BSH: Lottery Win?

Birmingham Sports Holdings today confirmed in a voluntary announcement to the Hong Kong stock exchange that they have entered into an agreement to buy a Chinese lottery company. The announcement confirmed that the new company should guarantee a profit of around £3million for BSH over the next three years.

Hong Kong Stock Exchange

The full announcement can be read at this link.

Is this good news?

On the face of it, this announcement is good news as it means another source of income for BSH and thus less dependence on Birmingham City.

One of the chief issues BSH has faced is a dependence on loans from third party companies and stock issues to keep cashflow into the company.

A new profit-making venture – even if it is only a small profit each year to begin with – should help to rectify those problems and make BSH a more stable listing.

In the longer term having diverse streams of revenue also makes it more possible that Birmingham City can be sold separately of the Hong Kong holding company.

However, that is in the longer term. The announcement is clear that the percentage ratios are small in this instance; this means that the new company will have to grow somewhat before it affects the balance of revenue at BSH.

Who is this new company?

The “target company” that is being required is called Wangmei Online (Beijing) Information & Technology Co., Ltd (網梅在綫 (北京) 信息技術有限公司 in Chinese.)

The announcement confirms that the target company is based in the People’s Republic of China and makes terminal equipment for lottery systems in the PRC.

It goes on to state that the company are looking to expand into South East Asia, Europe and Australia.

A search for this company on Chinese company data website confirms this information but also throws up some interesting and familiar names.

The executive director of the company is a man called Gao Lei, who is a shareholder at Beijing Rui Lang Sunshine Network Technology Co., Ltd – a lottery company I previously being picked up on as being connected to Mr King (Wang Yaohui).

Qixin goes on to name three shareholders in Wangmei Online who are connected to Beijing Rui Lang – Gao Lei, Ma Wei and BSH Chairman Zhao Wenqing.

This is interesting in itself, as the BSH announcement says that there is no connection between any of the companies involved and the company, despite Zhao being a shareholder of Wangmei Online since October 2017.

The interconnections point to this new company being once again a part of the business network of Mr King – and maybe another step towards him taking full control of the listed company.

So what now?

While there have been jokey references to lucky dips being handed out on the terraces at St Andrew’s, I think the big question is how much more money this acquisition will allow Blues to spend.

Right now, it won’t make an iota of difference; the transaction is new and now we have to wait to see how the money comes in.

Longer term, however it should help BSH to lower their own borrowings which makes for a more sustainable holding company.

That doesn’t mean a spending spree at Blues per se – but it means a possibility that the club could be moved on if Suen, King or any other investor wants to get rid and keep the listing.

3 thoughts on “BSH: Lottery Win?”

Leave a Reply