Rebirth in Hong Kong: From Dessert Shop to Industrial Empire.

Chapter 251 Family Fortune 4K (Seeking monthly tickets, recommendations, and subscriptions!)

The top-floor office of the Weiye Building was brightly lit.

On the large mahogany desk in front of Chen Bingwen, thick folders and reports were spread out.

This is a list of core assets and recent financial statements compiled by Huo Jianning and his team day and night over the past week from Hutchison Whampoa headquarters and major subsidiaries.

He rubbed his temples, picked up the now-cold tea and took a sip, then his gaze returned to the paper.

Although he had learned some information through the Hutchison Whampoa board of directors before, it was only when this heavy document, which covered almost all of Hutchison Whampoa's assets, was placed in front of him that the complexity and bloat of this long-established British trading company truly became clear, even to a degree that exceeded his initial expectations.

HSBC forcibly combined Hutchison Whampoa and Whampoa Dockyard a few years ago, and it seems they haven't had time to properly digest the merger.

It's a real hodgepodge, with profitable, unprofitable, promising, and burdensome companies all tangled together in a complex web.

"This is a huge, chaotic mess!"

Chen Bingwen put down the asset list in his hand and said to Fang Wenshan, Huo Jianning and Mai Lisi sitting opposite him, "It's more complicated than I imagined."

Huo Jianning nodded and pointed to a hand-drawn structural diagram on the table: "Hutchison Whampoa's business lines are intertwined, controlling more than 180 companies of various sizes through direct shareholding, cross-shareholding, and joint ventures."

Several years ago, HSBC pushed for the merger of Hutchison International and Whampoa Dockyard, intending to integrate resources. However, it now appears that this merely tied two large baskets together, resulting in poor internal synergy. Many businesses are even involved in redundant construction, internal competition, and resource depletion.

"That's true," McLeish replied incisively.

For example, in the warehousing and logistics sector, Junyi Warehouse is engaged in traditional warehousing and coastal barge transportation, but Huangpu Shipyard itself also has its own dock and yard business, and Hutchison Properties also manages some property-related warehouses.

Resources are scattered, standards are inconsistent, and management costs remain high.

Looking at the retail sector, besides Watsons, which we already control, the Hutchison Whampoa group also directly invests in or holds stakes in some small department stores and food wholesale businesses. These businesses overlap with Watsons' ParknShop supermarkets in terms of procurement and sales channels, failing to create synergy.

Chen Bingwen leaned back in his chair.

He needs to untangle this mess, find a clear path, and determine the key points and priorities for integration. Impatience will not help; he must plan carefully before taking action.

"It's not enough to just talk about the chaos; we need to talk about specific figures and core assets."

Chen Bingwen said, turning his gaze to Fang Wenshan.

Fang Wenshan adjusted his glasses, opened his notebook, and reported: "According to preliminary calculations, after deducting internal transactions and duplicate calculations, the total assets of the Hutchison Whampoa Group in the consolidated financial statements are approximately HK$12 billion."

Net assets are approximately 5.5 to 6 billion. However, this includes a mix of high-quality and non-performing assets.

He paused for a moment, then continued his report: "First, the heavy assets mainly consist of ports, docks, and land."

Whampoa Dockyard Limited: It is an absolute behemoth of the Hutchison Whampoa Group.

It is capable of building ships of 10,000 tons and has multiple wharves and dry docks, including Hong Yi and Qing Yi.

However, the report shows that in recent years, affected by the downturn in the global shipping industry, new ship orders have plummeted, maintenance business has also declined, and the company is operating at a very low profit margin. The labor costs for thousands of employees and site maintenance costs are high.

Its greatest value lies in the enormous amount of land it occupies, especially the red land, which has huge potential for future development.

Hong Kong International Terminals: This is the goose that lays the golden eggs. Although it currently only has two berths, No. 1 and No. 2 in Kwai Chung, its throughput is growing rapidly and its cash flow is stable and strong. It is one of the group's highest quality assets.

Junyi Warehouse: It owns seven large warehouses in Hong Kong and Kowloon, with excellent geographical locations, but its management model is outdated and there is room for improvement in utilization.

Second, the cash flow component mainly comes from retail and infrastructure.

Hebao: A small-scale wholesaler of electrical appliances and small household appliances.

Hutchison Power: It owns two small diesel power plants in Sha Tin and Tai Po in the New Territories, with an installed capacity of 48MW, which are pumped to Kowloon Power Supply Corporation.

Although the scale is not large, the revenue from the power supply business is stable.

Third, land reserves and real estate projects.

Hutchison Properties and Metro City Properties hold more than four million square feet of land reserves, mainly concentrated in Hong Kong Island and Kowloon. Some projects are already under development, such as North Point and Fu Centre.

The Hung Hom Whampoa Dockyard site is the largest undeveloped treasure trove.

Anderson's quarry is a resource-based asset, but it also occupies a large area of ​​land.

Fourth, manufacturing and trade.

Hutchison Engineering has decent technology in container manufacturing and port machinery factories in Tsing Yi, but lacks orders.

Hutchison Trading engaged in traditional entrepot trade, which had low profit margins and faced fierce competition.

Fifth, other miscellaneous assets, including numerous small associates and investments such as Hutchison Trading and Hutchison Shipping.

Chen Bingwen listened quietly, his mind racing.

Hutchison Whampoa's wealth is indeed substantial, but it's like a rich but neglected garden, overgrown with weeds, where precious flowers and fruit trees are hidden.

What he needs to do now is weed and prune, so that sunlight and nutrients are concentrated on the most valuable crops.

"What is the debt situation?" Chen Bingwen asked a crucial question.

Fang Wenshan replied: "The overall debt ratio is approximately 55%."

The main debts are syndicated loans and bonds incurred during previous expansions and mergers.

Annual interest payments are a significant burden.

This is one of the reasons why Hutchison Whampoa has huge assets on its books, but a low net profit margin.

Chen Bingwen nodded.

High debt is leverage during the expansion phase, but it becomes a risk during the consolidation phase.

He must improve cash flow and reduce debt as soon as possible.

"The most important thing right now is to develop a clear integration plan."

We need to be clear about our goals. The integration of Hutchison Whampoa is not simply about expanding real estate; our core focus should be on the real economy.

Chen Bingwen looked at Fang Wenshan and the other two, and said, "My initial thought is:

First, focus on core businesses and divest non-core businesses.

Hutchison Whampoa sold all of its retail and consumer businesses to Watsons.

Expand port logistics business.

Hong Kong International Container Terminals is the lifeline for future development and must be firmly grasped, while seeking expansion opportunities.

Junyi Warehouse's warehousing network needs to be coordinated with the port operations to create a modern logistics system.

Revitalize manufacturing assets.

Hutchison Engineering's factories can be transformed, for example, to produce the beverage filling equipment parts we need, or to find new orders.

Anderson Taiya's stone is the foundation of infrastructure, and it must be secured.

The real estate sector serves the core business.

The development of the Hung Hom site should not be limited to building luxury homes to sell for money.

We need to plan and build it into a modern industrial park to attract manufacturing and R&D centers, which will in turn support our real economy.

Hutchison Properties will continue its existing development projects, but will focus more on property development that complements the Group's core business in the future.

Second, streamline internal processes to reduce costs and increase efficiency.

Hutchison Whampoa's logistics fleet can prioritize serving our Chen Kee's transportation needs.

The power plant can supply electricity to its own factories and docks at preferential rates.

Third, utilize capital means to optimize asset structure.

For trading companies with poor prospects and low relevance to the main business, as well as small investments, selling them could be considered to recover funds and reduce debt. When the time is right, high-quality businesses like Hong Kong International Container Terminals could be spun off and listed to unlock value and raise more development funds.

Chen Bingwen's idea was very clear:

Instead of using real estate as a short-term tool for making money, it uses its profits and resources to support and strengthen its industrial base, building a comprehensive industrial empire with food, consumption, logistics, manufacturing, and energy as its core and real estate as a supplement.

Huo Jianning and Mai Lisi listened attentively, taking notes, their eyes filled with admiration. Their boss's strategic vision once again filled them with respect.

In the current hot real estate market in Hong Kong Island, it takes great determination and foresight to focus on developing real businesses.

"Understood, Mr. Chen," Huo Jianning said. "We will formulate a detailed integration plan as soon as possible based on this direction, including an asset divestiture list, a business restructuring plan, funding requirements, and personnel arrangements."

"We need to be fast, but even more important is stability," Chen Bingwen instructed. "Especially in personnel arrangements, stability is paramount."

For employees who are willing to stay, especially technical personnel and key frontline staff, clear career development and incentive plans should be provided.

For veterans who are willing to cooperate, they can be given ample respect and their benefits retained; those who outwardly comply but inwardly resist should be resolutely reassigned.

"clear."

"Okay, that's all for today."

Jianning, Mai Lisi, you two need to work hard and come up with a plan as soon as possible.

Chen Bingwen waved his hand, and the three of them got up and left.

The office fell silent. Chen Bingwen walked to the floor-to-ceiling window and looked down at the night view of the harbor in the distance.

Taking over Hutchison Whampoa is just the beginning; the real test is how to make this behemoth move according to its will.

He knew in his heart that before he could actually start the integration, there was still Li Jiacheng, this stumbling block, that had to be removed.

He would never allow the other party to remain on the board of directors, reaping the benefits of integration, or even hindering him at crucial moments.

A few days later, accompanied by Huo Jianning and his secretary, Chen Bingwen inspected the Whampoa Dockyard and Hutchison Engineering Factory in Tsing Yi.

Huangpu Shipyard is a massive shipyard. In its huge dry dock, 10,000-ton cargo ships are being repaired, and workers are busy as ants.

However, Chen Bingwen also noticed that many docks were vacant and the equipment appeared somewhat outdated.

The shipyard's general manager, an elderly gentleman surnamed Situ, accompanied them. In his words, he reminisced about the shipbuilding industry's glorious past and sighed at its current state.

"Mr. Chen, it's not that we're unwilling to change, it's just that the market is too bad, we lose money on every order we take," Manager Situ complained.

Chen Bingwen did not directly refute, but asked, "Manager Situ, how is the skill level of our shipyard's technical workers?"

Could you undertake the processing of large steel components, such as parts for port machinery or large chemical storage tanks?

Manager Situ paused for a moment: "The technology is not a problem. We can even build 10,000-ton ships, so of course we can do this."

However—these types of orders are unstable and the profit margins are not high.

"Whether the profit margin is high or low depends on how you do it," Chen Bingwen said, pointing to the open space in the distance. "If we renovate and upgrade part of the dock area, focusing on high-value-added heavy machinery manufacturing and large component processing, while leveraging our coastal advantage to develop high-end ship repair and modification businesses, wouldn't that be better than waiting for shipbuilding orders now?"

Manager Situ fell into deep thought.

He had to admit that the young man had a point.

However, transformation requires investment and courage.

The situation was similar at the Hutchison Engineering factory that was subsequently inspected.

They can produce standard shipping containers and also manufacture small cranes, but the technology involved is not high, and they face fierce competition for orders.

After the inspection, on the way back to the city, Chen Bingwen said to Huo Jianning, "See? It's not that we lack the ability, it's that the direction and mechanisms are flawed."

Shipyards and factories are valuable manufacturing infrastructure and should not be easily abandoned.

The key is to find new market positioning and orders for them.

Huo Jianning nodded: "I understand. Perhaps we can start with internal orders. Let them have work first, stabilize the team, and then plan for further development."

"That's the idea!" Chen Bingwen looked at Huo Jianning with admiration. "We need to get the internal circulation going first."

Please follow up on this and develop a plan.

At the same time, another undercurrent is also brewing.

Li Ka-shing's office at Cheung Kong Holdings headquarters.

Zhou Jinqian was reporting to Li Jiacheng: "—Chen Bingwen has been making frequent moves lately, inspecting shipyards and factories. It seems he really wants to make a name for himself in the real economy."

Li Jiacheng pondered for a moment, then slowly said, "It's a good thing for young people to have drive."

Industry?

It requires a large investment, has a long cycle, and is slow to yield results.

Nothing comes faster than real estate.

If he wants to tackle tough challenges, let him.

"Mr. Li, is there anything we can do? For example, question some of his plans at the board meeting?" Zhou Jinqian asked tentatively.

Li Jiacheng turned around and shook his head: "Now is not the time."

He's making a big show of things as a new official, and if we rashly oppose him, we'll easily become a target.

Let him run into trouble first. When his integration efforts encounter obstacles or he faces financial difficulties, that will be the best time for us to speak up.

He walked to his desk, picked up a report, and said, "Our focus should still be on Cheung Kong's own projects."

We need to speed things up in Tin Shui Wai.

In addition, you should continue to communicate with HSBC and several other British banks to ensure that our credit lines are sufficient.

Li Jiacheng's idea was simple: to remain still and wait for the opportune moment to strike.

He firmly believed that Chen Bingwen's radical approach to industrial integration would inevitably backfire in reality.

When that time comes, he will appear on the Hutchison Whampoa board of directors as a savior, which will naturally win him more shareholder support.

He wasn't in a hurry to kick Chen Bingwen out; he even somewhat appreciated the "fish effect" this young man brought.

Perhaps, with the help of Chan Ping-man, some of the rotten parts of Hutchison Whampoa can be removed, and then he can take over a healthier company. Wouldn't that be better?

Of course, all of this is predicated on becoming the controlling shareholder of Hutchison Whampoa.

Unbeknownst to him, Chen Bingwen also held a 4.9% stake in Cheung Kong Holdings and a 6% stake in Hutchison Whampoa held by Wayne Lai.

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