759 Store owner’s shares double on hopes death of founding chairman Lam Wai-chun may lead to restructuring
Executive director Tang Fung-kwan to take over as chairwoman of CEC International after the death of Coils Lam Wai-chun on Saturday
CEC International Holdings, which owns the popular 759 Store in Hong Kong, saw its share price more than double on Monday morning as brokers speculated there may be a restructuring of the company after its founding chairman died at the weekend.
The share price reached a 21-month high of HK$1.04 before the lunch break on Monday, up by 124 per cent from Friday’s close of 46.5 HK cents. It closed on Monday at 89 HK cents, up 91 per cent from Friday close.
The rise followed the sudden announcement on Sunday night that Coils Lam Wai-chun, the founding chairman of the company and its flagship 759 Store, had died at the age of 60 on Saturday at Hong Kong Sanatorium & Hospital.
“The passing away of the founding chairman is sad news. However, it also gives hope to investors that it may pave the way for a major restructuring, or even merger and acquisition opportunities. This has led buyers to rush to bet on the stock on Monday,” said Jeffrey Chan Lap-tak, founding partner of Oriental Patron Financial Group.
“The 759 Store in fact is very popular and has a leading market position among snack retailers. Its [financial] results were not good in recent years, mainly due to an overexpansion of the number of stores a few years ago. But the reduction of stores in the past two years has already helped the company get back on track. It may well be a target of acquisition,” he said.
However, Chan said 759 Store, like many small and medium-sized companies, relied heavily on the leadership of its founder. Lam and his wife Law Ching-yee own 70.89 per cent of CEC International, according to stock exchange data.
“Now the founder has died. We will need to wait and see if the new management can lead the business forwards,” Chan said.
CEC International did not disclose the cause of Lam’s death. A source close to Lam told the South China Morning Post that the founding chairman has suffered from diabetes for years.
“Mr Lam was submitted to hospital for intensive care on Saturday but passed away a few hours later. It is sad but the family and management of the company are now trying their best to maintain the operations of the company he founded,” the source said.
The source said the board held an urgent meeting on Sunday to discuss a successor. It then announced on Monday that executive director Tang Fung-kwan would take over as the new chairwoman of the company.
Tang 48, joined the group in 1993 and was appointed as an executive director in 1999. She is responsible for the overall management of the procurement function of the group’s retail business.
Lam was a well known figure in Hong Kong. He founded 759 Store in 2010 to take on the big supermarket chains in a highly competitive retail market. The store initially sold chips, noodles and other snacks from Japan and South Korea before expanding into rice, tea, coffee, wine and other food items.
At its peaks, it had over 270 stores around the city but the overexpansion, a decline in tourists, and high rents all led the company to suffer losses in recent years. This prompted it to cut back its stores to around 220.
The company last month announced that its net loss for the year ending April 30 had narrowed to HK$32.87 million from HK$49.99 million last year.