Saturday, July 01, 2006

Something amiss at Kenfair

Last year Hong Kong's listed trade fair organiser reported profit attributable to shareholders of HK$36.9 million. On Thursday, it issued a profit warning.

By way of explanation, the company says:

As part of its expansion plans, the Group organized four new exhibitions in different parts of the world during the past three years. In the latest profit forecast of these exhibitions, it is expected that the revenue to be generated from them cannot sustain the development costs of these new exhibitions capitalized in prior years. As a result, the directors are of the view that the development costs capitalized previously for these exhibitions will likely be expensed and will be charged to the consolidated income statement for this financial year. Moreover, the Group also invested in the development of certain new exhibitions which will be launched in the coming years and the related costs were charged to the consolidated income statement during the year.

We commented a couple of weeks ago on the 'postponed' Bahrain fair. It seems that some of those other development projects are proving troublesome as well.

The market seems to have been aware that not all was well. As the Yahoo Finance chart shows, having traded for some time in a HK$1 - 1.20 range, the shares have been slipping in recent weeks and tumbled to 74 cents yesterday.

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