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  • Dec 29, 2014
  • Updated: 9:35pm

Lai See

PUBLISHED : Friday, 27 July, 2012, 12:00am
UPDATED : Friday, 27 July, 2012, 12:00am

Which century is Lands Department operating in?

We hear of an extraordinary story that makes you wonder about the sanity of the Lands Department. One of our readers complained to the department because a tenant occupying a residential flat in a building was using it to operate a tattoo business. He pointed out in his complaint that the occupation permit for the flat, which determines the use of the property, stipulated residential use.

The Lands Department's response strikes an oddly Dickensian tone. 'The lease conditions governing Inland Lot ... stipulate that the lessee shall not use, exercise or follow on the Lot or any part there of the trade or business of a Brazier, Slaughterman, Soap-maker, Sugar-baker, Fellmonger, Melter of tallow, Oilman, Butcher, Distiller, Victualler or Tavern keeper, Blacksmith, Nightman, Scavenger, or any other noisy, noisome, or offensive trade or business without previous licence from the Government.' The department goes on to say that since the use of the premises as a tattoo parlour 'does not constitute a breach of the lease conditions', it will not take action against the tenant. As our reader remarks: 'The Lands Department appears to be living in another century.' He intends to fight on. Watch this space.

Piper Jaffray says bye-bye Asia

The decline in capital markets has led to the demise of another brokerage house. The US-based Piper Jaffray has said it will either sell or exit its operations in Hong Kong, its only operations in Asia, by the end of September. 'Losses through the second quarter, year-to-date and in 2011 [in the HK business] have been significant,' chairman and chief executive Andrew Duff told analysts, saying the firm 'doesn't have the financial resources to build out the business [in HK] to a more sustainable platform'. The Hong Kong operations lost US$10.9 million last year. Its chief in the city, Alex Ko, has approval to find a buyer for the business or undertake a management buyout, Reuters says. But analysts say the business will probably close. Piper Jaffray moved into Hong Kong in 2007 with the purchase of Goldbond Capital for US$50 million. Goldbond was set up in 2003 by Ko, who was previously head of corporate finance at BNP Paribas Peregrine Capital in Asia. Piper Jaffray's closure follows that of Renaissance Capital late last month and lay-offs elsewhere. Business is looking bleak, with an uncertain outlook, low turnover and dramatic fall in initial public offerings.

Less is more

An unusual research note has come across our desk in the form of an open letter from two Sanford Bernstein analysts to the managements of three Hong Kong-listed mainland renewable energy companies. The note was triggered by the appalling performances of the companies since listing over the past two years. China Longyuan, Huaneng Renewables and Datang Renewable have underperformed the market by 41.5 per cent, 47.1 per cent and 46.9 per cent respectively. The other catalyst for the note was an effort by the companies to contact analysts to explain their respective strategies. The open letter sets out the main concerns the analysts have heard from investors. It notes that these stocks have lost 54 per cent of their value since their IPOs even though market conditions have been 'ideal' for defensive stocks. 'The problem is not market conditions, operating environment or investor misperception. Nor do we believe that the reason for the weak performance of your stocks is a function of poor communication about your strategy. We believe the problem is your strategy.'

There are five suggestions: 1) Stop listening to whoever is telling you that investors are more concerned with revenue growth than with earnings growth; 2) Commit publicly that you will not issue new equity for at least five years; 3) State your plan to issue more corporate bonds and what that will mean for interest rate and earnings volatility; 4) Make your capital spending decision process transparent; 5) State when you aim to be free cash-flow positive and what you plan to do with the cash. Hmm, a possible buying opportunity is looming - perhaps.

Not such a good idea after all

Good to see Sandy Weill, 79, now thinks big banks should be broken up to avoid more bailouts and to protect taxpayers. Weill, Bloomberg reports, is the man who ushered in the era of supermarket banks with the creation of Citigroup 20 years before the financial crisis. 'What we should probably do is go and split up investment banking from banking,' he told CNBC this week. 'Have banks do something that's not going to risk the taxpayers' dollars, that's not going to be too big to fail.' Hindsight is such a beautiful thing.

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