Hong Kong 1980: The Savage Era

Chapter 422 [Hong Kong Shipping]

End of May 1989
Henderson Land Development has been in Zheng Jiachun's hands for nearly two years. He has been making moves everywhere, just like Luo Qihong and Liu Luanxiong, but he cannot obtain large amounts of funds from the stock market like Luo Qihong and the others.

Relying solely on those share offerings to raise funds, Hutchison Whampoa and New World Development fell into trouble.

However, Zheng Jiachun did acquire many assets for the two companies, such as a commercial building with a floor area of ​​60 square feet in Central and Ji Li Industrial Company.

The latter has two residential buildings in the Mid-Levels. If they are demolished and rebuilt, a 52 square feet luxury building can be obtained, which is as valuable as the two luxury buildings in Trestle Towers, or even better.

The acquisition of K-Industry cost Henderson Land Development and New World Development nearly 10 billion yuan in cash.

Of course, Ji Li Industrial Company also has other assets, and the properties on May Road in Mid-Levels only account for 3% to 4% of the total assets.

"Uncle Tong, Brother Chun, your recent acquisition activities are very aggressive. The company's asset value has increased by leaps and bounds. It will soon be able to compete with Hong Kong Land and Sun Hung Kai Properties." Luo Qihong complimented with a smile.

Luo Qihong knew that Zheng Jiachun wanted to prove himself after seeing his huge efforts in property acquisitions. Moreover, with his own judgment in advance, he was not worried about the collapse of the local market at all.

Unfortunately, Zheng Jiachun was wrong. Luo Qihong was not optimistic about the Hong Kong market, but he had to take over those properties, otherwise they would belong to others in the future.

Cheng Yutong smiled bitterly, which was rare for him, and said, "New World Development and Wheelock are different from you. Their debt ratios are already quite high. Wheelock is 63% and New World Development is 58%."

"If a crisis comes, I may face great difficulties. Now I want to find an opportunity to reduce my debt ratio."

Cheng Yu-tung still maintains a conservative style. Although he has the nickname "Shark-hearted Cheng", he is still very stable. Of course, this is in comparison with people like Luo Qihong, Liu Luanxiong, and Luo Xurui, rather than old seniors like Li Jiacheng.

Luo Qihong naturally knew about the series of actions taken by Zheng Jiachun after he took office. According to estimates, Zheng Jiachun spent at least HK$60 billion in less than two years, 6% of which were loans.

Luo Qihong speculated that Wheelock Group's cash flow had dried up, while New World Development would be better, but not much better.

"So Uncle Tong is planning to sell the shipping company under Wheelock and Hong Kong Shipping Company?" Luo Qihong asked, without the joking look on his face.

The international shipping industry has been in a slump for six or seven years. It has been another two or three years since the recovery of the shipping industry was originally expected in 86 and 87, and there is still no hope for the time being.

New World Development and Wheelock Properties have invested a lot of money, which has made Cheng Yu-tung discouraged. Now Cheng Jiachun is eager to make progress, which has put the two companies in trouble.

Therefore, Cheng Yu-tung had to consider reducing some unprofitable assets.

Luo Qihong owns a shipping company that was spun off from Wheelock & Company. It is not large in scale and did not have much debt before, but it is now heavily in debt.

The reason is that the ship requires a lot of maintenance costs every year, and since it is a listed company, it is difficult to raise funds through stock offerings, and it can only borrow from banks.

Moreover, those loans were obtained with Luo Qihong's personal guarantee, otherwise they would not have been possible based on the current situation of the shipping company.

After all, banks are not fools and will not lend money to companies with poor prospects.

"Well, the shipping industry is still in a downturn now. I don't know when it will pick up. This investment is considered a loss." Cheng Yutong said helplessly.

Luo Qihong smiled and said, "Uncle Tong, in my opinion, the shipping industry is about to pick up. As long as we wait a little longer, we should be able to recover our losses."

Luo Qihong certainly doesn't want Cheng Yutong to say in the future that he has ulterior motives and did not remind people about the recovery of the shipping industry.

Cheng Yutong thought for a moment, then shook his head and said, "No more waiting. We cannot lose the big picture for the small. The real estate industry is still the top priority of our company."

Zheng Jiachun remained silent. It was he who caused the trouble, but he still refused to accept it.

Why can Luo Qihong and Liu Luanxiong make a lot of money from this, but he has to sell his supplies? Or maybe his father is too cautious!

Luo Qihong stopped trying to persuade him. "Okay, I'll give you a 10% premium. I won't let you suffer a loss."

"Ah Hong, are you so optimistic about the future of the shipping industry?" Zheng Jiachun finally spoke.

Luo Qihong nodded and said, "I am very optimistic about the shipping industry. It has been in a slump for so many years, and it is time for it to pick up."

There are so many shipping companies internationally. As long as you have money, there is no need to buy from Cheng Yu-tung.

"Ah Hong, thank you for your kindness. Let's trade it according to the market price. There is no need for a premium." Cheng Yutong didn't want to owe too many favors to others.

In 83, Cheng Yu-tung spent 2 million US dollars to acquire the Heung Kong Shipping Company, holding a 60% stake. In the past few years, the shipping industry was in a slump, and Cheng Yu-tung bought a lot of ships against the market trend.

Currently, Xiangjiang Shipping Company owns 12 container ships and 1.2 containers, with an initial estimated value of 12 billion yuan.

If Luo Qihong wants to take over all of Henderson Land's shipping companies, including those of Wheelock, he will need 16 billion yuan.

"Daddy, why don't we sell 60% of the shares of Hong Kong Shipping Company and keep Wheelock's shipping company?" Zheng Jiachun looked at Zheng Yutong and said pleadingly.

Cheng Yutong thought about it, sighed and said, "Ah Hong, what do you think?"

Luo Qihong smiled and said, "I think what Brother Chun said makes sense. Funds are not in short supply, so they can be retained."

"If I need it, I can buy it from somewhere else."

"Okay, then let's just sell the Hong Kong Shipping Company," said Cheng Yu-tung.

Zheng Jiachun lowered his head and thought for a moment, then said, "Ah Hong, the Hong Kong government is going to auction off the Central Garden Road land king, what are you going to do?"

“Will the subsidiaries jointly bid for the auction like Wan Chai Central Plaza, or do they want to choose an ally?”

Luo Qihong immediately guessed what Zheng Jiachun was thinking and said, "I originally wanted to follow the convention. If New World Development or Wheelock wanted to cooperate with me, I could share some of the rights and interests."

"That's exactly what we meant. The land king on Garden Road in Central is really too good to be true, but the price will not be low, and will definitely not be less than 50 billion yuan," said Zheng Jiachun.

"Brother Chun, the rights and interests to be transferred may not be too much, about 30%! Can you accept it?" Luo Qihong said lightly.

Although he expected Cheng Yu-tung and his son to retreat because of the big drop, he also had to calculate the consequences of the expected failure.

This is a family property, and Luo Qihong cannot have too little interest in it.

"That's okay. Our funds are not that sufficient." Zheng Jiachun said with a smile. Thirty percent of the equity is just right, which is the limit they can bear.

"Uncle Tong, Brother Chun, let me make this clear first. My reserve price is 60 billion yuan. Don't think the price is too high." Luo Qihong laughed.

"This is the last large piece of land to be auctioned in Central. There will not be any more in the future. Any price is acceptable," said Cheng Yu-tung.

"That's good."

(End of this chapter)