j,
I have to admit that I've gotten confused on the currency.
1. The Annual Report (YE97) says, "The company's subsidiaries conduct substantially all of their business in Hong Kong dollars, whose exchange rate has been fixed to the US dollar at approximately HK$7.80 to US$1.00 since 1983." Also, "Aggregate foreign currency transaction losses included in income were $31, $26, and $91 in '95, '96, and '97 respectively." This is insignificant to $16-$20M, but it would be with the peg.
2. In my first phone conversation with Mr. Lau, I asked about the impact of a devaluation of the $HK or the yuan and he said it would have virtually no effect except to lower costs. The interpretation was that they kept cash in $US.
3. It was a topic under discussion when Mike talked to him and I believe he came to the same conclusions.
4. In my second conversation Mr. Lau stated that he felt the $HK and the Renminbi should be devalued and thought the ties to the $US to be wrong. Why would he say this if the company had not protected itself from a devaluation = $US?
I think the question is no longer relevant. It is now generally accepted that the peg to the $US will be maintained. If I talk with Mr. Lau again, I will try to get a definite answer on the cash currency. My confusion has come from my most recent read of the report.
jmt - I doubt if IR can give you a firm answer, but it would be worth a try.
FWIW,
Ron
|
