Upstart TVMost applies for listing on Hong Kong exchange

Over the past few years, it has been fashionable for the social-media generation in Hong Kong to call themselves NEET (Not in Education, Employment, or Training) although many of them have college certificates, white-collar jobs and spending power.

Sarcastic content on social media has become popular among the NEET community, whose young members have lost hope of ever owning property or enjoying genuine universal suffrage.

This trend provided an opportunity for TVMost, a sarcastic medium targeting the NEET group.

Non-Cantonese speakers may not know much about TVMost but they might have seen the performance of Australian actor Gregory Rivers, who sang at a show organized by TVMost in January 2016.

In a somewhat shocking revelation, TVMost’s founders, who made their names spoofing TVB news video, are applying for an initial public offering (IPO) on the Hong Kong Stock Exchange.

Their balance sheets reveal that the youth market is very profitable.

Most Kwai Chung, the content production house set up by Iu Kar-ho, Luk Ka-chun and Tsui Ka-ho, made HK$36.23 million (US$4.64 million) in its financial year ending March 31, 2017, up nearly 62% year on year, according to its filing to the stock exchange this week.

Turnover was HK$95 million in the 2016-17 financial year, with  revenue doubling in each of the last three years since switching to digital advertising in 2015. Its digital ads, most remembered for featuring star artist Leon Lai for Nescafe and Dayo Wong for DBS credit cards, accounted for some 78% of the turnover.

The name of the trio’s holding company, Most Kwai Chung, is quite creative, as the Kwai Chung urban area in New Territories is best known for its container businesses, yet no listed company in Hong Kong has up to now included the area’s name in its own.

It is amazing how these young guys, who started with a HK$1 single-sheet magazine called Blackpaper in 2010, pulled their enterprise  together against the meltdown of traditional media like Television Broadcasts (TVB) and Apple Daily, both of which sold off their media assets and laid off staff in search of a new business model.

Unlike those two traditional media outlets that between them had more than 3,000 staff, Most Kwai Chung has only 63 employees. The low staff cost largely explains why the net margin of the company, which includes digital media, print media, and event and artists’ management, has been as high as 64%.

Apparently the business is so good that the owners have received more than HK$67 million in dividends. The company paid out HK$22 million to its shareholders just before applying for the IPO.

Each of the three founders owns 30% of Most Kwai Chung. The remaining 10% is owned by One Media Group, a subsidiary of Media Chinese International, which publishes Ming Pao.

One Media Group paid HK$1 million for its 10% stake in 2012.

Now all eyes will be watching to see if Most Kwai Chung becomes one of the most profitable media outlets in Hong Kong, assuming the old media continue to contract and new media continue to gain market presence.