How will the arrest of China Travel International Investment Hong Kong chairman Wang Shuai Ting affect the business of the red-chip travel play?
Not much, for a few reasons.
But first things first. An official announcement this morning confirmed that Wang is being investigated by the Central Commission for Discipline Inspection of the Communist Party for certain suspected serious offences committed before he joined the company.
Wang, 57, was chairman and chief executive of China Resources Power for 10 years before he joined China Travel in September 2011. The announcement was issued by deputy chairman Lo Sui-on and was sent to all directors including Wang himself.
“Based on information available to the board, the company’s daily operations are not affected as these are undertaken by the management team led by the general manager of the company,” it said.
We’re inclined to believe that assertion. Wang has not changed the company much since he inherited the mantle four years ago.
China Travel, which owns some of the country’s best known travel brands including hotels, resorts and transport assets, reported an operating profit of HK$2 billion (US$258 million) in its latest financial report, unchanged over the past three years.
Last year, China Travel reported a 40 per cent increase in net profit to HK$1.25 billion but it was largely due to a write-back provision of HK$175 million.
We also found the company under Wang had almost made no acquisition, save for a recent proposal to sell its loss-making online portal Mangocity to parent CTS (Holdings) that is unlikely to involve any personal financial interests.
Wang has been a hands-off player. Last year, he attended just one in four board meetings, down from two in four in 2012 and three in four in 2011.
Unlike his fellow board members, he does not have any stock or options in the company. He made HK$330,000 last year, lower than all four non-executive directors.
China Travel has been a disappointment because it has made slow progress.
China’s tourism industry is enjoying a boom but much of it is in outbound travel. China Travel under Wang is focused on inbound tours.
China Travel’s hotel (it owns Metropark) and travel agency (including a monopoly visa service) business, as well as its transport operations have all recorded a fall in revenue. Even Ocean Spring in Zhuhai and Shenzen’s Window of the World have seen falling visitor numbers and lackluster revenue.
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