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

Chapter 253 Clash of 4K (Seeking monthly votes, recommendations, and subscriptions!)

"Good morning, fellow directors." Chen Bingwen looked around without much small talk. "Thank you all for being here on time."

Today is the first meeting of the new board of directors. The agenda mainly includes reviewing routine matters and discussing preliminary ideas for the company's future development.

The first half of the meeting proceeded smoothly without any major incidents.

Hear a report from management on recent business performance and approve several routine capital expenditure budgets.

As president, Wei Li's reports were well-organized and based on solid data, but they were limited to maintaining the status quo.

When the discussion reached the point of "discussing the company's future development and funding needs," the atmosphere in the meeting room noticeably became tense.

Chen Bingwen looked at Huo Jianning and nodded slightly.

Huo Jianning opened the prepared documents and said, "Chairman, fellow directors."

According to the management's initial analysis, the company is facing several key issues: First, some core assets and equipment are aging and urgently need to be upgraded, such as the gantry cranes and trailers at the container terminal and the storage facilities at Junyi Warehouse.

Second, the debt burden is too heavy, and annual interest expenses erode a large portion of profits.

Third, there is insufficient business synergy, which fails to leverage overall advantages.

To this end, we have initially drafted an approach aimed at strengthening our core business and optimizing our financial structure.

He paused for a moment, then continued, "The core issue is to launch a rights issue, which proposes to raise approximately HK$1 billion at a discount to the market price, based on a ratio of five to one of the existing share capital."

This funding will be primarily used for: 1. Upgrading container terminal equipment and preliminary preparations for berth expansion;

Second, repay some of the high-interest debt to reduce financial expenses;

Third, it will serve as seed funding for the future integrated real estate project in Hung Hom.

When Huo Jianning mentioned the "red plot of land," several senior directors present, especially Wei Li, Shi Yadi, and Newbijian, all had a slight change in their eyes.

They all know that the so-called "Hung Hom site" is essentially a large area of ​​land located along the Hung Hom coast that is currently being used by the Whampoa Shipyard.

The area is currently a dockyard and shipyard, so it seems premature to talk about a "comprehensive real estate project."

Huo Jianning looked at Chen Bingwen, who nodded slightly and then explained, "Regarding the Red Project, let me add some details."

Currently, the land in Huangpu Shipyard accounts for approximately 65% ​​of the total area, making it one of the group's most important undeveloped land reserves.

But it remains an active shipbuilding and repair center, with over three thousand workers and technicians employed there.

He first briefly described the current situation, then changed the subject: "However, we must face reality."

The global shipping industry remains sluggish, with a sharp decline in new ship orders and large vessel maintenance services shifting to lower-cost regions.

As a capital-intensive enterprise, Huangpu Shipyard faces high maintenance costs. Relying solely on traditional shipbuilding and repair businesses has an unfavorable outlook and could even become a heavy burden on the group in the future.

These words elicited slight nods from several directors familiar with the dock business; this was an undeniable fact.

"Therefore," Chen Bingwen said firmly, "we cannot wait until the shipyard business is completely in trouble before we think of a solution."

We must plan ahead and proactively transform.

The advantages of the red plot are obvious: it is located by the sea and has valuable coastline resources;

With its vast area and prime location on the edge of Kowloon's core area, it possesses extremely high comprehensive development value.

He paused for a moment to let everyone digest the information, and then put forward the core idea: "My proposed Red Integrated Development Project is by no means a simple matter of demolishing the docks and building residential buildings for sale."

That's a one-time gain, a waste of this precious land.

He glanced around the room and slowly said, "My initial idea is to carry out modernization and redevelopment in phases and in sections."

In the first phase, we can upgrade some of the underutilized or outdated dock areas and transform them into a modern heavy industry park focused on high-end ship repair and modification, as well as the manufacturing of heavy precision components.

This will both preserve and enhance our core manufacturing capabilities, and provide new opportunities for development for our skilled workers and experienced craftsmen in the shipyard, thus stabilizing our workforce.

"At the same time," Chen Bingwen continued, his voice carrying an indomitable spirit, "we can plan and build a modern industrial park in the nearby area."

This industrial park will focus on attracting and supporting industries related to our group's future business development direction, such as food and beverage R&D centers, high-end packaging, cold chain logistics and warehousing, and even potential future involvement in electronics or precision manufacturing.

At this point, he glanced at Li Jiacheng, then swept his gaze across the crowd and pointed out the most crucial core: "More importantly, this layout can create a powerful strategic synergy with our development of the Hongheyuan plot on the other side of the river, which is held by Qingzhou Yingni."

He drew a line on the table with his hand: "You can imagine that the Huanghong plot is adjacent to the Qingzhou Yingni Crane Garden plot."

In the future, the Heyuan plot will focus on the development of beverage main ingredient production, bottling base and supporting packaging industry, while the Hong plot will focus on research and development, high-end manufacturing and logistics support.

The two can form a complete food and beverage innovation manufacturing industrial cluster.

Chen Bingwen’s voice carried an undeniable confidence: “This is not just about developing two plots of land, but about building a complete industrial ecosystem that spans research and development, production, warehousing, and logistics.”

It will greatly enhance the synergy efficiency and risk resistance of our core business, and its long-term value will far exceed the profits from simply developing and selling real estate.

This rights issue is precisely the first spark to ignite this ambitious transformation plan.

Chen Bingwen's explanation elevated what seemed like a distant real estate development project to the level of the group's strategic transformation and industrial ecosystem layout.

He not only provided a clear blueprint for the plan, but also pointed out the synergistic effect with another important asset under his control, demonstrating a far-sighted strategic vision.

The meeting room was silent as the board members digested this ambitious and somewhat disruptive plan.

Shi Yadi broke the silence first: "Chen Sheng's idea is very forward-thinking."

Upgrading industrial land into a modern industrial park and linking it with the Heyuan plot is a trend that is in line with current trends.

""

He then shifted his focus to a crucial question: "However, this involves several very real issues."

First, the relocation of Huangpu Shipyard's existing operations and the resettlement of more than 3,000 employees will be extremely costly and time-consuming.

Secondly, are the target industries and customer groups of the modern chemical industrial parks and R&D centers you mentioned clearly defined?

After such a huge investment, can we attract enough businesses to move in and ensure a return on investment?

Finally, the rights issue of HK$1 billion is a huge amount.

Shouldn't the risks of investing such a huge sum of money in a long-term, uncertain-return integrated development project, rather than using it for business improvements or debt reduction that can generate immediate cash flow, be more carefully assessed?

Shi Yadi's questions were very astute, getting straight to the heart of the matter: Where does the money come from? Where will the staff go? Where are the customers? How to control the risks?

Newbigen then spoke up, "I agree with Sir John S. Yaddy's opinion."

Mr. Chen's blueprint is very attractive, but we need a more specific financial model and risk assessment.

The greatest value of the Hung Hom site currently lies in the land itself.

If development is phased, how much should be invested in the initial phase?

When is the expected cash flow to turn positive?

What is the estimated internal rate of return for the entire project cycle?

Compared to simply developing residential or commercial projects, is this industry-oriented development model competitive enough in terms of return on investment?

These all require detailed data support.

His meaning was clear: empty promises weren't enough; he needed to settle accounts.

Faced with these sharp but professional questions, Chen Bingwen did not rush to refute them. He listened calmly and waited until the two finished speaking before responding steadily: "Sir Sir Shi Yadi and Mr. Newbijian's questions are very pertinent and point out the key to the project."

The rights issue plan is still in the feasibility study stage. The finance department will provide further details on the plan and the feasibility report on the use of funds later.

But one thing is clear: Hutchison Whampoa must invest in order to break out of the current stalemate.

The dock is our cash cow, but the equipment is outdated and its efficiency has fallen behind that of our competitors. If we don't invest in it, we will lose all our advantages.

The Hung Hom site is key to future development; early planning and proactive action are essential.

As for debt, in a high-interest-rate environment, reducing the interest burden is itself a way to generate profit.

He changed the subject, his gaze sweeping over everyone before finally settling on Li Jiacheng seemingly casually: "Of course, a rights issue requires the support of all shareholders."

In particular, we need the strong support of major shareholders like Mr. Li.

If major shareholders are unable to participate due to funding or other reasons, resulting in a dilution of their shareholding, this is probably not what anyone wants.

This is why we had a thorough discussion with the board beforehand, hoping to reach a consensus and proceed steadily.

These words seemed to be addressed to everyone, but the target was Li Jiacheng.

Chen Bingwen's meaning was clear: you have to invest money too, otherwise your shares will be diluted and your say in the company will decrease.

All eyes, whether openly or secretly, were on Li Jiacheng.

Li Jiacheng's face betrayed no emotion. After a moment's hesitation, he said, "Chen Sheng's ambition is a good thing."

Hutchison Whampoa definitely needs a fresh injection of energy.

I believe that raising funds through rights issues is the right direction.

However, one billion Hong Kong dollars is not a small amount.

How can we ensure that this money is used effectively and produces the expected results?

In particular, regarding the development of the Red Plot, I personally believe that launching such a large-scale rights issue hastily is a bit hasty.

Perhaps we can consider a phased approach, addressing the most pressing issues of port equipment and debt first. The scale of this approach could also be smaller, making it easier to gain market support.

This is a classic example of retreating to advance.

Instead of directly opposing it, they raise a series of practical questions to delay the process and increase the difficulty of implementation.

Chen Bingwen sneered inwardly. He knew that Li Jiacheng was testing him and trying to gain the support of the other directors.

However, he was prepared.

"Mr. Li's concerns are very reasonable," Chen Bingwen continued. "A detailed business plan and financial calculations will take time."

Furthermore, regarding fund supervision, we recommend establishing a special fund account overseen by independent directors to ensure that the funds are used for their designated purpose.

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He paused, then his tone became more firm: "As for whether it's too hasty—the business world is like a battlefield, and opportunities are fleeting."

With interest rates currently high, now is a good time to negotiate repayment of high-interest debt.

Competition at the port is fierce, and equipment upgrades are imperative.

I believe that once you've identified the right direction, you should commit to it decisively.

If we hesitate to move forward because of concerns about risks, we may miss development opportunities, which would be the greatest irresponsibility towards our shareholders.

The two exchanged words in a calm tone, but every sentence was witty and pointed.

Shi Yadi and Niu Bijian, among others, remained silent. They were all seasoned veterans who knew it was not advisable to express their opinions lightly at this time, and they were all observing the situation.

Chen Bingwen knew that it was unrealistic to force the rights issue plan through at the first board meeting, and that was not his main objective.

His purpose today is to demonstrate his determination to integrate the company, while simultaneously putting Li Jiacheng in a position where he must make a choice, and to observe the reactions of the other directors.

"It seems that everyone needs time to digest and understand the rights issue."

Seeing that the situation was ripe, Chen Bingwen took the initiative to ease the tension, "Let's put this issue on hold for now. Please have the management team further refine the plan based on the opinions of the directors, especially the detailed plan for the use of funds and the risk-return analysis, and discuss it again at the next board meeting."

That concludes today's meeting.

He did not force a vote, thus avoiding direct conflict, but he clearly conveyed his intention to move forward.

After the meeting adjourned, the directors left one after another.

After nodding to Chen Bingwen expressionlessly, Li Jiacheng hurriedly left with his secretary.

After exchanging a few pleasantries with Chen Bingwen, Shi Yadi and Niu Bijian also left with their assistants.

Chen Bingwen returned to the chairman's office, followed by Huo Jianning and Mai Lisi.

"Mr. Chen, it seems Li Jiacheng won't cooperate easily," Huo Jianning said.

"As expected," Chen Bingwen said calmly. "His attitude today has further strengthened my determination to clean up the board of directors."

The rights issue plan needs to be further improved and made to be flawless.

At the same time, activate Plan B.

"You mean—?" Maris asked.

"Approach his other minority shareholders at Cheung Kong Holdings, especially those financial investors," Chen Bingwen emphasized to MacLehose. "Find out their views on the future development of Cheung Kong Holdings and create the illusion that you want to acquire their shares in Cheung Kong Holdings."

In addition, we disclosed the news that we hold a 4.9% stake in Cheung Kong Holdings to one or two financial media outlets with whom we have a good relationship.

Huo Jianning and Mai Lisi understood instantly.

Chen Bingwen is trying to put pressure on Li Jiacheng from two fronts, causing trouble in Li's own backyard and diverting his attention.

"Understood, I will handle it." Huo Jianning nodded.

"Remember to keep a low profile and stay within the legal and compliant limits," Chen Bingwen advised. "We are now on the defensive, but also on the offensive."

Every step must be taken carefully.

Huo Jianning and Mai Lisi accepted the order and left.

A few days later, a brief news item appeared in the financial section of a tabloid, mentioning that "market sources say that Sugar Heart Capital, which has been active in the capital market recently, is suspected of holding a small number of shares in Cheung Kong Holdings, with unclear intentions."

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