Chapter 135 - A Golden Goose That Lays Golden Eggs
In Lin Haoran's previous life, Li Jiacheng's acquisition of Hongkong Electric was considered a classic case of acquisition. Anyone familiar with Li Jiacheng's rise would know about this takeover. Compared to Qingzhou Cement, the value of Hongkong Electric Group was obviously much greater — significantly so. Founded in 1889, Hongkong Electric was a British-owned utility company with a history spanning 90 years. Over these decades, the group had accumulated vast amounts of land, not only across Hong Kong Island but even parts of Kowloon Peninsula. For example, the former North Point Electric Road power plant site, Lot 8200 inside Jardine's Lookout, and lands in Tsuen Wan.
Previously, much of this land was considered peripheral, but with the expansion of the urban area, they were now prime city properties, their values skyrocketing. At this moment, if Lin Haoran wanted to take over Hongkong Electric Group, he had many advantages. First, Hongkong Electric's real estate business had just started. Although it was developing rapidly, profits were not yet high, and its stock market value remained modest. Second, Hongkong Electric had not yet collaborated with Cheung Kong Holdings to develop the North Point power plant site, nor had it attracted Li Jiacheng's attention. But once collaboration began, Li Jiacheng would surely covet the group.
Third, if Jardine and Hongkong Land lost the battle for Wharf Holdings, they would have surplus funds and might become aggressive in expansion, turning their eyes toward Hongkong Electric. They would first acquire Hong Kong Telephone Company and then secretly move to take over Hongkong Electric. If not for the devastating financial losses suffered during aggressive expansion, forcing Jardine and Hongkong Land to sell their Hongkong Electric stakes to Li Jiacheng, the group would have long fallen under their control.
Fourth, Hongkong Electric was a high-quality utility stock with stable revenues. In just a few more years, its market value would reach 5.5 billion Hong Kong dollars. By then, there would be many competitors, and acquiring it would cost far more. Right now, its market cap was only about 1.5 billion Hong Kong dollars. Fifth, Hongkong Electric, being a publicly listed company without a strong family shareholder base, would not easily resist a takeover.
Clearly, this was a golden opportunity to move. Hongkong Electric was absolutely one of Hong Kong's top enterprises. Its business extended beyond electricity supply to real estate development and management, technical services, retail, advertising, and finance. Subsidiaries included Hongkong Electric Company, Hysan Engineering Company, Hysan Development Group, Hysan Property Company, Fortress Electrical Appliances, and Hui Ze Finance Company. It was a diversified powerhouse, second only to giants like HSBC, Jardine Matheson, Hutchison Whampoa, and Swire Group.
To say nothing of the land value alone — the former North Point Electric Road site and Lot 8200 in Jardine's Lookout were already worth more than a billion Hong Kong dollars combined, and next year, their value would rise to over two billion. Most importantly, Hongkong Electric had stable profits; its electricity business ensured that, unlike real estate developers like Hutchison or Hongkong Land, who were vulnerable to market downturns.
Taking control of Hongkong Electric would be like acquiring a golden goose that laid golden eggs. Right now, Lin Haoran's funds were insufficient to seize full control, especially since he had other uses for his money. However, he could begin acquiring shares quietly while prices were still low. Later, when his funds grew, he could launch a full takeover. Even if he failed, he would still double his money thanks to the rising stock price.
At the moment, Hongkong Electric's market capitalization stood at about 1.5 billion Hong Kong dollars. In another year, it would likely reach 2 to 3 billion, and within two years, soar to 4 or 5 billion. Buying early guaranteed profits.
Having decided, Lin Haoran no longer lingered at Qingzhou Cement's office. There was nothing urgent needing his attention — Burton was managing the company well, and overseas expansion of the cement business was proceeding smoothly. Previously, Qingzhou Cement's monthly profits were modest, impacted by Hong Kong's small market. Even as real estate construction picked up, annual profits only reached about 20 to 30 million Hong Kong dollars.
But with Burton's push into overseas markets, profits were rapidly increasing. Last month alone, Qingzhou Cement recorded over 5 million Hong Kong dollars in profit, and with continuous expansion into Singapore, Malaysia, Thailand, and beyond, it wouldn't be long before monthly profits exceeded 10 million Hong Kong dollars.
Compared to Hong Kong's small population of under 5 million, markets like Malaysia and Thailand, each with tens of millions of people, offered vastly greater demand for cement. As long as Qingzhou Cement maintained its high quality, its reputation and market share would naturally grow.
Descending by elevator, Lin Haoran noticed that the passageways connecting Qingzhou Tower, Qingdao Tower, and Qingbao Tower had been completed. This was Burton's commercial street project. From proposal to completion took just two months. Now, two-thirds of the shops were rented out. The prime location and influx of nearby office workers made it a bustling little shopping area, generating tens of thousands of Hong Kong dollars in monthly profit almost immediately.
In the cement factory itself, production remained busy. Hong Kong's real estate boom had kept cement demand high despite the reduction in exports to the Philippines.
Half an hour later, Lin Haoran was back at Wan'an Group's headquarters, sitting in his chairman's office. He called Su Zhixue to his office. During these months, with little for Huanyu Investment Company to do, he had temporarily merged them into the Su Group's securities division for cross-training. But now it was time to reassign them.
Su Zhixue arrived shortly. "Boss, you called?" he asked respectfully. "I have two tasks for you," Lin Haoran said seriously. "First, start acquiring Wan'an Group shares. My goal is to privatize it, but don't drive the price up. Second, start quietly acquiring shares in Hongkong Electric. Buy as much as possible without alerting others."
Unlike Qingzhou Cement, where aggressive buying would trigger alarm and protests from multiple shareholders, Wan'an Group was essentially a family business. Even if people noticed, Lin Haoran could simply announce a privatization bid. As for Hongkong Electric, stealth was vital. Lin Haoran currently had 90 million U.S. dollars — around 477 million Hong Kong dollars — plus additional liquidity from Qingzhou Cement and Wan'an Group profits. Overall, he could mobilize about 500 million Hong Kong dollars.
Furthermore, Qingzhou Cement's monthly profits were climbing steadily. Available funds would only increase. Under normal circumstances, Huanyu Investment wouldn't even be able to spend all that money within six months.
However, he did have two loan repayments due this year: 50 million Hong Kong dollars plus interest to Yumin Finance, and 45 million to Hang Seng Bank. Together, they would require about 100 million Hong Kong dollars. As for the second 240 million Hong Kong dollars loan from Yumin Finance, Lin Haoran planned to renegotiate for an extension. Compared to the huge profits from his gold investments, the interest cost was negligible.
"Boss, you're planning to acquire Hongkong Electric?" Su Zhixue asked in surprise. It was a corporate giant. "Yes," Lin Haoran nodded. "Don't tell anyone. If any traders ask, just say it's a regular investment. Make sure no one suspects our true intentions."
"Understood, boss. I'll handle it discreetly," Su Zhixue replied confidently before respectfully exiting the office.
Lin Haoran trusted Su Zhixue completely — he was the only subordinate with a 100% loyalty rating.
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