Dear Shareholders,
A decade ago, in February 2015, the Group successfully transformed from a fiber optic network telecommunications services provider and a multimedia production business to online shopping business, and has become the industry leader in just ten years. This achievement is entirely attributable to our united, professional, dedicated and highly capable team. Their diligence and resilience have enabled the Group to swiftly adapt to market changes and challenges, achieving great results continuously. This spirit embodies the century-old “Lion Rock Spirit” of Hong Kong — regardless of external circumstances or industry shifts, we remain committed to innovation, daring to take risks, and contributing to Hong Kong society.
Since the Group’s inception, we have adhered to a core principle across all our business endeavors: the importance of “long-term survival” far outweighs short-term profits. Investors and different stakeholders often ask us, “What is your nightmare?” We will share our concerns about the future below, and outline the Group’s strategies to address them.
Our “nightmare” mainly stems from three challenges:
OUR TECHNOLOGICAL LEVEL LAGS BEHIND GLOBAL TRENDS
The “our” here refers not only to HKTV Group but to Hong Kong as a whole. We are facing a shortage of technical talents and it is hard to attract sufficient top talents, particularly in fields aligned with global technology trends like artificial intelligence, big data analytics, etc. This not only hampers the Group’s capability to innovate and remain competitive but also leaves Hong Kong vulnerable in the global tech race.
CONSTRAINTS IN MARKET STRUCTURE AND INTENSIFIED COMPETITION
Hong Kong’s relatively small population base, coupled with exorbitant rental costs for physical stores, has led to the exit of many international brands from the local market. Even in the fast-moving consumer goods sector, Hong Kong distributors and retailers face difficulties in the price competition against large-scale Mainland enterprises.
DECLINING INFLUENTIAL POWER FROM LOCAL CULTURE
Hong Kong’s entertainment industry — including films, TV dramas and music — is gradually losing ground, while cultural industries in the Mainland and neighboring regions flourish. Influenced by these “soft power,” Hong Kong consumers’ consumption habits are shifting. For instance, while Hong Kong consumers were once cautious about Mainland food products, this perception has notably changed, with cross-border consumption becoming a new trend.
The above challenges are not merely personal concerns of ours; they represent long-term challenges for the Group and the whole Hong Kong economic environment.
OUR STRATEGIES FOR SURVIVAL AND GROWTH
To address the above challenges, the Group has devised the following strategies to ensure long-term competitiveness and sustainable development:
1. Recruiting Mainland Talents to Strengthen Technology and Market Insights
We plan to hire more professional talents from the Mainland — not merely for cost considerations (in fact, some talents command higher salaries than local hires) — but to bring in talents with diverse perspectives and technical expertise. Our goal is to have 15% of our office talent pool consists of Mainland Talents by the end of 2027. This initiative will enable us to gain a deeper understanding of consumer culture and better prepare for future competition.
2. Enhancing HKTVmall’s Competitive Edge and Expanding Market Reach
We have invited hundreds of Mainland merchants to join HKTVmall and will ensure their pricing aligns with Mainland Ecommerce platforms. HKTVmall’s role is twofold: to assist local retail partners in entering the digital retail market while providing Hong Kong consumers with a wider range of product choices, preventing them from turning to Mainland platforms due to limited options. Additionally, we will launch a simplified Chinese version of HKTVmall to attract simplified Chinese users and Mainland tourists, further expanding our market influence.
Over the past two years, the Group has invested significant resources in New Ventures and Technology business. Below are the progress updates and plans for several key projects:
1. “Wet Market Express”: A Localized Competitive Advantage
The “Wet Market Express” service offers express delivery of fresh food ingredients and products as fast as three hours — a unique advantage that is difficult for nonlocal operators to replicate. This service recorded strong growth in 2024, with both coverage rates and business performance exceeding expectations. We will continue to strengthen promotion to solidify its market position.
2. Fully Automated Retail Store and System in the UK: Technical Challenges and Review
The development of Fully Automated Retail Store and System in the UK has encountered substantial technical obstacles, leading to delays that extend beyond our initial timeline. Despite the dedicated efforts of our engineering team in addressing these challenges, the path forward in the UK remains highly complex due to intricate regulatory and technical barriers. Drawing from the past three years of experience, overcoming these hurdles will demand significant effort and resources.
As a result, we intend to scale back the pace of store deployment in the UK. By the end of 2025, we will conduct a thorough reassessment of the UK project’s feasibility and chart its future course.
In parallel, we will maintain our research and development efforts, leveraging insights from the performance of the two UK stores to refine the system design and streamline operational workflows. Additionally, we are exploring the potential of establishing a store in Hong Kong to support engineering and operational research. Meanwhile, we will ongoingly evaluate the practicality of alternative commercialisation pathways to ensure the project’s long-term success.
3. Global Personal Shopping Service “Everuts”: Steady Adjustments and Focus
While the transaction volume of Everuts has yet to meet our expectations, the business is steadily improving. Since most of its IT systems have already been developed, we will recalibrate the operations to lower costs and re-allocate those resources to HKTVmall. Although achieving breakeven in the short term remains challenging, as more international brands have withdrawn from Hong Kong market, we believe there is still demand for global personal shopping services, and hence we will continue to developing this business in a stringent manner.
4. Research Progress for Life Science Projects
As our Life Science projects involve confidentiality constraints, we are unable to provide detailed disclosures. The Group is collaborating with two internationally renowned universities, forming two research teams comprising over 20 research members including university professors, professional medical teams and doctors. Following extensive data collection from numerous experiments, research and preliminary analysis, all parties are convinced that this is a groundbreaking direction in “blood regeneration” and “human organ preservation” with profound potential. That said, shareholders and stakeholders should understand that such cutting-edge research typically requires ten years or more to yield significant results. We will continue to invest resources and make progress steadily in this field.
We recognise that not all shareholders, investors, or even colleagues fully agree with our development strategy on “New Venture projects”. However, if we are only satisfied with HKTVmall’s current annual adjusted EBITDA of HK$300 million or so, the Group will be difficult to achieve “long-term survival”. We firmly believe that pioneering new businesses is the only path to the Group’s survival and growth. “Always Something New” is not just a slogan — it is the spirit and core value that the Group has actualised for over 30 years since its founding.
Looking ahead, the Group will continue to be driven by innovation, responding flexibly to market challenges and aiming for long-term development while creating greater value alongside our shareholders and all stakeholders. This year marks the 10th anniversary of HKTVmall. To celebrate its significant achievement in transforming the retail landscape in Hong Kong and in recognition of the long-term support from our shareholders, the Board has resolved to recommend a special dividend of HK38 cents per share, after considering the liquidity level and our no gearing balance sheet. We sincerely thank all shareholders for the unwavering support and trust, and we look forward to working hand in hand with you to build a brighter future.
Cheung Chi Kin, Paul
Chairman
Wong Wai Kay, Ricky
Vice Chairman
Hong Kong, 27 March 2025