Hong Kong Fook Tai Holdings seeking to go public

Jewellery retailer Hong Kong Fook Tai Holdings is seeking an IPO on the growth enterprises market board with the aim of opening more retail stores and improving brand recognition.

Fook Tai runs seven retail shops under the Fook Tai Jewellery brand in Hong Kong, while also selling products to VIP customers at its office. The company is a wholesaler of products mainly to a few jewellery retailers with stores outside Hong Kong and is a trader of recycled gold products. The company’s products come under three major categories – gold jewelry, platinum, karat gold and silver jewellery, as well as gem-set jewellery for mid- to high-end customers. Those categories accounted for 32.4, 4 and 24.3 per cent of total revenue respectively last year.

Recycled gold products bought from the public and sold to recycled gold products collector/dealers, who resell them to goldsmiths, generated 39.3 per cent of total revenue.

All the retail shops of Fook Tai are in residential areas of non-prime districts in Hong Kong, including Tsuen Wan, Jordan, Sham Shui Po, Tseung Kwan O, Sheung Shui and Kwun Tong. Fook Tai believes these locations will help grow a loyal customer base.

The company intends to grow sales in major shopping and residential areas after going public. It plans to open two street-level shops in North Point and Sheung Shui in June and October respectively this year.

Fook Tai directors believe the company should broaden its customer base and try to attract mainland customers. The new Sheung Shui store is near the border and is expected to benefit from mainland tourists. Also, North Point’s population includes high-income immigrants from the mainland.

Fook Tai also plans to refurbish its retail stores after going public, and aims to attract younger buyers.

Meanwhile, in its IPO prospectus, Fook Tai says its business may be adversely affected by the fluctuation of gold prices, while turnover from retail stores is subject to the risk of decline in the coming years.

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