The Industrial Giant Reborn

"The biggest problem of Hang Lung Properties now is the nine subway properties, right?" Chen Zhiwen asked rhetorically.

"Yes, if we give up these 9 subway properties, Hang Lung will definitely lose its vitality. But if we don't give up, the amount of money that needs to be invested is simply huge. And with the current land price, I don't dare to develop it like this. Losing money is a trivial matter, and Hang Lung can afford it, but if the house cannot be sold after it is built and the cost cannot be recovered, then no real estate company can bear it," said Chen Zengxi.

The business model of real estate companies itself is to use large leverage. For example, the land price is 1 billion and the construction cost is 1 billion. Some bold players who have good relationships with banks may only put up a capital of 100 to 200 million, and then they can have endless matryoshkas, and then wait. After pre-sale, you can collect future income and use it for construction costs or even other projects.

As long as there are no problems with the subsequent pre-sales, even if only 1.8 billion is recovered, it will still be a loss of 200 million. Normally larger real estate companies can bear this loss, but if no one cares about the subsequent pre-sales and cannot sell, then Even if a capital chain problem of more than one billion Hong Kong dollars occurs immediately, the entire group will be dragged down. This is the current situation in Hong Kong's real estate market. Many people are unwilling to buy houses, even if they have money, which makes Chen Zengxi dare not develop projects at all.

In 1982, when land prices were at their highest, Chen Zengxi's Hang Lung Group formed a large consortium with several real estate companies and snapped up nine subway station properties from the MTR Corporation. Judging from the housing prices at the time, the total investment in these nine properties exceeded 9 billion Hong Kong dollars. Even if housing prices remain unchanged in the future, sales will be as high as 13 billion. According to the ratio, the total profit is 4 billion Hong Kong dollars. Hang Lung Group can make a net profit of 1.4 billion Hong Kong dollars. And if housing prices can continue to rise, the profits can double. rise.

Unfortunately, land prices plummeted before the end of the year, and the book losses alone were as high as more than one billion. At the same time, due to the collapse of Hong Kong's real estate market, many foreign banks also began to withdraw. Japanese banks that had made a HK$1.5 billion commitment to Hang Lung overnight Run away.

It is naturally impossible to go back on a contract that has been signed. In addition, the Hong Kong government also has time regulations for the development of real estate projects. Hang Lung spent a lot of effort to persuade the Hong Kong government to agree to postpone the development date. At the same time, it also wanted to Let the Hong Kong government lower the previous prices a bit.

But how could the Hong Kong government and the MTR Corporation agree? The cost of selling land before was not less than a penny. After all, in the years before the real estate crisis, the land sold through external auctions by the Hong Kong government and the MTR increased in price in line with the market price. Which real estate company will pay the difference to the Hong Kong government?

Under pressure from many parties, Chen Zengxi finally solved the funding problem by using various personal connections. However, the collapse of the official exchange rate of the Hong Kong dollar last year caused his foreign bank liabilities to suddenly increase by more than 50%. In addition, in the past few months, The market has been stagnant for a long time, and Hang Lung Real Estate couldn't bear it any longer. Taking advantage of the Midea Building's groundbreaking ceremony, he came to see Chen Zhiwen.

In Hong Kong at present, he is the only one who can save Hang Lung.

"For this kind of thing, when you won this project, the reason why you had such a high profit margin was actually because of the various uncertainties in the market. Although you had confidence in the Hong Kong real estate market at the time, it was not unknown. Is this a risk?" Chen Zhiwen said with a smile.

Since the auctions between the MTR and the Hong Kong government are basically exclusive, in terms of profits, it can be said that they get the big share and the real estate companies get the small share. However, the special thing is that Hong Kong housing prices have risen so much in the past few years. At that time, even if there was no profit based on the house prices at that time, by the time of development and pre-sale, house prices might have increased by 50%. The profit would be so huge that it could even exceed the profits of the Hong Kong government from land sales. This was also the case in the crazy bidding scene in the past few years. The reason is that many people want to acquire land even at a loss, simply hoping that house prices will rise in the future and making expected profits.

Then the house prices plummeted in 1982. However, in early 1982, many people already felt that land prices were too high. Because the balance between supply and demand was not as good as before, the Hong Kong government's bidding gave more profit.

In other words, if house prices continue to rise, Hang Lung's profits will be very impressive, even three to four billion is normal. This is a kind of "gamble".

But he lost the bet.

"Yes, I know the risks, but being in our industry means gaining wealth through risk. Didn't Chen Sheng also invest heavily in the real estate industry ten years ago?" Chen Zengxi said with a wry smile and shook his head. There is nothing wrong with admitting your bet and admitting defeat. When the real estate market is good, everyone can make money. Even if you are strong, you may not make much more than others. If you want to turn over and cross a level, you must Take a gamble with a little risk, take a chance when it's risky.

"Then how do you want me to help you?" Chen Zhiwen nodded and said. 10 years ago, he had just started his business. At that time, the core was not Midea and Red Bull. During that time, these two companies were just building the most basic The foundation, the real focus, is the real estate industry in Hong Kong, especially industrial land, which allowed him to earn 7.8 billion in 2 years. It can be said that this investment was one of the main sources of funds for him to acquire Hutchison Whampoa. One, otherwise, if Hutchison misses out, it will be almost impossible to acquire it again.

Therefore, wealth can be gained through risk. This sentence is not empty talk. It means that he knows the future economic trend and dares to say that there is no risk. Otherwise, if other people played this way at the beginning, one wrong time point may lead to the loss of everything.

"Sheng Chen, I want to know if you are interested in the nine subway station property projects of Hang Lung Group?" Chen Zengxi did not answer directly, but asked.

"You want me to buy shares?" Chen Zhiwen said with a smile. As soon as this old fox in the shopping mall said this, Chen Zhiwen knew his purpose. Inviting him to become a shareholder was only secondary. The bigger purpose was to judge his views on the real estate economy in the short term from his own answers. Due to the requirements of the Hong Kong government and MTR, these nine subway property station projects cannot be delayed indefinitely.

If I agree, it means that my judgment will be that the real estate economy will recover in the short term. If it is resolved, it will naturally mean the opposite.

"Yes." Chen Zengxi nodded and said.

"What is the deadline given by the Hong Kong government?" Chen Zhiwen asked.

"All construction must start in September this year, and pre-sale can be completed by the end of next year. It must be completed in July 1986. This is the bottom line of the Hong Kong government, because by that time, the MTR project must also be completed, and it cannot be matched. It will affect the entire future subway plan of Hong Kong." Chen Zengxi said.

In fact, because of the real estate crisis, the Hong Kong government has been very considerate. Many projects that have been auctioned can be negotiated. It is naturally impossible to get the Hong Kong government to make concessions in terms of money, but in terms of time, generally They can all be postponed a little further to ease the economic pressure on real estate companies.

But the problem is that these Hang Lung projects are all paired with subway projects. Although the subway projects have also been affected by the economic crisis, they cannot be delayed for too long compared to other real estate projects. As a result, Hang Lung's nine projects have been tied up and have to continue. , this can be regarded as a risk after high profits. After all, the subway project is envied by everyone.

"Then how to allocate shares?" Chen Zhiwen asked again.

"It depends on how much Chen Sheng needs!" Chen Zengxi said with a smile: "I am not the sole proprietor of these nine subway property projects. My shares are less than 40%. There are more than a dozen small shareholders. These shareholders Among them, there are many that can no longer bear it and they also need to get rid of it. As long as Chen Sheng is willing, I can be the middleman and sell their shares to you at a price that will definitely be much lower than the amount they paid for the shares before. "

"This is a good method, but if I only buy shares, doesn't it mean there is no investment? How to solve the funding problem? Especially once I buy more than 16% of the shares, Hisense Bank will not be able to participate in the loan of this project. ." Chen Zhiwen asked. Chen Zengxi's move was really good. He killed two birds with one stone. He had a lot of shares, he could also bring in capital from a larger consortium, and he could get rid of the burden of those who no longer wanted to invest.

"If Chen Sheng joins us, it won't be a problem for us to find other banks for loans." Chen Zengxi said with a smile on his face.

What Chen Zhiwen said just now has already shown that he is optimistic about this project, otherwise he would not be thinking about 16% of the shares. This shows that the rebound of the real estate market should not be far away in the future. As for Hisense Bank not being able to lend directly, it is a pity. But this is not a big deal. As long as Chen Zhiwen is a shareholder, there will be no problem in finding a loan from any bank.

"That's true. It seems that Chen Sheng is really optimistic about these subway property projects." Chen Zhiwen said with a smile.

"Yes, Hang Lung once invested half of its capital resources in it. Even now, I am optimistic about it, but the impact on the capital chain is too great." Chen Zengxi said.

"When signing the contract with the Hong Kong government for these subway properties, was there an agreement on the ratio between holding and selling?" Chen Zhiwen asked again.

Many of the Hong Kong government's auctions require developers to limit the proportion of properties they can own after the project is completed. Especially when it comes to shopping malls, if developers ignore everything and leave after selling out, this business will How else to play in real estate?

There may be some office buildings, but not many. As for residential buildings, some will limit the proportion that must be sold to prevent real estate companies from holding large quantities of them and affecting the entire market.

"No, they can all be sold. This is what I originally thought. After cashing out, I will distribute dividends to all shareholders. If we keep it ourselves, it will be difficult to distribute among shareholders." Chen Zengxi said.

"Well, how about I book some of the residential and office buildings in these properties directly first?" Chen Zhiwen said again.