Friday, May 22, 2015 Hong Kong Standard
Li & Fung (0494) management struggled to pacify individual investors grumbling about the firm's lifeless share price at a meeting yesterday.
That reveals a quandary facing the sourcing and delivery provider which has been hard-pressed to cut costs as sales in its major markets flag and outlook dims. Apparently as part of its belt- tightening measures, the firm moved its annual general meeting yesterday to its Cheung Sha Wan office from the usual Mandarin Oriental hotel. And shareholders were unusually vocal. "I'm very disappointed," cried a woman, referring to the company's anaemic share price when "all other stocks are surging through the roof."
Chairman William Fung Kwok-lun said the company should be viewed as a mid- to long-term investment. "We haven't trimmed our shareholding." The firm spun off its brands and licensing arm Global Brands (0787) to focus on supply chain management in July 2014. Core operating profit slid 18 percent to US$604 million (HK$4.7 billion) last year. Fung confessed the company will likely miss a three-year target of boosting that number to US$870 million. Chief executive Spencer Fung admitted some UK and US customers had cut orders on sluggish sales, but business from core clients keeps growing. William Fung denied plans of widespread redundancy. "We're actually hiring more people in Bangladesh and Cambodia," he said. Such relocations will not affect its Hong Kong base, where the company's staff turnover is steady at 20 percent every year, Spencer Fung said. ADAM XU