A century-old wealthy family that rose from Shanghai

Inside the Jardine Matheson headquarters, the newly appointed chairman, Henry Keswick, stood before the floor-to-ceiling window, his gaze sweeping across the city below. This fifth-generation leader of the Keswick family had just taken the reins of Jardine Matheson, yet he held the reins of the group firmly in his hands.

At that time, Jardine Matheson was at its peak in the 1960s and 70s, controlling more than 200 companies with businesses spanning Hong Kong, Kowloon and overseas, from shipping and trade to retail, penetrating almost every corner of Hong Kong's economy.

Even so, Jardine Matheson only ranks fifth in Hong Kong, behind only four companies: Universal Group, Cheung Kong Industries, HSBC, and CK Asset Holdings.

Within Jardine Matheson's business empire, Hongkong Land's position is becoming increasingly prominent.

As the Hong Kong property market heated up in the late 1960s, Hongkong Land, which owned many properties in Central, saw its market value soar, becoming the second largest company in the Jardine Matheson Group, with only a small gap between it and Jardine Matheson. It ranked seventh among Hong Kong companies, with Ping An Financial Group ranking sixth.

As is customary, the taipan of Jardine Matheson automatically assumes the chairmanship of Hongkong Land, and Henry Keswick is no exception—this allows him to directly lead Hongkong Land's expansion strategy, while the "saturation" of Central has led him to a new target: Causeway Bay.

At that time, Central was already the financial and commercial core of Hong Kong, and Hongkong Land owned many buildings in the core area; however, land development in Central was nearing saturation, and it was extremely difficult to acquire large plots of land, especially after losing the 'Central Land King' in 1970, which made Henry Keswick regretful for a long time whenever he thought about it.

Hong Kong's urban development has not stopped, and the second business district of Hong Kong Island is quietly shifting to Causeway Bay - a place with convenient transportation, dense population, and increasingly strong demand for shops and residences. In particular, after the opening of the Hung Hom Tunnel, it has become a "new gold mine" in the eyes of real estate developers.

Henry Keswick knew that if Hongkong Land wanted to maintain its growth, it had to step out of its "comfort zone" in Central and seize the initiative in Causeway Bay; more importantly, Hongkong Land had fallen far behind Cheung Kong Holdings, and he had to catch up.

However, most of the prime land in Causeway Bay had already been acquired. After several rounds of screening, Jardine Matheson and Hongkong Land finally focused their attention on a company that seemed to have nothing to do with real estate – Dairy Farm.

"The value of the dairy company lies not in the milk, but in the land."

“In today’s market, raising cattle and milking them is the most wasteful use of land. If you can acquire these plots of land and transform them into office buildings, shopping malls and residences, the profits can increase at least tenfold.”

These words reveal Jardine Matheson's core logic in coveting Dairy Farm: rather than spending high prices to acquire plots of land piecemeal, it would be better to directly swallow up Dairy Farm, which owns large tracts of prime land, and take control of Causeway Bay's development in one fell swoop.

The story of the Dairy Farm Company is much longer than Jardine Matheson imagined.

Its origins can be traced back to 1886 when American businessman John Deutsch opened a "snow factory" (i.e., icehouse) on Ice Factory Street, which was the earliest ice-making enterprise in Hong Kong. In 1890, Deutsch partnered with British businessman Kyle to reorganize the ice factory into the "Hong Kong Ice Company," which owned the Ice Factory on Ice Factory Street, the Ice Factory on Spring Garden Street, and the Ice Factory in Causeway Bay, almost monopolizing the ice-making business in Hong Kong—in an era before refrigerators were widespread, ice factories were a "necessity" for urban life and business operations.

In 1896, another seemingly unrelated company was born: the "Dairy Company," founded by British doctor Dr. Winsor. Its initial cattle farm was located on a barren hillside in Causeway Bay. At that time, Causeway Bay was undeveloped, with large tracts of land lying idle, making it ideal for livestock farming. In 1918, with business expansion, the Dairy Company merged with the Hong Kong Ice Factory Company, becoming "Dairy Ice Factory Limited," producing both ice and milk, making it a rare "dual-business" enterprise in Hong Kong.

By the mid-20th century, household and commercial refrigerators had become increasingly common, the ice-making business gradually shrank, and the company shifted its focus entirely to dairy products. The name "Dairy Company" has remained to this day.

Despite the shift in business, the land assets accumulated in the early years were completely preserved—the cattle farm in Causeway Bay and the farm in Pok Fu Lam were even more extensive. These lands, which were “worthless” back then, had become scarce resources worth their weight in gold by the 1970s.

What makes the Dairy Farm Company even more difficult to shake is its leader – Sir Zhou Xinian. This Chinese tycoon, whose ancestral home is Dongguan, Guangdong, comes from a distinguished family: his grandfather, Zhou Yongtai, came to Hong Kong to make a living in 1860, and by the time of his father, Zhou Zhuofan, the Zhou family had become a well-known wealthy merchant family in Hong Kong; Zhou Xinian received a Western education from an early age and studied in Britain and Austria. After returning to Hong Kong in 1930, he not only became a lecturer in the Department of Otolaryngology at the University of Hong Kong, but also became a "renowned doctor in Hong Kong" for his superb medical skills.

But Chow Sek-nin's ambitions extended far beyond the medical field. He was passionate about public service, first serving as chairman of Po Leung Kuk. With his fluent English and familiarity with Western rules, he was highly regarded by the Hong Kong British authorities: he was appointed as a member of the Legislative Council in 1946, became a member of the Executive Council in 1953, was awarded the OBE in 1960, and was knighted by the Queen in 1970, becoming the fifth Chinese in Hong Kong to receive this honor after Ho Tung, Chow Shou-sun, Chan Kwong-leung, and his cousin Chow Chun-nin.

With his dual prestige in politics and business, Zhou Xinian became a "benchmark figure" in Hong Kong's Chinese-owned business circle. He served as a director and chairman of more than ten companies. During his tenure as a director of Dairy Farm, he quietly began to increase his shareholding. Unlike the fierce takeover battles that followed, Zhou Xinian's shareholding increase was low-key and continuous. He eventually became the largest shareholder of the company and naturally took the chairman's seat. The whole process was "unremarkable," but it laid the foundation for the "Chinese-owned control" of Dairy Farm.

However, in the early 1970s, Zhou Xinian fell out of favor in politics because he "failed to provide strong support to Governor David Trench" during the Hong Kong turmoil of 1967, and gradually faded from public view, but his foundation in Hong Kong remained unshaken.

The Dairy Farm Company has more than 2000 employees and owns multiple dairy factories in Causeway Bay and Pok Fu Lam. It has formed a complete industrial chain from breeding and production to sales and has a huge market share. It is a "heavyweight enterprise" in Hong Kong's livelihood sector.

Hong Kong stock market on October 25.

Dairy stocks inexplicably rose HK$14 to close at HK$137, while Hongkong Land stocks also climbed to a new record of HK$95.

Strangely, the media was slow to react and reported on it. This is inconceivable in later generations.

Since the Far Eastern Conference opened at the end of 1969, the stock market has been steadily rising. By 1972, the stock market was booming with active trading. The media and investors alike assumed this was the general trend of the market and overlooked the unusual fluctuations in smaller markets.

On Monday, October 30th, the stock market finally erupted into a takeover battle between Hongkong Land and Dairy Farm. Hongkong Land and Dairy Farm stocks attracted considerable attention that day. However, evening newspapers and radio stations remained silent.

On October 31, Hongkong Land published a full-page advertisement in the newspaper announcing its acquisition of "Jerusalem Ice Factory Limited and Walmart Limited" (both financial advisors to Hongkong Land). The advertisement stated that draft documents were being prepared and would be sent to the shareholders of Milk Company Limited on November 7, 1972. The documents would contain a proposal to exchange two Hongkong Land shares with a par value of HK$5 each for one Milk Company share with a par value of HK$7.5.

In fact, the battle had already begun on October 25th. This meant that someone had leaked information and was taking advantage of the situation. In later times, the stock exchange and regulatory authorities would have investigated and charged them with "insider trading." Even more perplexing is that, despite the scale of the acquisition, neither party requested a trading halt, and the exchange remained unmoved, allowing both companies to continue trading. This demonstrates that the stock market at that time was still immature, with lax regulation, ineffective securities laws, a lack of experienced securities journalists in the media, and limited investor knowledge. All of this provided too many opportunities for experienced stock traders and astute investors to exploit.

CK Asset Holdings Limited.

Chen Guangliang only learned about the acquisition of the Dairy Company from the newspaper. His face remained calm, and his thoughts on the matter were simply to let things take their course. If Zhou Xinian asked him for help, he would consider intervening, which would give him a legitimate reason; if Zhou Xinian didn't ask for his help, he wouldn't interfere with Henry Keswick's normal acquisition process.

In fact, Henry Keswick's methods at this time were indeed very clever—he wanted to take over the Dairy Farm Company without spending a penny; that is, by exchanging shares, Hongkong Land was, after all, the second largest real estate company in Hong Kong, and its shares were second only to Cheung Kong Holdings in terms of attractiveness.

Of course, there are also drawbacks. Jardine Matheson's stake in Hongkong Land will be diluted significantly, even more than in the previous life. This means that Hongkong Land's market value in this life is much lower than in the previous life, while Dairy Farm's market value is about the same as in the previous life.

Chen Guangliang even thought that if he went all out, he could probably acquire Hongkong Land very soon. After all, Ping An Investment held about 5% of Hongkong Land's shares and another 10% of Dairy Farm's shares; once Dairy Farm became part of Hongkong Land's shares, Ping An would probably hold nearly 10% of the company. Jardine Matheson's shareholding in Hongkong Land was probably only slightly over 30%.

However, he quickly suppressed this thought, realizing that doing so would likely be counterproductive.

Throughout November, the takeover battle between Hongkong Land and Dairy Farm was also a war of public opinion, which boosted newspaper sales in Hong Kong. At the same time, the Ping An Index rose sharply, breaking through 800 points in November, with a 100% increase in the first 11 months.

Just as Chen Guangliang guessed, Zhou Xinian was probably worried that a large real estate developer would take over Dairy Farm, so he only sought help from Chinachem Properties, which had little influence. In the end, just like in his previous life, Hongkong Land acquired Dairy Farm without spending a penny, greatly increasing its strength.

Sunland's market capitalization, while still somewhat behind that of CK Asset Holdings, has increased considerably.

Entering December, taking advantage of the hot market, CK Asset Holdings announced a rights issue plan—one share for every ten shares held, raising HK$300 million to be used for business development.

This news triggered a market-wide rally, with the Ping An Index approaching 1000 points.

Shangri-La Hotel.

Chan Kwong-leung invited Chuang Chu-kau to dinner, during which he said, "Taking advantage of the current high property market, let Times Films sell the Mong Kok Cinema Building and the Tsim Sha Tsui Cinema Building. After all, we are now gradually entering the era of 'multiplex cinemas,' and traditional cinemas occupy too much space, which is too wasteful."

Zhuang Zhujiu was surprised. Although these two properties were not as valuable as the two buildings in Central and Tsim Sha Tsui, they were the fourth and fifth most valuable properties of Times Film Company (the Times Film City complex in Clearwater Bay was the most valuable).

"These two properties will probably cost over 100 million. Are you really going to sell them?"

He is also the general manager of TVB and the chairman of the board of directors of Times Pictures, but at this moment he has to listen to his father-in-law.

Chen Guangliang nodded and said, "This cycle has reached its peak, and something might happen any day that could cause it to enter a period of stagnation. These two theater properties need to be rebuilt, so there's no need for Times Pictures to keep them. After selling them, we can get a larger share of the profits."

In recent years, Times Pictures has consistently distributed substantial dividends annually, primarily due to high real estate rental income, coupled with profitability from film production, cinema chains, and distribution. Times Pictures has entered a period of high dividend payouts.

Although Zhuang Zhujiu was heartbroken to sell the properties he had purchased over the years, he also sensed something different: this most astute businessman had probably foreseen something.

“Okay, I’ll arrange it right away. This is a high-quality property, and there’s no shortage of buyers right now.”

"Um"

During this peak in the securities and real estate markets, the Chan family must have made at least HK$10 billion – it was practically plunder. Of course, this is also what the Chan family deserves, given their significant contributions to Hong Kong.

After all, the trading volume of Hong Kong's stock market this year may exceed 550 billion, while the previous estimate was only 450 billion.

Of course, Chen Guangliang did not plan to cash out his securities this year; he intends to consider doing so after New Year's Day.

Chen Zengxi, founder of Hang Lung Properties, who had just completed its IPO and raised HK$2 million, was struggling to find projects that matched his "high-end commercial real estate" positioning. At this time, news from his younger brother Chen Zengtao gave him a glimmer of hope: Times Films planned to sell two cinema buildings in Mong Kok and Tsim Sha Tsui.

These two properties are located in a prime business district with high plot ratios, making them suitable for conversion into high-end commercial buildings, perfectly aligning with Hang Lung's development direction. Chen Zengxi immediately decided to personally contact Zhuang Zhujiu, Chairman of the Board of Directors of Times Film Group.

Two days later, at the Shangri-La Hotel in Central, Chen Zengxi bluntly expressed his intention to acquire the property for full. Following Chen Guangliang's instructions, Zhuang Zhujiu quoted HK$2 million—far exceeding the industry's estimate of HK$1.8 million—both demonstrating confidence in the property's value and testing the buyer's sincerity. Chen Zengxi agreed without much hesitation, only requesting a "swift transfer of ownership." Zhuang Zhujiu, citing the need to accommodate the cinema business, stipulated delivery by the end of 1973, allowing sufficient buffer time for subsequent adjustments.

From the release of the news to the finalization of the terms, this HK$2 million transaction took only three days, a speed that astonished the industry. Unbeknownst to many, Zhuang Zhujiu's "high price" and "delayed delivery" were actually part of Chen Guangliang's strategy: to maximize cash out while using the delivery as a buffer to avoid potential market risks.

For Hang Lung, this deal is a timely boon. The HK$2 million investment in core properties will not only quickly expand its asset portfolio, but the estimated annual rental income of over HK$3000 million after redevelopment will also set a benchmark for Hang Lung's position in Hong Kong's commercial real estate sector.

For Times Pictures, the HK$2 million cash-out is a key step in Chen Guangliang's "secure the profits" strategy. Times Pictures is indeed too large, so it's not surprising that they can sell some properties at high prices.

The key point is that those two properties weren't core assets. Even after selling them, Era Films still owned two high-quality Grade A buildings in Central and Tsim Sha Tsui. (End of Chapter)