Most Kwai Chung warns of sharp profit drop as media services take a hit

Magazine and online company Most Kwai Chung is expected to have a sharp decrease in profit in the first half of this financial year starting from 1 April 2021, as its digital media and other media services segments have recorded a decrease in gross profit margin. In a statement, the company said that based on the preliminary review on the management accounts of the company for the six months ended on 30 September 2021, it is expected to record a significant year-on-year decrease of not less than 70% in the profit due to a number of reasons.

The company said it has recorded a decrease in gross profit margin of the group’s digital media and other media services segments. Also, the Hong Kong government granted subsidies to businesses in the city through the Employment Support Scheme last year, while the government did not offer any subsidies this year. 

The company has also recorded an increase in administrative and other operating expenses mainly due to the increase in staff costs. 

The company's business has been impacted by the pandemic before. Revenue of the group decreased by about HK$17.8 million or 23.1% from about HK$76.9 million for the financial year ended 31 March 2020 to approximately HK$59.1 million for that this year. The decrease was mainly attributable to the decrease in revenue from the digital media services segment and other media services segment.

Most Kwai Chung provides integrated advertising and media services, including digital media services under which the group provides a one-stop advertising solution package to the customers, with different types of ads including video, online banner, newsfeed and advertorials; print media services which include sale of book publications; and other media services which include events organisation and artistes management.

In August, one of its founders Tsui Ka-ho resigned to devote more time for his personal commitments. Following his resignation, Tsui also ceased to retain any role in the group. Meanwhile, the board confirmed that on 1 August 2021, executive directors Iu Kar-ho, Luk Ka-chun entered into the sale and purchase agreement with Tsui. The sale share at a total consideration of HK$8 million, subject to the terms and conditions of the sale and purchase agreement. Also, Iu and Luk undertook to Tsui that within six months after the date of completion, each of them shall procure Blackpaper BVI to transfer 6,750,000 ordinary shares in the company held by Blackpaper BVI to certain long-serving employees of the group as designated by Tsui.

After the transaction, both Lu and Luk will hold 50% of the shares of Blackpaper BVI, which holds 67.5% of the entire issued share capital of the company.

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