Hongkong.com hunts on mainland

PUBLISHED : Tuesday, 28 October, 2003, 12:00am
UPDATED : Tuesday, 28 October, 2003, 12:00am

Hongkong.com is hunting for more profit drivers on the mainland after its recently acquired mobile service provider helped to more than triple its earnings in the past quarter.

The Growth Enterprise Market-listed firm on Monday reported a profit of HK$30.5 million for the three months to September, of which Newpalm (China) Information Technology contributed 70 per cent. The result compares with a profit of $9.24 million a year ago.

'We are studying some acquisition plans now,' hongkong.com chief executive Rudy Chan Kai-yu said. 'Our acquisition targets must have profit-making track records and their products can integrate with our portal platform.'

The firm posted a 348.4 per cent increase in income to HK$57.17 million, including 81 per cent from mobile service provider Newpalm.

Hongkong.com bought Newpalm in April for US$55 million. Newpalm had 5.1 million subscribers at the end of last month, up 16 per cent from the previous quarter.

Unlike other mobile service providers, Newpalm's focus is on community services, including fortune telling, mobile chatting and gaming, rather than only ring-tone and content downloads.

Last month, Newpalm signed a direct connectivity agreement with China Unicom in Guangdong province, allowing it to tap Guangdong Unicom's 11 million customer base and boost its coverage to 26 mainland provinces.

Newpalm plans to introduce new products in the first half of next year, including internet voice response services, according to chief executive John Xiao.

With HK$1.3 billion cash on hand, hongkong.com said it was in talks with online game developers in Beijing and Shanghai on merger and acquisition plans.

In the third quarter, hongkong.com also began managing www.china.com under a licence agreement with parent chinadotcom.

'That's what Newpalm lacks,' Mr Chan said. 'Our operation of china.com will help Newpalm diversify its business to the internet market.'

DBS Vickers Securities analyst Wallace Cheung expected the portal to bring in advertising revenue this quarter.

'[It] is moving in a correct direction,' he said. 'There is still much room in the online advertising market despite the presence of top players such as Sina and Sohu.'

Sohu last week said online revenue in the third quarter jumped 28.6 per cent from the previous three-month period to US$8.74 million.

Mr Cheung forecast hongkong .com would post a full-year profit of HK$96 million.

The stock yesterday closed up 2.6 per cent at 77 cents.