This article only represents the author's own views.
Livestreaming e-commerce has powered sales for leading laundry detergent maker Blue Moon Group Holdings Ltd. (6993.HK) to new highs lately, as the company spends heavily to promote its new more environmentally friendly Zhizun brand targeting the younger generation. But such heavy spending can only go so far before returns start diminishing sharply – a lesson that’s on clean display in a new profit warning from the company issued Friday.
At the same time, the warning shows the company is also being undermined by China’s slowing economy, with Blue Moon saying it will report its first-ever annual loss since going public in 2020. Last but not least, the company is also probably questioning its decision to report its results in Hong Kong dollars, even though nearly all of its business is in China’s currency, the yuan. That decision is hurting the company now, as China’s currency loses steady ground against the Hong Kong dollar, which is pegged to the U.S. dollar.