Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 205 Replacing the Cage with a New Bird (Seeking monthly tickets, recommendations, and subscriptions!)
Chen Bingwen did not directly answer Fang Wenshan's question.

After inspecting the Hung Hom Crane Garden site, Chen Bingwen and Fang Wenshan returned to the Weiye Building.

In his office on the top floor, Chen Bingwen gestured for Fang Wenshan to sit down, then pointed to the preliminary estimate document he had brought regarding the land price supplement for the redevelopment of the plot.

"The Hong Kong government's Planning Department and Works Department's calculation method is based on the premise that the site is immediately and completely converted to pure commercial or residential use."

Chen Bingwen tapped his finger on the glaring figure of "HK$1.8-2.2 million" and said calmly, "But we can't calculate it that way."

Fang Wenshan nodded: "I understand, Mr. Chen."

Simply paying land premiums for real estate development is too costly and puts immense pressure on cash flow.

Moreover, our recent acquisition of a controlling stake in Qingzhou Yingni would make our actions too aggressive and direct, potentially drawing unwanted attention and resistance.

“Yes.” Chen Bingwen closed the preliminary estimate document, pushed it to Fang Wenshan, and continued, “So, we need to change our approach and make a new plan to discuss with the Urban Planning Committee and the Public Works Bureau.”

Fang Wenshan immediately took out his notebook to take notes: "Mr. Chen, please speak."

"The core idea is: industrial upgrading, overall planning, and integration of industry and city."

Chen Bingwen slowly explained his planned scheme, "Tell them that we are not doing this for real estate profits, but to cooperate with the Hong Kong government's urban development and industrial restructuring policies."

Seeing Fang Wenshan's puzzled expression, Chen Bingwen explained:

First, they proactively proposed relocating the existing, highly polluting wet-process cement production line in Qingzhou Yingni from the increasingly urbanized area of ​​Hongkan Heyuan.

The destination could be Tuen Mun, Tseung Kwan O, or even Shek Lok Kok, areas where the Hong Kong government encourages industrial development.

This demonstrates our social responsibility and environmental awareness as a listed company.

"Second," he continued, "the original site of Crane Garden and the surrounding land will not be planned as a single residential or commercial project."

Instead, it aims to create a new, modern beverage and food industrial park, or what might be called a light industrial town.

"This industrial park should include: an automated beverage production plant, a supporting packaging plant, a research and development quality inspection center, and a warehousing and logistics base."

At the same time, dormitories, canteens, and leisure clubs will be built for employees, and commercial service facilities such as mini-supermarkets, bank branches, and restaurants will be introduced.

He paused, letting Vincent Fang process this: "The advantage of this plan is that we emphasize to the Hong Kong government that this is still land use centered on industrial development, upgrading from the traditional cement industry with high pollution and low added value to the modern food and beverage industry with low pollution, high technology, and high added value."

The land use designation can still be industrial land, but we are applying for higher-density industrial land that allows for the provision of some supporting living service facilities.

In this way, the additional land price difference would be far lower than directly converting the land to pure commercial and residential use.

Fang Wenshan quickly took notes and said with a smile, "Mr. Chen."

This makes the story completely different.

We take a holistic approach to urban planning and industrial layout, proactively cooperating with the government to optimize urban functions, eliminate outdated production capacity, introduce advanced industries, and boost employment and regional vitality.

There will be much more room for negotiation regarding the land premium, and it may even be possible to negotiate policy incentives or installment payments.

“That’s right.” Chen Bingwen nodded. “Moreover, this is not only a negotiation strategy, but also part of my vision for the future of Chen’s Company.”

Centralizing dispersed production, R&D, and warehousing in Hung Hom, a location with convenient transportation and close to the core area of ​​Hong Kong Island, can greatly improve efficiency and reduce costs.

The industrial land owned by Qingzhou Yingni in Tuen Mun and Tai Po is perfectly suited for accommodating the relocated cement plant or future expansion of other industries.

Fang Wenshan closed his notebook: "I immediately redid a detailed planning proposal and supplementary land price assessment report based on this idea, and then I went to meet with the heads of the Urban Planning Committee and the Public Works Bureau."

"Yes, this matter needs to be handled as soon as possible," Chen Bingwen instructed.

Fang Wenshan accepted the order and left.

The office quieted down.

Chen Bingwen's gaze fell on the document again, his eyes deep.

Saving hundreds of millions in land price differences is only the surface.

Behind this lies his profound consideration of the entire asset portfolio and capital layout.

Acquiring control of Qingzhou Yingni, a listed shell company, is just the beginning.

How to maximize its value while providing the strongest support for Chenji's main business is something he must weigh.

The most important core issue here is whether or not Chenji Foods should be injected into Qingzhou Yingni.

If Chenji Foods were injected into Yingni, Qingzhou.

The benefits are obvious.

Once the beverage business, with annual profits of tens of millions or even hundreds of millions in the future, is injected, Qingzhou Yingni will transform from a traditional cement plant into a giant driven by both "consumption and real estate," and its market value will inevitably soar. A tenfold increase would be normal, and it may even be more.

At that time, Qingzhou Yingni will be able to issue new shares at a high price-to-earnings ratio, and use the funds raised (stocks) instead of precious cash to acquire and expand, thus leveraging a larger business.

But the disadvantages are equally obvious.

After the injection, Chen's financial statements will be completely transparent, and every penny of profit will be presented to the public and competitors.

The flexibility of tax planning has been greatly reduced.

Moreover, how will the capital market value this "hybrid" entity?
When the market is good, you may enjoy a double premium.

However, in the event of a real estate downturn or sluggish consumption, the mixed valuation may actually drag down the price-to-earnings ratio, preventing it from fully reflecting the high growth potential of the beverage business.

However, if Chenji Foods is not injected into Qingzhou Yingni, and the two remain as they are, operating separately, Qingzhou Yingni can focus on real estate and its existing cement business, becoming a pure real estate investment and development platform.

Leveraging its listed status, the company will continue to acquire high-quality real estate projects, transforming itself into a stable rental and real estate development giant.

Chen Ji Beverages, on the other hand, maintains the flexibility of being a private company.

Utilize offshore company structures for more flexible tax arrangements and profit shifting globally.

In the future, they could even wait for the right opportunity to list the beverage business separately on the Nasdaq in the US, where it has a higher valuation, and focus on telling the story of a global consumer brand. The valuation they would obtain then would likely be far higher than if they were tied to a real estate company in Hong Kong.

The downside of this approach is that Qingzhou Yingni's stock price cannot directly benefit from the high growth of its beverage business, its market capitalization grows relatively slowly, and its financing capabilities are not as strong as the former in the short term.

For Chen Bingwen, this was a strategic decision.

Acquiring a controlling stake in Qingzhou Yingni is a crucial step in his future strategy, determining whether Chen Ji can transform from an industrial company into a significant conglomerate in the capital market.

Qingzhou Yingni, this company itself carries a piece of Hong Kong's industrial history.

It was originally established in Macau and was one of the earliest cement plants in South China.

It was not until the early 20th century that the company shifted its business focus to Hong Kong Island, established itself in Hok Yuen, Kowloon, and gradually developed into an industry giant through repeated technological upgrades and capacity expansion.

A large-scale cement production plant was built in Hung Hom Crane Park.

This coastal land witnessed the glorious era of Hong Kong Island's industry.

Now, times have changed.

Hong Kong Island's economic structure is undergoing a dramatic transformation, with manufacturing shifting north and the real estate and financial industries emerging.

The core value of Hung Hom Crane Park, a piece of land that once symbolized industrial power, is quietly changing, shifting from production value to spatial and locational value.

His acquisition of Qingzhou Yingni was based on the enormous opportunities brought about by this historical value shift.

This site in Hung Hom boasts an excellent location, bordering the harbor and offering convenient transportation. Whether developed into high-end residences, Grade A office buildings, or a large-scale commercial complex, its potential is limitless.

But he can't rush things.

We can't be like pure real estate developers, only thinking about demolishing factories and building high-rises.

That would be too wasteful and too conspicuous.

Therefore, his proposed concept of a beverage industrial park is an excellent transition and cover.

On the one hand, it can significantly reduce the cost of regulatory reform under the guise of industrial upgrading.

On the other hand, it can indeed integrate Chenji's industrial chain and improve efficiency.

In the future, once the industrial park matures, the surrounding facilities are more complete, and the land value is further enhanced, it can completely transform its function again, upgrading some or all of the park's land use to higher-value commercial or residential uses.

That will be the second release of value, with even more astonishing profits.

This entire process can be completed within the listed platform of Qingzhou Yingni, continuously telling new growth stories to the capital market and continuously pushing up market value.

Thinking about this, Chen Bingwen gradually formed a preference.

Perhaps there's no need to rush to inject the entire beverage business.

This allows Qingzhou Yingni to focus on the story of real estate transformation and industrial park development.

Make good use of the Hung Hom land and develop it into a benchmark project, so that the market can rediscover the value of Qingzhou Yingni.

Meanwhile, Chenji Beverages continued its independent development, expanding globally and quietly channeling its substantial profits to support the real estate transformation and expansion of Qingzhou Yingni.

The two complement each other, but are not completely intertwined.

Maintain sufficient flexibility and strategic resilience.

When the time is truly ripe, perhaps after achieving a decisive breakthrough in the North American market, we can then consider securitizing the beverage business, which would be an even bigger strategic move.

"step by step."

Chen Bingwen muttered to himself.

The most urgent task at present is to promote the transformation plan for the Hung Hom site, so as to leverage the greatest benefits for the future with the least cost.

Then, in a short period of time, the valuation of Qingzhou Yingni was increased.

In its bid to gain control of Qingzhou Yingni, Sugar Heart Capital invested over HK$100 million in Qingzhou Yingni shares.

Chen Bingwen did not intend to keep so much money tied up in Qingzhou Yingni stock for a long time.

For him, the difference between a 51% stake and a 73.7% stake is actually not that significant.

As long as he retains absolute control, he plans to reinvest the excess shares in the secondary market to recoup funds at an appropriate time.

But this is definitely not something that can be done now.

At this time, due to his previous large-scale increase in holdings with Li Jiacheng, the number of shares of Qingzhou Yingni in the market was already small.

If 22.7% of the shares were suddenly released to the market, Qingzhou Yingni's stock price would collapse instantly.

Therefore, in order to make room for new businesses, the only option is to first raise the valuation of Qingzhou Yingni, and then gradually release it after the stock price has risen significantly.

(End of this chapter)