Breer seemed like a good solution. She first came up with the idea for the Enactus Social Innovation Competition at Hong Kong University of Science and Technology. After representing Hong Kong in the national competition, the team decided to pursue it full time, using the money they won from the competitions as capital.  Almost half of store-disposed foods in Hong Kong is leftover bread, according to a report by Breer. The city also produces 3,600 tonnes of …

Business

TikTok owner ByteDance likely to launch Hong Kong IPO in second quarter

  • The Young Reporter
  • By: Vikki Cai ChuchuEdited by: Zhou Yichen Gloria 周奕辰
  • 2021-04-16

ByteDance has started preparations for its Hong Kong IPO and is likely to file a prospectus in the second quarter assuming the company’s valuation of up to $400 billion (HK$3.12 trillion), about 1.8 times of its competitor Kuaishou, according to media reports. Caixin Global said if the Hong Kong IPO could be successfully launched, ByteDance would be the third most valuable listed company at the Hong Kong stock exchange behind Tencent and Alibaba group. Caixin put the valuation of ByteDance at about US$300 billion (HK$ 2.33 trillion) while Hong Kong and international media reported that it would be up to $400 billion (HK$3.12 trillion). However, ByteDance kept silent on the rumoured listing plan.  The listing of the Beijing-based start-up is expected to include BtyeDance’s most popular mobile applications such as Douyin, news platform Toutiao and video service Xigua. TikTok will probably seek a separate listing since it involves overseas assets, Caixin said. China Securities Journal said that ByteDance had notified the operator of the HKEX that it had appointed securities underwriters on Wednesday but the media took away the story from its website on the same day. According to the HKEX underwriting agreements, firms are required to appoint sponsors and underwriters at least two months ahead of applying for IPO. The latest stock-option price for employees trading their bonuses to ByteDance’s unlisted stocks more than doubled compared with last year to $126 (HK$978.82) per share from under $50 (HK$388.42). The price did not move much from 2019 to 2020 at around $44 (HK$341.81). The prominent rise in internal stock-option price reflects the private equity market’s assessment of the firm’s value in the past 12 months. ByteDance now is the world’s highest-valued unicorn. ByteDance’s rival Kuaishou, with 271 million daily active users, reported revenue of 58.8 billion yuan (HK$ 69.93 billion) …

Business

China's Trip.com raises up to $1.4 bln in HK secondary listing amid tourism recovery

  • The Young Reporter
  • By: Zhou Yichen Gloria 周奕辰Edited by: Kwok Chiu Tung 郭昭彤
  • 2021-04-09

Chinese online travel giant Trip.com Group Ltd. (9961) is raising as much as $1.4 billion (HK$ 10.9 billion) in its Hong Kong secondary listing, as a rebound in travel may lead to a business revival.  The public offer started on Thursday and would run through Apr.13, with trading expected to start on Apr.19, according to its listing document. The Nasdaq-listed company (Nasdaq: TCOM) is offering 31.6 million shares at a maximum price of HK$333 apiece. That's a premium of 11% to its closing price of $38.55 (HK$ 299.88) on Nasdaq on Thursday. Each Trip.com's American depositary receipt represents one ordinary share to be listed in Hong Kong. "Trip.com's secondary listing in Hong Kong could increase cash flow, diversify risk and attract more Asian investors amid growing tensions between China and the U.S.," said Zhang Xiao, an analyst from Great Wall Securities. "The domestic tourism is recovering strongly and the global tourism will gradually recover as more people having vaccinations. This will boost investor confidence and bring more opportunities for Trip.com to increase its market value." The Shanghai-based company is among the growing cohort of U.S.-listed Chinese firms to carry out homecoming listings, including search giant Baidu which is Ctrip's single largest shareholder holding a stake of 11.5%. Total fundraising via new share listings in Hong Kong surged 822% to a record high in the first quarter. Trip.com provides comprehensive travel products and services on its global one-stop travel platform, generating revenues primarily from the accommodation reservation and transportation ticketing businesses. Due to the severe impact of COVID-19 on the global tourism industry, the company's revenue in 2020 plunged 49% to 18.3 billion yuan (HK$ 21.74 billion), according to the prospectus. It also saw a loss of 3.3 billion yuan (HK$ 3.92 billion) after making a profit of 7 billion yuan …

Business

Goldman recommends “buy” Bilibili with expectation of soaring 40%

  • The Young Reporter
  • By: Vikki Cai ChuchuEdited by: Zhou Yichen Gloria 周奕辰
  • 2021-04-02

Bilibili (9626) was rated ‘buy’ by Goldman Sachs on Thursday and with the stock expected to increase by 40% to HK$1,219 a share, compared to the current stock price of HK$870, due to its large and fast-growing user base and strong revenue.  IPOs in the Hong Kong stock market often have potential first-day rallies, but Bilibili’s stock price dropped 3.6% from an HK$808 issue price to HK$780 at its trading debut on Monday. The recent global declines in technology stocks and China’s crackdown on the country’s technology conglomerates put heavy pressure on Bilibili. Goldman Sachs said as the online video sharing and streaming platform with the most Generation Z users, Bilibili was expected to see its monthly active users to reach 400 million before 2023.  Besides, Bilibili has high quality and abundant content which are the fundamental elements for expanding its users. Bilibili also adopts multiple liquidity strategies which can generate more revenues. Bilibili’s revenues are mainly generated from mobile games, value-added services, advertising, and e-commerce and others. Its revenue in 2020 increased by 77% to 12 billion yuan (HK$ 14.3 billion) according to its prospectus. Monthly average users reached 202 million in the fourth quarter of 2020, up 55% over the same period in 2019. Guosheng Securities also gave a buy recommendation to Bilibili, according to an analyst report released on March 29, expecting the company to continue expanding its commercialization. Goldman Sachs affirms Bilibili’s community value and its understanding towards Generation Z in encouraging them to join the activities in Bilibili community in its report. The investment bank also said Bilibili has chosen a clear company development path and hopes it can keep thriving. Bilibili is building a video content ecosystem by providing various video content in satisfying its audiences’ entertainment, cartoon, technology and life skills viewing demand. …

Business

Chinese sportswear stocks jump after anti-Xinjiang cotton statement

Shares of Chinese sportswear makers extended gains on Friday in hopes of increased sales as leading foreign brands, including H&M and Adidas, faced backlash in China after western countries imposed sanction on the country amid a Xinjiang cotton row. Li-Ning (2331.HK) ended 2.9% higher at HK$51.45 after jumping nearly 11% on Thursday. Anta Sports (2020.HK) rose 5.61%, extending gains of 8.4% yesterday. Chinese consumers boycotted some foreign brands after the US along with the European Union, Canada and the UK announced a joint statement earlier this week for sanctions on Chinese officials over human rights violations in Xinjiang. Xinjiang Uygur Autonomous Region in northwestern China produces about a fifth of the world’s cotton and supplies the material to many international brands. The anti-Xinjiang statement affected a number of fashion brands in China over Xinjiang cotton. Swedish fast-fashion retailer H&M products were removed from major Chinese e-commerce platforms including Alibaba and JD.com, following calls by state media for a boycott over the retailer's decision to stop buying cotton from Xinjiang, according to media reports. Several other international brands, including Nike and Adidas, were also targeted by social media in Mainland China this week. The People's Daily, a Chinese government-backed newspaper, shared an image with the hashtag “I support Xinjiang cotton” in Chinese. This post triggers a boycott on Adidas, News Balance, H&M, Nike and Burberry, brands, which expressed concern about the alleged use of Uighur forced labour in the production of Xinjiang cotton. Adidas, New Balance, H&M and Burberry and their stock prices were lower. Adidas was at $155.71 (HK$1209.7) and H&M $4.56 (HK$35.43), down 5.25% and 3.38% respectively overnight. Chinese celebrities cut ties with brands rejecting Xinjiang cotton. “Me and my company artist - Eason Chan Yick-shun resolutely boycott any action vilifying China, Therefore, we decided to terminate all collaboration …