【Stock】TV star eyes Hong Kong stock market

The glamor of former beauty queen and TV star Erica Yuan may give her cosmetic retailing firm a boost at the beginning if the firm gets a stock listing but analysts said the celebrity effect could be short lived while the performance of its shares will mainly depend on the fundamentals of the company.

Mi Ming Mart Holdings Limited, founded by yuan who is also a former chairwoman of radical democratic party the People Power, has applied to the Hong Kong stock exchange for listing its stock on the Growth Enterprise Market (GEM).

“Celebrity effect is just a short-term effect,” said Francis Kwok Sze-Chi, a marketing manager of Bright Smart Securities. For a longer term, investors should look at the fundamentals, such as earnings prospect of the company. Mi Ming Mart is mainly engaged in retail business, which would be relatively stable in terms growth, he added.

High rent pressure may threat business

However, Hong Kong rents are high and that could post a threat to Mi Ming Mart because its shops are located in prime commercial areas of the city such as Tsim Sha Tsui and Causeway Bay, said Lam Ka-Lun, the head of research of Pico Zeman Securities (HK). Mi Ming Mart only sells limited brands of products and is not diversify enough, he said.

Lam predicted the share price trend of Mi Ming Mart will be similar to other celebrity-owned companies, such as medical aesthetic firm Miricor Enterprises Holding Limited (8358). Miricor is controlled by former TV and movie star Gigi Lai Ka Yee.

Miricor shares soared to a record of HK$4.6 shortly after its debut in January, nearly six folds of its IPO price of HK$0.8 but gains were quickly pared to close at HK$1.83 on its first day of trade on the GEM board.

Miricor operates two medical aesthetic centers in Hong Kong, providing both surgical and non-surgical services. It also sells skin care products.

With six retail stores in Hong Kong and an online store, Mi Ming Mart is good at promotion, analysts said. Yuen has made good use of free social media platforms, such as YouTube and Facebook, to promote her own Mi Ming Mart products. Her own YouTube channel “ericayuen” has more than 46,000 subscribers and the official Facebook page of “Mi Ming Mart” has over 72,000 thumbs up now.

However, Lam pointed out that the price to earning ratio (PE) of Mi Ming Mart would not be as high as Miricor because competition among the beauty retail industry is higher than medical aesthetic operators. The PE of Miricor peaked at 100 times on its debut date. Lam predicted that the PE of Mi Ming Mart would be around 20 times.

Miricor’s earnings rose 19.1% in the first three quarter ended December 2016 from a year ago but after stripping its IPO expenses of HK$11.5 million, its net profit was down 64.45% at HK$4.9 million.

Uncertain IPO after new SFC rules

The recent high volatility of newly listed stocks, especially those on the GEM board, has triggered the concern of local stock regulators. The Securities and Futures Commission (SFC) and the Hong Kong Exchanges and Clearing jointly issued guidelines on the GEM board in March, urging issuers and investment banks to ensure their share placements are “fair and orderly” to avoid high volatility in trading. Since regulators have tightened the rules, there was an uncertainty on the listing prospect of Mi Ming Mart, Kwok said. Three companies scrapped their applications for listing on GEM board in a month after the new guidelines were issued.

 

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