Shares in Club Med parent Fosun Tourism fall on Hong Kong debut, but firm ‘filling a blank’ in tourism market, remains hopeful
- Shares fall 4 per cent from offering price of HK$15.60
- CEO ‘not worried’ as company focuses on high-end, leisure holiday market, where he sees a shortage of supply
The chairman of Fosun Tourism, the Chinese owner of the Club Med resort chain, said on Friday he was hopeful about growth at the company even as its shares fell on debut in Hong Kong.
The holiday resort operator’s stock fell by 4 per cent to close at HK$14.98, easing from its initial public offering price of HK$15.60, in line with a broad sell-off in Hong Kong shares on Friday.
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“The stock price is determined by a number of factors, but the company’s business and profitability have kept expanding,” said Qian Jianong, chairman and chief executive of Fosun Tourism.
“I believe our profitability will continue to improve in the future,” he said.
The company, which was spun off from Chinese private conglomerate Fosun International, managed to sell only 30 per cent of shares set aside for Hong Kong retail investors, a tenth of all shares, according to a statement on Thursday.
“Most of the newly listed companies are trading below their offer prices because market sentiment is very cautious right now,” said Kenny Tang Sing-hing, chief executive at China Hong Kong Capital Asset Management.
In Hong Kong, the benchmark Hang Seng Index dropped by 1.6 per cent, or 429.56 points, to 26,094.79 on Friday, on the back of weak China economic data for November and rising diplomatic tensions between Beijing and Ottawa.
Listings worth HK$256 billion (US$33 billion) were completed in Hong Kong during the first 10 months of this year, a 187 per cent jump from the same period last year.
China has been the world’s largest tourism market since 2012 as a result of surging household incomes, but an economic slowdown and weakening consumption this year have clouded the industry’s outlook.
Fosun Tourism’s Qian, however, said he was not worried that the company’s business would suffer because it focuses on the high-end, leisure holiday market, where he saw a shortage of supply.
While Chinese people in the past have overwhelmingly travelled in affordable tour groups, they are increasingly preferring holidays that offer a better, more relaxed experience, as part of which they can get to know the local culture, said Qian. “We are filling a blank in China’s tourism market, which is leisure holidays,” he said.
The company aims to build a one-stop tourism services ecosystem that allows customers to get everything they need for a high-quality holiday, from shows and performances to children’s entertainment, said Qian.
Fosun Tourism recorded a net loss of 135 million yuan (US$19.6 million) in the first half of this year, which was down from 189 million yuan in the same period last year.