HMV shares slump 89 per cent over two days as landlords file suits seeking more than HK$5m in overdue rent

06-Dec-2018 Intellasia | South China Morning Post | 6:00 AM Print This Post

HMV Digital China Group’s shares have tumbled 89 per cent over the past two trading days, amid concerns the company may liquidate or dispose of its loss making retail units, according to a filing at the stock exchange.

The company’s shares were quoted at 1.7 HK cents at the midday break on Wednesday on GEM, down 15 per cent from Tuesday when they fell 80 per cent.

GEM is the second board of the Hong Kong stock market, tailored towards small and medium-sized companies that have yet to post a profit.

Wednesday’s level was the lowest since the company, chaired by entertainment businessperson Stephen Shiu Jnr, listed in 2008.

Retail Business in Hong Kong being under siege from the high rental fees, potential lawsuits, weakening local consumer sentiments and the worldwide rise of e-commerce

HMV Digital

“In the past few months, HMV Retail Business in Hong Kong being under siege from the high rental fees, potential lawsuits, weakening local consumer sentiments and the worldwide rise of e-commerce,” HMV said in a stock exchange filing on Tuesday night.

“The HMV Retail Business has been remaining stuck in time. The HMV retail business may undergo future plans, but not limited to, restructuring, investment, liquidation and disposal.”

The company added that it will issue an announcement once a decision has been made.

The group’s retail business revenue for the third quarter stood at HK$31.55 million (US$4.04 million), down 41 per cent from a year earlier, the exchange filing said.

“Now HMV cannot even afford to pay its rent and the landlord had filed lawsuits. This may lead to the shops being closed or a forced wind up,” said Louis Tse Ming-kwong, director of Hong Kong-based VC Wealth Management.

“Other creditors may also take similar actions. The investors have lost confidence and that led to the nosedive in the share price,” Tse said.

Where there were market rumour said chair Shiu has been trying to find a white knight,

Tse said it would be difficult to find a white knight to help rescue the music retailing venture, referring to market talk that company chair Shiu has been actively searching for new investors.

“The CD and DVD retailing industry has been a sunset industry. People nowadays have shifted to downloading music, films and television shows online to watch on their computers or mobile phones. This is particularly difficult for Hong Kong as the rent is among the most expensive worldwide,” Tse said.

HMV’s three shops in Central, Causeway Bay and Kowloon Bay all faced eviction as their landlords have filed lawsuits separately over the past two weeks seeking more than HK$5 million combined for unpaid rent and other charges. The company has seven HMV outlets in Hong Kong.

In June, Hong Kong Records, another major CD and DVD retailer, also closed its flagship shop in Pacific Place. The company still has a shop at Harbour City.

HMV Digital China said its financial position and business operations are “as usual”. Aside from its retail business, HMV has a film unit and acts as artist manager for a number of stars and singers in Hong Kong.

The company has made films such as Delete My Love, and manages artists including Julian Cheung Chi-lam. Originally the company was named China 3D Digital.

In 2016 the company bought HMV’s retail music business for HK$408 million from AID Partners, a private equity firm directed by local businessperson Kelvin Wu King-shiu. AID Partners took over the Hong Kong HMV business in 2013 when British HMV went into administration.

In an interview with the Post at the time of the acquisition, Shiu said he wanted to turn HMV into part of his entertainment empire and would expand HMV to become a lifestyle store featuring shopping, restaurants and concerts that would showcase his artists in addition to other talent.

“HMV is an international brand which has been rooted in Hong Kong for the past 22 years,” Shiu said in 2016. “It has become an integral part of the collective memory of Hong Kong people.”

The company’s market cap on Wednesday morning stood at HK$258.37 million.


Category: Hong Kong

Print This Post

Comments are closed.