Hong Kong 1980: The Savage Era

Chapter 132 [The profit is amazing]

"The net asset value and asset value of Hongpu Chemical Company are not as high as the market value, and it seems a bit difficult for you to sell it at the market value." Li Yude asked lightly, without stopping his eating at all.

"Uncle Li, you don't know that real estate listed companies do not talk about net asset value, but asset value is somewhat important. However, Hongpu Chemical's debt ratio is extremely low, and it is entirely possible to increase assets in large quantities through loans. With this operation, the asset value can easily keep up with the market value." Luo Qihong smiled slightly.

Luo Qihong was reminding Li Yude that the low debt ratio of Hongpu Chemical Company was a great advantage. If Li Yude insisted on the asset value issue, he could simply purchase properties from the market after signing the agreement to increase the asset value.

"This is not quite what I think. There are many real estate companies with high debt ratios and large asset values ​​in the market. Do you think Hongpu Chemical has other advantages?" Li Yude asked gently but aggressively.

"Hongpu Chemical Company doesn't have many advantages, but if it is sold based on assets, there will be many buyers. Hongpu Chemical Company needs to identify better buyers." Luo Qihong's meaning was very clear. I don't have to sell it to you. Who do you think you are?

Li Yude knew that he had lost his composure and said with a smile, "Come on, let's have a drink."

"Clang!" The three wine glasses collided together.

Luo Qihong thought about it and felt that if Lin Luoqi and Li Yude acquired Hongpu Chemical Company, he could save some trouble. Of course, the premise here is that the price is right.

"Hongpu Chemical Company still has great potential. The piece of land along the coast of Tuen Mun alone is worth tens of millions. If we hold on to it for a while, it will not be a problem for it to increase to 1 million. By this calculation, the market value of Hongpu Chemical Company is not high, and it may even be a bit low." Luo Qihong smiled faintly.

Li Yude frowned slightly. "I heard that the land is difficult to develop. The Environmental Protection Bureau has been making things difficult for us."

"That's true." Luo Qihong knew that he couldn't hide such a thing, so he explained openly, "It's just a few million yuan in remediation costs."

Li Yude nodded and said, "With such high-quality land, Hongpu Chemical can definitely find someone to cooperate in development and increase its market value."

Luo Qihong smiled and said, "The Paramount Company took over Hongpu Chemical Company just to make a fortune, and it had to be done in a short period of time. It is not in the interests of the Paramount Company to renovate and develop this land."

"Besides, when I acquired Paramount, I had some unpleasant experiences with Liu Jiehui, the vice president of Standard Chartered Bank, the creditor bank, so I didn't want to touch this piece of land anymore."

"So that's it! How much is the debt owed to Standard Chartered Bank?" asked Li Yude.

"1 million!" Luo Qihong said, "If we can turn this piece of land into residential land, the profit margin will at least double."

"Uncle Li, Hongpu Chemical will definitely be transformed into a real estate company under my leadership, and it can take advantage of the acquisition opportunity to make a name for itself. Raising funds and issuing shares in the future will not be a problem," Luo Qihong added.

Li Yude still shook his head and said, "It's still too expensive. I don't have that much money."

Luo Qihong suggested, "Don't we still have Rocky as our ally? If Rocky runs Hongpu Chemical Company, Uncle Li can become the major shareholder of Dehe Real Estate, gain control, and become the second largest shareholder of Hongpu Chemical."

He could naturally see that Li Yude wanted to acquire Hongpu Chemical and did not want to involve Lin Luoqi, but Li Yude could not afford it. If he forced Li Yude to acquire it, the only ones who would suffer would be Paramount Company and Luo Qihong himself.

Li Bingjun interrupted and said, "Luo Sheng, how about we be the largest shareholder and you be the second largest shareholder?"

"Ms. Li's words make sense!" Luo Qihong said politely, "But this is not in my interest. First, Paramount needs this money to achieve certain goals. Second, I also need funds for another acquisition. Hongpu Chemical is just a short-term investment of mine."

"If we want to gain control of Hongpu Chemical but don't have enough funds, does Luo Sheng have any ideas?" Li Bingjun said what Li Yude wanted to ask.

"Ms. Li, in my opinion, Dehe Real Estate Company is more suitable for you than Hongpu Chemical." Luo Qihong said, "You are still not familiar enough with the real estate industry. If you rashly 'swallow the whale', you will suffer a great loss."

"There is only one way, and that is to mortgage shares and take over Hongpu Chemical with loans. I think you only need 31% of the shares, but this is very dangerous, especially when the prospects of the local market are unpredictable." "Is Paramount Company willing for us to acquire only 31% of the shares?" Li Yude asked solemnly.

Luo Qihong shook his head and said, "You must take at least 45% of the shares, and I will arrange the remaining 26%."

There is still 14% of the shares that need to be taken over by someone, and this person must be very reliable, Li Yude thought to himself.

"Okay, I'll reply to you in two days." Li Yude nodded.

In fact, Li Yude’s words reminded Luo Qihong that Hongpu Chemical Company’s assets were only tens of millions of yuan. How could it support a market value of several hundred million yuan?
Once the bubble is burst, it will be difficult for Hongpu Chemical Company to be sold at a high price.

"It seems that I still need to take out a loan to purchase some properties with strong qualifications." Luo Qihong sighed softly as he walked in the aisle.

In the box, Li Yude and his daughter were still there, but they had stopped eating and were leaning back in their chairs with serious expressions.

"Dad, in fact, Hongpu Chemical Company is not better than those real estate companies. Its assets cannot keep up with its market value. We will suffer a loss if we acquire it." Li Bingjun persuaded.

Li Yude shook his head. "I am attracted by the reputation that Luo Qihong has created for Hongpu Chemical Company. It will be easier to raise funds in the future. This is also a way for a real estate company to grow rapidly."

Li Bingjun asked worriedly, "How do we repay those loans?"

"Luo Qihong is right. We can't be too greedy and want everything. I plan to withdraw from Dehe Real Estate Company, pledge the factory for a loan, and let Xu Jiawen and her son become the second largest shareholders of Hongpu Chemical Company. However, in order to prevent us from making wedding dresses for others, I will sign a relevant agreement with Xu Jiawen." Li Yude said.

"Dad, I don't agree with you taking such a gamble. The ginseng factory is our foundation, not Hongpu Chemical and Dehe Real Estate." Li Bingjun said with a grim expression.

As Luo Qihong said, they need to take it slow, and perhaps Dehe Real Estate Company is the most suitable for them.

Unfortunately, she was unable to convince Li Yude in the end and could only try her best to help do the job and reduce the potential risks.

After 2 days

Hongpu Chemical Company announced that the First City Building in Central, owned by First City Limited, cost 8 million yuan.

When the news came out, it did not cause any sensation, just some ripples.

On that day, the share price of Hongpu Chemical rose to 1.3 yuan as soon as the market opened, with a market value of 2.6 million yuan, which surprised many people.

At the same time, Luo Qihong asked Bai Jinyan to help reduce his holdings in Paramount Company and slowly sell 4 million shares of Hongpu Chemical Company.

On Tuesday, October 10, Bai Jinyan successfully helped Paramount Company reduce its holdings of 6 million shares and recovered 4 million yuan.

Luo Qihong then planned to issue 5 million new shares to Paramount Company through the board of directors to raise 5 million yuan to acquire the Yunfeng Building in Wan Chai, of which 2 million yuan would require a loan.

Stimulated by such a series of good news, the share price of Hongpu Chemical Company rose smoothly to 1.6 yuan (the share price fell after the new share issuance), with a market value of 4 million yuan, and an asset value of 2 million yuan, including a batch of securities stocks.

The shareholding ratio of Paramount Company fell to 60.8%. Excluding the 5% held by the Landlord Association, Paramount Company only held 55.8% of the shares.

(End of this chapter)