Vitasoy’s shares slide 10 per cent in the wake of profit warning sparked by incendiary stabbing incident
- Vitasoy sparked a political storm this year after an internal memo expressed condolences to the family of an employee who stabbed a policeman, then himself
- Analysts say investors need to take a longer view on the stock, wait for an improvement in sociopolitical conditions
Vitasoy International’s shares plunged 10.1 per cent to HK$19.28 by the close of trading on Monday after the Hong Kong beverages company warned that its operating profit for the six months to September 30 could fall between 91 per cent and 107 per cent from the same period a year ago.
Vitasoy, which sparked a political storm in July after an internal memo expressed condolences to the family of an employee who stabbed a policeman and then turned the knife on himself, said it expected to face “between a loss of HK$50 million and a profit of HK$60 million” for the period, in a statement issued to the Hong Kong stock exchange on Friday.
“[Vitasoy’s stocks] will continue to fall [in the short term], because at the moment the company is standing in what is, for them, a situation that is absolutely not ideal,” said Ken Lo, director of investment strategy at Grand Capital. “Over the past year, Vitasoy’s sales [have] depended on the China market,” Lo added.
According to company information, mainland China accounts for about two-thirds of Vitasoy’s revenue.
Vitasoy found itself in hot water after an employee, a 50-year-old purchasing agent named Leung Kin-fai, stabbed a Hong Kong policeman in the back and then fatally turned the knife on himself on the 24th anniversary of Hong Kong’s return to Chinese sovereignty.
Following the incident, an internal memo – written by a now-dismissed staff member – expressing condolences to Leung‘s family was leaked and then went viral. The memo described the incident as “unfortunate”, sparking outrage on the mainland and in government circles in Hong Kong, which led to calls for a boycott of Vitasoy products on China’s microblogging platform Weibo.
Vitasoy expressed its full backing at the time for a police investigation into what authorities characterised as a “lone wolf-style act of domestic terrorism”. It followed this up with another statement apologising for causing distress in the community and clarifying that the leaked memo in question had been written by a staff member without official approval.
Analysts said Vitasoy’s long-term performance would likely depend on an improvement in sociopolitical conditions.
“It will take time for investors and consumers to digest this issue. That’s why we need to take a mid-to long-term view [of] the stock,” said Kenny Wen, a wealth management strategist at Everbright Sun Hung Kai.
