A century-old wealthy family that rose from Shanghai

Time came to 1975.

Shortly after New Year's Day, CK Asset Holdings took the lead in the market by announcing the privatization of Hong Kong Resorts International through a share swap plus cash deal, with a premium of approximately 30%.

After the news was released, investors holding shares in Hong Kong-based company R&F Properties were overjoyed.

Hong Kong Resorts' stock had already become a hot potato. Although it is a subsidiary of Cheung Kong Holdings, investors could see that Hong Kong Resorts' revenue was far from ideal. Under the current real estate situation, Hong Kong Resorts' Discovery Bay project was difficult to sell or to generate profits.

However, Cheung Kong's stock is different. While the Ping An Index fell by as much as 90%, Cheung Kong's stock only fell by a little over 50%, which is a clear indication of its high quality.

Therefore, after the privatization plan was announced, long queues of shareholders lined up to register. Cheung Kong Holdings quickly acquired more than 90% of the shares of Hong Kong Resorts, completing the legal privatization and announcing its delisting.

After the major market crashes of 1973 and 1974, the stock market finally rebounded sharply in early 1975, driven by factors such as a significant reduction in US interest rates and technical "oversold" conditions.

At the start of January, the index rose rapidly from 215.11 points.

However, although the stock market in early 1975 reversed the weakness that followed the major crash of 1973, trading was still not very active, and trading volume repeatedly hit new lows, indicating that investor confidence had not fully recovered.

Although the overall investment atmosphere is less than satisfactory, some forward-thinking entrepreneurs have taken the lead in planning various acquisitions and mergers, attracting the attention of market participants.

Following closely behind Cheung Kong Holdings was the long-established British trading company, Swire Group, which spearheaded the acquisition spree.

In mid-January, Swire Properties issued 2.8 million new shares in exchange for 10.5 million shares of Swire Properties Development, a subsidiary of Tai Cheong Properties. These shares were then transferred to Swire Properties. Swire Properties then issued 12.1 million new shares in exchange for a 50% stake in the first phase of the Swire Dockyard development (later known as Taikoo Shing). In return, Swire Properties sold the land in the eastern part of Order Bay to Swire Properties at a low price.

Through this game of rights issues, share swaps, and the issuance of new shares, the equity of minority shareholders is naturally "diluted," while the strength of the company grows rapidly.

CK Asset Holdings Limited.

Chen Guangliang and his son Chen Wenjie were having a meeting at the conference table in the office.

At this time, Chen Guangliang had moved behind the scenes. Although he still held the title of Chairman of the Board of Directors of Cheung Kong Holdings, everyone knew that Chen Wenjie had taken over Cheung Kong Holdings.

Of course, the reason why Chen Guangliang was so at ease was because Chen Wenjie and the others would listen to his advice, unlike his self-important children who refused to listen to advice.

Chen Wenjie handed the documents to his father, kept a copy for himself, and then began his report:

"Currently, our overseas investments are mainly in Singapore and Japan. Among them, the Singapore project is the Paragon shopping mall complex on Orchard Road, with a final land area of ​​12 square feet (we also purchased adjacent land). After completion, it will have a six-story shopping mall of 50 square feet, a 32-story office building with a floor area of ​​30 square feet, and a hotel building with a floor area of ​​26 square feet, totaling a commercial complex of 106 million square feet. The shopping mall is expected to open in 1979, the office building in 1980, and the hotel in 1981."

As Chen Guangliang looked at the project proposal, he was also thinking:
The Chen family's real estate investments in Singapore are primarily concentrated on Orchard Road: Currently, the Shangri-La Hotel, a large five-star luxury hotel, has its tower wing, garden wing, and canyon wing all in operation, while over fifty villas are scheduled to open in 1978. The entire project took only twelve years. This hotel has become Singapore's most luxurious and renowned hotel, and is the preferred choice for overseas investors and business travelers visiting Singapore. Government events also frequently utilize this hotel.

Another example is Lane Crawford on Orchard Road. As an investment from the early 1960s, it became a representative of mid-to-high-end department stores in Singapore as soon as it opened; the Lane Crawford office building has also always had a high occupancy rate.

It appears that the Chen family has begun investing in their third large-scale real estate complex in Singapore, but in any case, they have taken each step very steadily and achieved a good return on investment.

“Once the Paragon shopping mall is completed, it will dominate Singapore’s retail market in the 1980s. The remaining plot of land can be used to build a shopping complex in the mid-1980s, so that we will have a representative in the 1990s.”

Chen Wenjie nodded and said, "Such a steady approach is the best investment strategy."

Next, Chen Wenjie said, "In Japan, we have finalized four projects, including a large shopping mall in partnership, the Tokyo Shangri-La Hotel, and two commercial buildings. Combined with the four commercial buildings we already own in Ginza, our investment in Japan is already quite substantial."

The four commercial buildings in Ginza were purchased back in the 1940s and 50s. After being rebuilt, they have been leased out ever since, bringing substantial rental income to Cheung Kong Holdings. Their investment has undoubtedly multiplied many times over.

Chen Guangliang glanced at the proposal for the large shopping mall. It was a large plot of land in Tokyo, not in a bustling downtown area like Ginza, but not exactly a suburb either; instead, it aimed to fully utilize the shopping mall's 'cluster effect' to stimulate surrounding businesses. The project had a partner holding a 30% stake: the renowned Seibu Group, the family asset of Yoshiaki Tsutsumi, who later became Japan's richest man. However, the Seibu Group was later in the hands of Yoshiaki Tsutsumi's older brother, Yoshikiyo Tsutsumi.

The plan for a large shopping mall is fine. American designers will be involved in the modernization, while Asian designers will be responsible for the garden-like design, blending them together. It is expected to be completed after 1982 and can be sold by 1989. Of course, it is also fine to keep it.

As for the Shangri-La Hotel in Japan, it is located in a prime location in Japan, and even in 1989, it was unlikely to be sold. This is also the third Shangri-La Hotel in the world, showing that every step it takes is very stable.

Of course, many large hotel groups operate under a franchise model, which is essentially a light-asset operation. This means they can receive a management fee of about 4% of their annual turnover, but they don't need to invest in buildings; they only provide management and brand authorization.

Chen Guangliang does not intend for the Shangri-La Hotels and Resorts in Hong Kong to follow an asset-light model, but rather plans to invest in hotels in a substantial way; after all, under his second wife's control, Amazon Hotels Group is already following a combined asset-light and asset-heavy model, and its Sheraton hotel franchise is developing rapidly.

Cheung Kong Holdings already owns six commercial buildings in Japan, five of which are located in Ginza and the other in a prime area of ​​Tokyo, making them quite valuable.

From this perspective, CK Asset Holdings' lowest market capitalization was only HK$23 billion, which is actually less than half of its net assets, making it extremely undervalued.

Of course, CK Asset Holdings' investments in Singapore and Japan have not yet commenced, and the funds have not actually been secured; they have only been initiated.

“Investments in Japan are not one-time investments; some of the funding can be obtained through local loans in Japan.”

Chen Wenjie nodded and said, "Yes, we also have substantial assets in Japan, including real estate, food and beverage assets, and more."

Nissin, a wholly-owned brand, remains Japan's largest instant noodle brand. It has also established the Ajisen Ramen chain, which now has dozens of directly operated stores nationwide and has opened up franchising opportunities.

Next, we'll discuss the plans for Hong Kong.

Chen Wenjie stated, "In the real estate development sector, we are continuously acquiring land reserves. Currently, our land reserves have a buildable floor area of ​​just over 8 million square feet. This includes the six sites (15 urban residential towers) we recently acquired from Cheung Kong Property Holdings, as well as Songcheng (formerly Yueyuan) in North Point, which is also planned for redevelopment into residential and commercial properties in this cycle. Over the next three years, we will continue to purchase land reserves for real estate development. Swire Properties is also preparing to sell the first site in Taikoo Valley, and we are already in negotiations."

Looking at the data, Chen Guangliang calculated that 800 million square meters of buildable floor space wasn't much, roughly 15000 residential units. This cycle, from 1975 to 1981, lasted seven years, and these units were barely enough to sell. Of course, Cheung Kong Holdings might later partner with someone, with the partner providing the land and Cheung Kong providing the construction costs, which would increase the available floor space for sale.

However, land prices did not rise significantly between 1975 and 1977, so Cheung Kong Holdings would certainly continue to acquire land reserves; it was impossible for all reserves to be acquired between 1982 and 1984.

"It's true that we need to continue to reserve development land over the next three years, but we also need to invest in commercial land. I'm quite optimistic about the Tsim Sha Tsui East area. I expect the Hong Kong government to release several plots of land for auction every year as the property market recovers next year. What Cheung Kong Group needs to do is acquire about two plots of land in a waterfront location, connect them, and develop a shopping mall complex and a five-star hotel complex. The earlier we acquire the land, the cheaper it will be."

Chen Wenjie took the map and looked at it, saying, "The reclaimed land in Tsim Sha Tsui East is about 165 million square feet, which can be divided into 20 plots of land of varying sizes. It can accommodate the eastward shift of prosperity from Tsim Sha Tsui. However, Hong Kong real estate developers don't have much foresight. After all, to them, this is just a mudflat. So, the cost of acquiring these two waterfront locations shouldn't be too high. After all, the Hong Kong government will definitely auction off the waterfront land first, driving up the land prices in this area, before releasing the remaining land."

That's about right; Chen Wenjie's analysis was very accurate.

Chen Guangliang said, "In short, a large portion of our profits from this round will be invested in commercial real estate; at the same time, we are considering purchasing hotel assets in London and Canada. Of course, we shouldn't rush these things; I have a plan."

Chen Wenjie immediately replied, "Yes, Father."

He didn't feel that since his father had retired, he should be allowed to make more decisions; in his character, stability was the most important principle, and having his father around meant stability.

As for the father not being present?

Chen Wenjie never imagined that he would outlive his father, because when he walked on the street with his father, their appearances made it easy for people to mistake them for brothers.

The offices of the Global Group.

Chen Guangliang looked at the documents in his hand, which were the property information of Global Group's investments in Tokyo and New York last year.

One office building in Manhattan, three commercial buildings/landmarks in Tokyo (including a property in Ginza), a total of four properties. But for the Universal Group's cash flow, this is nothing at all.

By the end of 1973, Universal Group's cash flow had reached US$3.5 million; in 1974, Universal Group's profits exceeded US$2.5 million, accumulating a total cash flow of US$6 million.

No debt, net profit.

The purchase of five overseas properties was not expensive, costing a total of only US$1.5 million.

"We'll share a $100 million profit, and you, the second son, will take $15 million. What are your plans?"

Upon hearing this, Chen Guangcong replied without hesitation, "We don't have much ambition for investment. After all, with shares in Global Shipping, we'll be set for generations. So let's use this money to buy some properties."

Chen Guangliang laughed and said, "That's true. The Global Group has developed to its current level, and the shares you hold are indeed enough. There's no need for you to start your own business. If Wenbo's son is capable and wants to go into business, then sending him to the Global Group is the right thing to do. He can start his own business too; with such a large family and business, he's bound to lose money eventually."

Today, the Global Group is worth more than two billion US dollars, and holding 15% of the shares is worth three to four hundred million US dollars. More importantly, its industries have been diversified and passed down through generations. As long as the earth is not destroyed and order is not rebuilt, it will be difficult for this family to go bankrupt.

Then, Chen Guangliang inquired, "What is the situation regarding securities investment in Japan?"

With such a large cash reserve, even if the company distributes $1 million in dividends annually, it would still be more than sufficient. Therefore, to avoid financial constraints, it naturally needs to invest heavily.

Chen Wenming immediately said, "We have already purchased US$65 million worth of Japanese securities, and we expect to complete the established target of US$80 million by the end of February."

Chen Guangliang nodded. He calculated that the annual shipping profit was around 2 million US dollars, and by 1979, the normal shipping profit would be 10 billion US dollars.

The acquisition of Wharf Holdings in the future will not cost much at all, only about US$6 million.

"Continue investing in properties in Japan and the United States. Places like Osaka and Los Angeles are also worth considering. Before making an investment, send me the target information for review."

"Ok"

As the head of the family, Chen Guangliang needs to coordinate the investment direction of each branch and lineage.

Of course, buying up properties at rock-bottom prices does not mean that Global Group will focus on developing properties; rather, it serves more as a stabilizing force for 'preserving and increasing value'.

Later.

Chen Wenming reported something, saying happily, "Since the Middle East oil market has returned to normal, Japan has been intentionally stockpiling oil, so even if our oil tankers' contracts expire, they are willing to continue signing long-term contracts, and the prices are quite good."

Currently, Global Shipping owns 55 VLCCs with a total tonnage of over 1300 million tons; in addition, the total tonnage of container ships is approximately 260 million tons, and the remaining 200 million tons are non-VLCC oil tankers and bulk carriers.

Chen Guangliang said, "Let's rent it! In short, try not to sign a contract that extends into the 1980s, and at the latest, it should not be later than the end of 80."

"Yes"

The shipping downturn of the 80s began in the 80s, became severe starting in 1983, and reached its lowest point in 1985. Chen Guangliang's expected target for global shipping was to reduce its 1800 million-ton fleet by half. A fleet of 800 to 1000 million tons with no debt would have the ability to withstand risks and maintain customer relationships.

The businesses of CK Asset Holdings and Global Holdings are actually quite easy to plan, since real estate and shipping are cyclical industries. Unlike other entrepreneurs, Chen Guangliang doesn't need to conduct extensive market research, gather information from governments around the world, and then formulate strategies based on the specific circumstances.

As for him, he only needs to arrange things according to the cycle from his previous life, and there won't be any problems. Even if there are errors, the losses won't be significant. (End of Chapter)