Li & Fung defends company as shareholders cry for loss

Supply chain manager Li & Fung yesterday urged shareholders to be patient even as it forecast difficulties to persist amid bleak prospects for global consumer demand this year.

The world's largest consumer goods sourcing company finds itself battered by slowing consumption and high operating costs. Ever since the company reported its disappointing annual results in March, the stock has been on a steady slide, with even the ongoing market rally failing to stem the decline. Yesterday it closed at HK$7.49, a far cry from the HK$20 level seen in 2011.

"I bought your shares at over HK$20 because I believed in the Fung family, ignoring the doomsayers who forecast HK$7. Now they have been proven right. I still support the Fung family but I feel let down," a shareholder said at Li & Fung's annual general meeting yesterday.

Defending the business, group chairman William Fung Kwok-lun replied: "Our company is a mid- to long-term investment. We rarely react to short-term stock price movements. Everyone is watching how Li & Fung will reinvent itself because they think we operate a conventional business. Investors these days chase internet and technology stocks. Many of these companies do not even make money.

"Our edge as a global supply chain manager remains unchanged and we are committed to the business," he said. "Sooner or later, internet [retailing] companies will need supply chain management, whether they sell online or offline."

Li & Fung, which sources and supplies consumer goods for retailers such as Wal-Mart and Target, in March reported its core operating profit had fallen 18 per cent to US$604 million last year while net profit had dropped nearly 12 per cent from 2013 to US$539 million. It also admitted then that its three-year growth plan was no longer achievable.