26 April 2019
A giant video screen displays performers from the Hong Kong Philharmonic during the Swire Symphony under the Stars event in Hong Kong on November 11. Photo: Ben Kwok
A giant video screen displays performers from the Hong Kong Philharmonic during the Swire Symphony under the Stars event in Hong Kong on November 11. Photo: Ben Kwok

Swire’s slow symphony under the stars

Lying down on a mat and enjoying the “Swire Symphony under the Stars” at the Central harbourfront over the weekend, I could not be more thankful for a wonderful evening and the enchanting classical music, all under blissful weather.

However, I could not but help think and worry about Swire Pacific, the event sponsor and the chief patron of the Hong Kong Philharmonic Orchestra, which presents the annual outdoor extravaganza.

The conglomerate announced that it will extend the HK$20 million yearly sponsorship for another three years.

That is good news for music lovers, but the group’s sagging fortunes makes me wonder whether it still really has the muscle to take on headline-grabbing long-term financial commitments.

If Swire were a symphony, I’d say that it is now at a slow movement.

Subsidiary Cathay Pacific, for one, is being kicked out of the Hang Seng Index after a 31-year reign among the benchmark constituents.

As for the parent company itself, Swire Pacific last week issued a profit warning for 2017 – months before the annual book closing. 

The conglomerate said it would take an impairment loss for its units Hong Kong Aircraft Engineering Company and Swire Pacific Offshore, for a total of HK$1.3 billion.

It’s difficult not to like Swire, given all the good things and services it brought to Hong Kong. Stellar property management and passionate promotion of arts and cultural events are among the things it is known for. 

And the group’s motto – “Esse Quam Videri” (meaning “To be, rather than to seem to be”) — has set a good example for HK Inc in so many ways.

Even as Cathay faces a serious challenge from rivals, which includes not only regional low-cost carriers but also the airline’s own shareholder Air China — which undercuts Cathay fares by 50 percent on some long-haul routes, the Hong Kong flag carrier is still the preferred option for many locals.

An excellent safety record has a lot to do with that.

Still, problems are mounting, with the airline facing criticism that its standards and service quality have slipped compared to the past. 

For parent Swire, it is not only Cathay, but also other units that have largely underperformed the blue-chip index.

In the times of property boom, Swire Properties trailed behind major peers because of its prudence — some would say, over-cautiousness — in buying land.

I cannot, in fact, recall the time when the firm last won a land auction. It seems not in the last 20 years, at least.

On a recent trip to Beijing, I stopped by East, Swire Properties’ boutique hotel in Beijing. Looking at the structure, I couldn’t help thinking that the skillfully-designed hotel may have been just too little, and too late in China.

Swire Pacific is even more miserable because the bulk of its earnings are generated from its property unit, which undermines the parent as a pure holding company.

Shares of Swire Pacific have been basically unchanged this year, as compared to a 30 percent surge in the Hang Seng Index.

Major shareholder John Swire & Sons bought Swire Pacific shares at HK$80.3, above current market price, 18 months ago. But Swire Pacific B, the only company with B shares in Hong Kong, has been buying back shares since six months ago at prices between HK$13.07 and HK$13.73.

Let’s hope that Swire can ride out its rough patch and make it to a jubilant Symphony 9 of Beethoven.

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EJ Insight writer

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