Li Ka-shing’s Tom Group to spend lavishly on e-commerce, fintech and data analytics in China to avoid repeat of 2015 net loss

Group says it will reorganise investments and business on the mainland as challenges remain this year

PUBLISHED : Thursday, 10 March, 2016, 7:59pm
UPDATED : Friday, 11 March, 2016, 11:29am

Tom Group, the Chinese media conglomerate controlled by tycoon Li Ka-shing, plans to reposition its businesses and investments on the mainland after reporting a wider net loss last year.

In a filing with the Hong Kong stock exchange on Thursday, Tom chairman Frank John Sixt said the group’s traditional media operations “continue to experience adverse structural and cyclical pressures that are expected to continue for the foreseeable future”.

Sixt said the company will pursue more spending in three strategic areas: e-commerce, financial technology and advanced data analytics.

He pointed out that China’s “Internet Plus” policy, which encouraged the digital transformation in various industries, and efforts to boost domestic consumption “have created opportunities for Tom Group to reposition its businesses and investments” on the mainland.

The company posted a net loss of HK$214. 47 million (US$27.6 million) last year, compared with HK$84.88 million in 2014, due mainly to high operating expenses and the slowdown in advertising on traditional media like television.

Total revenue decreased 16 per cent to HK$1.27 billion, down from HK$1.51 billion in 2014, as the company streamlined its business portfolio.

Sixt said Tom decided to exit some activities under its publishing and outdoor media business units.

Ule, the e-commerce joint venture established by Tom and China Post in 2010, is expected to be “a key driver of growth for Tom Group”, he said.

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Data from Tom showed that Ule’s gross merchandise volume - the total value of all goods sold across the e-commerce service - surged 254 per cent last year to 23 billion yuan, up from 6.5 billion yuan in 2014.

Backed by China Post’s vast infrastructure, Ule is encouraging more rural store owners and villagers to shop and trade through its network of online, offline and mobile retail channels.

At the end of December, Ule had more than 100,000 rural outlets across 29 provinces, offering online-to-offline services.

Tom’s online finance ambition was fuelled in 2014 by its investment in WeLab, an internet finance technology company that launched the first social - also known as peer-to-peer - lending platform in Hong Kong.

Through Ule, WeLab had 3 million individual customers on the mainland and recorded 10 billion yuan in loan applications.

According to Tom, WeLab will expand its loan services through the Ule outlets in rural villages this year.

Mainland China’s peer-to-peer lending market was estimated to have reached US$7.8 billion last year, according to research and advisory firm Celent.

Sixt said Tom and Ule invested last month in German firm Friendsurance to expand into peer-to-peer insurance service.

He added that Tom and Ule plan to deepen its ties with Canadian data analytics firm Rubikloud to provide market insights to online merchants and brand owners in China.

Tom’s share price was down 2.43 per cent to close at HK$2.01 on Thursday.