BC Technology stock suspension related to the sale of OSL's business?

On November 13, BC Technology Group, the parent company of Hong Kong’s licensed virtual asset exchange OSL, announced that it would suspend stock trading pending an insider trading announcement.

Previously, there were media reports that BC Technology was considering selling the OSL business. Although BC Technology has denied this, industry sources say that the news is likely to be true.

| or in connection with the sale of OSL

On November 13, BC Technology Group issued an announcement stating that trading in the company’s shares was temporarily suspended on the Hong Kong Stock Exchange from 9 a.m. on the 13th, pending the announcement of a notifiable transaction of the company (which constituted insider trading).

BC Technology Group is a Hong Kong-based listed company mainly engaged in digital asset and blockchain business, and its subsidiary owns OSL, a licensed digital asset exchange in Hong Kong.

On August 3, 2023, OSL announced that it has received approval from the Hong Kong Securities and Futures Commission to upgrade its existing license to provide retail investors with digital asset trading services in mainstream currencies such as Bitcoin and Ethereum.

**Some industry analysts believe that BC Technology’s suspension is likely to be related to the sale of the OSL business. **

Previously, a number of media outlets have exposed the news of the sale of OSL. In July this year, according to media reports, OSL, a subsidiary of BC Technology Group, had decided to withdraw and looked around the market for a buyer to acquire it after the Spring Festival in 2023, but no one has taken over so far.

In an interview conducted by Techub News in early October about whether BC Technology is looking to sell OSL, Hu Zhenbang, CFO of BC Technology, said: "We have been looking for some business partners. ”

On October 16, some media quoted people familiar with the matter as saying that BC Technology is considering selling the OSL business to a potential buyer for HK$1 billion.

**In response to the report, which caused BC Technology’s stock price to plummet by more than 30%, BC Technology clarified on October 17 that the content and statements of the report were inconsistent with the facts and extremely misleading. However, BC Technology did not make a more specific statement, which has also made the market suspicious.

Techub News conducted an interview on the reason for BC Technology’s suspension, but did not receive a reply as of press time.

| Stock price rose more than 2 times in 3 months

As one of the two compliant virtual asset exchanges in Hong Kong, OSL has attracted a lot of attention in recent months, and BC Technology’s share price has also continued to rise.

As of Friday’s close, BC Technology’s share price was trading at HK$4.92, up 228% from its August low of HK$1.5.

The continued rise in BC Technology’s share price is also related to its positive news and frequent movements in recent months.

On August 22, BC Technology released its interim results report, with revenue of HK $126 million, a year-on-year increase of 346%.

On September 21, OSL entered into a strategic partnership with the School of Business and Management of the Hong Kong Polytechnic University to establish a Web 3.0 research center to promote asset tokenization innovation.

On November 1, BC Technology announced that its OSL and active asset manager Harvest International jointly submitted a proposal to the Securities and Futures Commission to explore the tokenization of retail fund products.

It can be seen from the announcement issued by BC Technology that in the past two years, BC Technology has been in a state of loss, and the net loss has continued to expand.

According to BC Technology’s 2022 annual report, the operating income in 2022 was HK $116 million, a year-on-year decrease of 64%, and the net loss attributable to the parent company was HK $541 million, an increase of 44.02% year-on-year. In 2021 and 2020, BC Technology Group’s net loss was 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 the OSL digital asset and blockchain platform business. **Earlier this year, according to media reports, OSL was laying off employees and would cut its total costs by about one-third. **

On the other hand, the profitability of OSL has also been questioned due to competition and regulation in actual operations, and OSL’s situation has been described by the media as “licensed and killed”.

On October 11, Wang Yang, Vice President of the Hong Kong University of Science and Technology and Chief Scientist of the Hong Kong Web3.0 Association, said in a policy proposal,

The Hong Kong Securities and Futures Commission implements supervision to maintain the order of the virtual market, but the licensing system is undoubtedly a heavy burden for Hong Kong’s virtual asset companies, and licensed exchanges have a large amount of losses every year after obtaining the license, and the compliance license has become an expensive talisman", which will only become more and more “expensive” after the JPEX incident.

According to BC Technology’s 2023 semi-annual report, the company’s net loss in the first half of 2023 was HK $94.7 million. Due to the continued downturn in the crypto market, OSL’s trading volume fell sharply, with the total trading volume of the OSL digital trading platform in the first half of this year being HK$112.6 billion, a year-on-year decrease of 47.5%, and the brokerage trading volume fell 42% year-on-year.