HK turmoil takes its toll on Jardine and Swire

November 08, 2019 11:19
Maxim's Caterers and Cathay Pacific reel from the impact of the ongoing unrest in Hong Kong. Photo: Bloomberg/AFP

At least two of Hong Kong's leading conglomerates are reeling from the impact of the raging political conflagration that broke out five months ago.

There's Jardine Matheson's Dairy Farm International, which has a 50 percent stake in Maxim's Caterers, the restaurant chain whose outlets have been targeted by anti-government protesters.

Swire Pacific (00019.HK), meanwhile, has issued a profit warning in view of the poor performance of its airline associate Cathay Pacific (00293.HK), also as a consequence of the ongoing protests.

In its third-quarter management update, Dairy Farm said overall sales were better than a year ago, primarily as a result of gains from its investment in Robinsons Retail, one of the leading operators of supermarkets and department stores in the Philippines.

At the same time, however, the weak performance of the travel and retail sectors in Hong Kong has impacted its sales in the city.

In particular, shops owned by Maxim's Caterers have been under severe attack in the past two months since Annie Wu Suk-ching, daughter of Maxim's founder James Wu Tak, spoke out against the anti-government protesters during a hearing of the United Nations Human Rights Council.

Many of Maxim's outlets in the city – including MX, Starbucks, Genki Sushi, Simplylife and multiple Chinese restaurants in Central and elsewhere – now appear like forlorn shacks, all boarded up with only the entrances open, after they have been seriously vandalized and firebombed by protesters.

Despite the impact of the wrath unleashed by the protesters on Maxim's bottom line, the 71-year-old Wu remained defiant, telling the Communist Party-owned tabloid Global Times last week that Hong Kong should give up on two "lost generations" of youngsters who had been brainwashed via social media to becoming anti-government, anti-establishment and anti-China.

"I won't waste time talking with them because they do not know what they should be doing," she said.

Cathay Pacific, meanwhile, said the protests in Hong Kong reduced inbound passenger traffic in July and are adversely impacting forward bookings.

The airline's weak performance was the major reason why parent Swire issued a profit warning on Thursday, although the group's second-half result is still expected to be better than in the first six months.

Earlier, Cathay had been caught in the turmoil after Beijing threatened to block its mainland business because several of its employees had been found to be participating in the protest movement. The controversy led to the resignation of chief executive Rupert Hogg and the firing of staff.

– Contact us at [email protected]


EJ Insight writer