Fri, Apr 07, 2017 - Page 11 News List

FX Hotels shares plunge as margin trading halted

‘UNIMAGINABLE’:The hotel firm posted an annual loss of NT$601 million on Wednesday, prompting industry analysts to call for a malpractice investigation

By Crystal Hsu  /  Staff reporter

Shares of FX Hotels Group Inc (富驛酒店集團), which manages more than 50 directly operated and franchise hotels in Taiwan and China, closed down by the daily limit at NT$5.72 yesterday after the Taipei Exchange imposed a ban on margin trading, starting today.

The ban came after the hotel chain booked a loss of NT$601 million (US$19.67 million) for last year with its net worth falling to NT$0.59 per share, well below the NT$3 threshold to trigger such restrictions, according to a statement by the local bourse for firms with medium and small capitalizations.

The bourse said it would conduct a check on the firm’s financial statement as the firm had failed to submit the statement to an independent accounting firm as required by law.

The bourse declined to comment on the company’s boardroom disputes last week, when major shareholder Singapore-based Furama Hotels International Management Inc pushed through a new election of directors and attempted to oust chairman Alvin Ho (侯尊中).

Ho has challenged the validity of the board meeting on Tuesday last week.

Furama is unhappy about the losses at FX Hotels, which last year was a loss per share of NT$15.76, or one-and-a-half times its capital of NT$381.72 million, it was reported earlier this week.

FX Hotels, the owner of four brands — FX Hotels (富驛時尚酒店), Boyi Boutique Hotel (泊逸精品酒店), FX Inn (富驛商旅) and Boutix Resort Hotel (泊逸渡假酒店) — disclosed its financial statement in the early hours of Wednesday and blamed the loss on unprofitable investments in China.

Some investment projects had failed to yield a profit, while others have been suspended, delayed or disrupted, the firm said in an exchange filing, adding that some losses stemmed from ongoing lawsuits with its Chinese business partners or customers.

The group said it plans to discuss plans to strengthen its capital structure with its shareholders.

FX Hotels shares made their debut at NT$73.5 per share in 2012, backed by earnings per share of NT$1.5 the previous two years.

The company reported record earnings per share of NT$1.55 in 2013, but has since plunged into the red, with the losses deteriorating each year, company data showed.

The company’s performance has prompted industry analysts to press for a malpractice investigation.

“The hospitality industry is relatively stable compared with other sectors as cash and cash equivalents account for most transactions,” Chinese-language Wealth Magazine executive director Hsieh Chin-ho (謝金河) said on Facebook on Sunday, describing the group’s diminishing net worth as “unimaginable.”

Billy Yen (顏炳立), a property consultant at Cushman & Wakefield, yesterday said many Taiwanese hotels are seeking deals with local life insurance companies, but few have been able to close deals because of price differences.

“In the absence of healthy occupancy, potential buyers stay away, despite promises of lease contracts and rental incomes,” Yen said, adding that the hospitality industry has fared poorly due to the sharp decline in the number of Chinese tourists.

FX Hotels has scheduled a shareholders’ meeting for June.

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