(Alliance News) - Cathay International Holdings Ltd on Wednesday reported a narrowed 2019 loss due to disposal gains, but warned that its performance for 2020 may be hurt on Covid-19 disruption.
The stock was trading 11.4% higher at 2.06 pence each on Wednesday afternoon in London.
For 2019, the China-focused healthcare investor posted revenue of USD79.8 million, down 5.4% from USD84.3 million in 2018 due to a decline in inositol sales and a reduction in revenue in the Hotel division.
Sales of inositol and di-calcium phosphate fell to USD5.4 million from USD7.8 million, particularly due to the continued low price of inositol. In response to social unrest in Hong-Kong and the US-China trade war, the Hotel unit lowered its room rates to attract more business, resulting in revenue per available room declining by 13% year-on-year to USD80.
However, pretax loss narrowed to GBP11 million from GBP16.4 million posted the year prior. During the year, Cathay disposed 6.6% of its investment in Starry which resulted in a net gain of USD25.5 million. As at the end of the period, Cathay held a 4.0% stake in Starry which produces and sells iohexal for X-CT scanners.
Looking ahead, the company said while the pause in production in February as ordered by the Chinese government is not expected to hurt its pharmaceutical, healthcare and cosmetic performance, the reduction in occupancy resulting from travel restrictions will "have a material impact" on the Hotel unit's performance.
"The Hotel has seen a marked reduction in occupancy and bookings resulting from the travel restrictions within China and this will have a material impact on the Hotel's performance during the first half of 2020, and potentially beyond. To mitigate this negative impact, the Hotel has implemented an action plan to reduce its operating costs until the market recovers. There remains uncertainty as to how the pandemic will develop in China and worldwide and the severity of the impact on the economy and our businesses," the company said.
By Ife Taiwo; ifetaiwo@alliancenews.com
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