As one of the two compliant virtual asset exchanges licensed by the Hong Kong Securities Regulatory Commission, OSL is driving BC Technology's stock price to continue to rise. Since the beginning of August, it has risen by more than 150%. In the recent JPEX case that has caused a sensation in Hong Kong, BC Technology's stock price has not been negatively affected.
Prior to this, BC Technology had experienced two years of continuous decline, and its transformation from advertising and business park management to digital assets and blockchain business had also been full of twists and turns, with its stock price experiencing sharp rises and falls many times.
Industry analysts said that OSL's focus may not be on the business itself, but on using virtual asset licenses to speculate in the stock market. Previously, media reported that BC Technology was looking for a buyer for OSL.
1. The stock price rose by more than 150% in February
On September 29, the last trading day before National Day, BC Technology’s share price hit a new high since the second half of the year, at HK$3.77.
Since the beginning of August, BC Technology's stock price has continued to rise, with a cumulative increase of 151%. As of the close of October 4, BC Technology's stock price fell slightly to HK$3.48.
BC Technology's stock price soared, thanks to the recent progress made by its virtual asset trading platform OSL.
According to the 2023 interim report released by BC Technology, the digital asset and blockchain platform business had revenue of HK$105 million in the first half of the year, accounting for 83% of the group's revenue, a year-on-year increase of 1766.54% from HK$5.63 million in the same period last year.
In addition, OSL’s upgrade of virtual asset license from the Hong Kong Securities Regulatory Commission is also a huge positive factor.
On August 3, OSL announced that it had obtained approval from the Hong Kong Securities and Futures Commission to upgrade its existing license and would provide digital asset trading services for mainstream currencies such as Bitcoin and Ethereum to retail investors starting today. This means that OSL has become one of the only two compliant virtual asset exchanges in Hong Kong licensed by the Hong Kong Securities and Futures Commission, and will have a first-mover advantage over other exchanges.
The next day (August 4), BC Technology’s stock price rose 63.25%.
BC Technology CFO Hu Zhenbang told Techub News that Hong Kong retail investors can now register and open accounts on the OSL platform and buy and sell digital assets including Bitcoin and Ethereum. With the development of the digital asset market and the inclusion of more different types of currencies in digital asset-related indices, it is expected that retail investors will be able to trade more and more digital assets.
Since then, although BC Technology's stock price has fallen back, as OSL has made a number of advances in the Web3.0 field, its stock price has continued to rise sharply.
On August 22, BC Technology released its interim results report, with revenue of HK$126 million, a year-on-year increase of 346%. Among them, digital assets and blockchain business contributed HK$105 million, compared with HK$5.637 million in the same period last year, a year-on-year increase of 1766.54%.
On September 11, OSL announced a strategic partnership with Harvest Global Asset Management Co., Ltd. to jointly promote the innovative integration of financial technology and the securities industry and promote the transformation and upgrading of security token products.
On September 21, OSL reached a strategic partnership with the School of Business and Management of the Hong Kong Polytechnic University to establish a Web3.0 Research Center to promote innovations in artificial intelligence and asset tokenization.
Recently, the JPEX case that caused a sensation in Hong Kong did not have a negative impact on OSL. The case had limited impact on its stock price. The price only fell on the 19th and 20th, and continued to rise thereafter.
Since September 18, the JPEX case has caused a sensation in Hong Kong. So far, the Hong Kong police have arrested 19 people involved in the case and received reports from more than 2,000 victims, with the amount involved exceeding 1.5 billion yuan. According to industry observers, affected by the JPEX case, Hong Kong investors have become more cautious about investing in virtual assets.
Hu Zhenbang told Techub News that Hong Kong has shown its support for the development of Hong Kong's compliant digital asset market. After the JPEX fraud was exposed, the market generally demanded stricter regulation of the digital asset market, including the banning of illegal exchanges and OTC money changers, which is a positive factor for the development of BC Technology's business operating compliant exchanges. The JPEX incident highlights that Hong Kong must plug the legal gray area and implement law enforcement to protect investors, which is crucial for Hong Kong to become an international digital asset trading center.
“We believe that the government and regulators will study how to regulate the operations of some overseas non-compliant platforms in Hong Kong, including their marketing activities in Hong Kong, fund-raising, payment agents, etc. Hong Kong, as an international financial center and a society ruled by law, will continue to attract more digital asset trading platforms and investors after learning lessons from this incident. At the same time, we also hope that regulators can strengthen supervision, crack down on illegal and irregular activities, and protect the rights and interests of investors.” said Hu Zhenbang.
2. The dawn of victory vs. hype
Currently, BC Technology’s main business is digital assets and blockchain business in Hong Kong and Singapore, as well as commercial property management business in the Mainland. From its public information, it can be seen that the former is its main business.
However, before 2019, BC Technology's main business was advertising and business park management services. In April 2019, BC Technology announced its transformation from the previous "Brand China Group Co., Ltd." to "BC Technology Group Co., Ltd.", seeking to expand its business to fast-growing digital assets and blockchain technology-related businesses.
Judging from the subsequent stock trends, BC Technology’s transformation was not smooth.
When it was renamed in 2019, BC Technology was already in trouble, with its stock price falling from a high of HK$25 in early 2018 to around HK$6. After business adjustments and the support of the bull market in the crypto industry, BC Technology's stock price rose again, reaching HK$22.65 in early 2021.
After the second half of 2021, BC Technology experienced a two-year downturn, with its stock price plummeting to a low of HK$1.5, down more than 90% from its peak.
It can be seen from the announcement released by BC Technology that BC Technology has been in a loss-making state in the past two years, and its net losses have continued to expand.
According to BC Technology's 2022 annual report, the company achieved operating income of HK$116 million in 2022, a year-on-year decrease of 64%, and a net loss attributable to the parent company of HK$541 million, a year-on-year increase of 44.02%. In 2021 and 2020, BC Technology Group's net losses were HK$369 million and HK$291 million, respectively.
In order to reduce operating costs, BC Technology closed its advertising business in October last year to devote more resources to its OSL digital assets and blockchain platform business.
Earlier this year, media reported that OSL was laying off employees and would cut about one-third of its total costs. BC Technology CEO Hugh Madden said the decision to cut costs, including layoffs, was made in response to current market conditions.
However, OSL's compliant and stable virtual asset development path and recent development momentum have allowed investors to see the dawn of BC Technology's turnaround.
On September 22, OSL announced that it had successfully completed the Service Organization Control Report (SOC) 2 Type 2 audit assessment for its custody and automated trading services (ATS) products. This certification assures institutional, professional and retail investors that OSL will independently audit its core systems based on one of the most stringent and globally recognized control frameworks.
Hu Zhenbang said that this certification demonstrates OSL’s new standards in digital asset security and compliance, providing confidence for institutional, professional and retail investors.
According to Hu Zhenbang, OSL has been providing professional digital asset services to institutional investors in the Asia-Pacific region, including funds, securities firms, high-net-worth investors, Web3.0 companies, etc. Currently, Interactive Brokers, one of the world's largest securities firms, and Victory Securities, a Hong Kong securities firm, have cooperated with OSL and can directly provide virtual asset trading services to their customers with the support of OSL. In the future, OSL will cooperate with more financial institution partners to promote digital asset business in Hong Kong.
However, some industry analysts said that OSL’s focus may not be on doing business itself, but on using Hong Kong’s Web3.0 new policy and virtual asset licenses to speculate on the stock market, with the core being the stock market. OSL, as one of the only two compliant virtual asset exchanges in Hong Kong, could be sold at a high price at any time.
Earlier media reports said that OSL, a subsidiary of BC Technology Group, has decided to withdraw and has been looking for buyers in the market after the Spring Festival in 2023, but no one has taken over so far.
In response to this, Hu Zhenbang said that he has been looking for some partners for business cooperation.