Chapter 185 Developing the Cheung Chau Cement Land
Inside a small private room at Joy Lai Restaurant, Lin Haoran ordered a few signature dishes. Since there were only four people, he didn't want to order too much and waste food.
The dishes were quickly served.
"Boss, should we continue acquiring China Gas Company's stock?" Chen Shoulin asked.
Regarding the acquisition of China Gas Company, Chen Shoulin decided to follow the boss's instructions without making decisions on his own. His focus was managing the overall development of Hong Kong Electric Group.
Now, Hong Kong Electric Group was no longer a listed company without a dominant shareholder; it was already a publicly listed company with a controlling owner.
Although Lin Haoran rarely intervened in daily operations, major investment projects clearly had to follow his decision. As a professional manager, Chen Shoulin could at most offer suggestions.
From the boss's previous actions, it seemed he was targeting the shares in the hands of the Li family.
If the Li family or other Chinese shareholders were unwilling to sell, Hong Kong Electric Group's acquisition attempt would basically be declared a failure.
It would be very difficult to compete with Jardines Matheson by relying solely on absorbing shares in the market, because Jardines Matheson most likely already held a large number of shares, maybe 15% or even 20%.
Meanwhile, Hong Kong Electric Group only held 7.2% of China Gas Company's shares. Even if they absorbed shares from the secondary market, it was impossible to catch up with Jardines Matheson.
After all, Jardines Matheson was one of the top three financial giants in Hong Kong, and Jardine Securities was almost as powerful as HSBC Securities.
Meanwhile, Hong Kong Electric Group's business in financial securities was only a sideline at best. Competing with Jardine Securities in the secondary market was not realistic.
Fortunately, the Chinese shareholders of China Gas Company had a strong aversion to Jardines Matheson, a British-funded enterprise, and would almost certainly not sell shares to them.
This was an advantage for Hong Kong Electric Group.
As long as they could strike deals with the Chinese shareholders, they could easily surpass Jardines Matheson.
"Proceed with absorption. Start organizing the acquisition of China Gas Company's shares from the secondary market tomorrow. Although we're focusing on the Chinese shareholders, we must also strengthen ourselves. The more shares we hold, the higher our chances of success," Lin Haoran said with a smile.
Not only Hong Kong Electric Group but also Huanyu Investment Company would continue acquiring China Gas Company shares from the secondary market.
He wasn't sure exactly how many shares Jardines Matheson controlled, so the goal was to absorb as much as possible. If Hong Kong Electric Group and Huanyu Investment combined could hold more than 15% or even 20%, when the Chinese shareholders faced pressure from Jardines Matheson, they would have no choice but to sell part of their holdings to Lin Haoran. At that point, no matter how much Jardines Matheson tried, it would be useless.
Lin Haoran didn't believe Jardines Matheson could acquire over 40% of the shares.
After a hearty meal at Joy Lai Restaurant, Lin Haoran had Li Weiguo drive Chen Shoulin back to Hong Kong Electric Group headquarters, and then he himself returned to his villa on Sassoon Road.
Another night quickly passed.
The next morning, Lin Haoran didn't get up until after ten o'clock.
He was in no rush before Jardines Matheson officially launched their attack on China Gas Company.
With Chen Shoulin managing Hong Kong Electric Group and Su Zhixue managing Huanyu Investment, everything that needed to be arranged was already in place; there was no need for him to intervene further.
After leisurely having lunch at home, Lin Haoran finally set out.
The rain had stopped today, but it remained overcast. Hong Kong hadn't seen the sun for several days.
"Weiguo, let's head to Cheung Chau Cement," Lin Haoran instructed Li Weiguo, who was in the driver's seat.
"Yes, boss!"
Half an hour later, the Rolls-Royce stopped in front of the Cheung Chau Building.
Since acquiring Hong Kong Electric Group, Lin Haoran had spent much less time at Cheung Chau Cement.
After all, his biggest asset now was Hong Kong Electric Group, and Cheung Chau Cement had taken a backseat.
"Good afternoon, boss," Burton, who was sitting in the office, stood up and greeted him.
"Good afternoon. Have you had lunch?" Lin Haoran asked with a smile.
"I ate at the canteen just now," Burton replied.
Lin Haoran nodded, adjusted a nearby chair, and sat down.
"By the way, boss, we have already applied to the Governor's Office to convert Cheung Chau Cement's land in Hung Hom from industrial use to commercial use. We are now waiting for approval. Once approved, we will need to pay a significant sum to the government," Burton said.
"How much approximately?" Lin Haoran asked.
The Hung Hom land was zoned for industrial use. To develop real estate there, it had to be rezoned as commercial land.
Of course, the government wouldn't oppose Cheung Chau Cement's plan. After all, building skyscrapers there would improve Hong Kong's urban image.
Keeping the cement factory in place, on the other hand, would be an eyesore—this was Victoria Harbour's prime area, facing bustling districts like Causeway Bay and Wan Chai.
"We have about 800,000 square feet of land. Based on current policy, it will require a payment of just over 100 million Hong Kong dollars," Burton answered.
"That much?" Lin Haoran frowned.
"This is after government discounts. The government has been encouraging industrial landowners along Victoria Harbour to convert their land to commercial use to improve the city's skyline. Plus, because cement factories cause heavy dust pollution and frequent complaints, they've repeatedly urged us to relocate. Without the discount, we'd have to pay more than 200 million," Burton said with a wry smile.
Hearing this, Lin Haoran no longer found the price unreasonable.
If Lin Haoran knew that Hutchison Whampoa would pay 590 million Hong Kong dollars a few years later to rezone the Whampoa Dock land, he would find 100 million quite cheap.
Of course, the Whampoa Dock land was about three times larger than Cheung Chau Cement's Hung Hom site, so it made sense that the cost was several times higher.
Moreover, in a few years, rezoning fees would rise sharply, not stay at the current level.
"When can we start developing the land?" Lin Haoran asked, walking to the window and looking out at the cement factory area.
Although the cement factory was still operating, the main production line had already moved to Yuen Long. Once the infrastructure was ready at the second Saikung plant, all remaining equipment would be relocated.
After the move, demolition and development could start anytime.
"In about a month, we can move everything. After that, we can engage a design company to plan the site. Boss, do you think we should develop residential or commercial buildings here?" Burton asked.
"Develop commercial towers and a large shopping mall!" Lin Haoran said without hesitation.
Building a residential complex here would be a waste.
This was prime first-line Victoria Harbour sea view property. Developing commercial buildings and a mall would generate substantial rental income every year.
If developed into residential units, it would be just a one-time sale—not worth it.
Take Li Jiacheng's development of Whampoa Dock as an example: he built 94 residential towers and made 5.2 billion Hong Kong dollars in a few years.
But to Lin Haoran, that was too little.
If he were developing Whampoa Dock, he would never build residential buildings.
He knew how much Hong Kong property values would rise in the future.
Although a property market crisis would hit in two years, it would last only two years, after which a real estate boom lasting more than a decade would follow. Even future crises would be weathered easily, and prices would soar again.
Thus, Lin Haoran preferred long-term rental income from commercial properties rather than selling apartments for one-time profits.
Moreover, the cement produced by Cheung Chau Cement could save on construction costs.
"Even so, the development will cost more than 700 to 800 million Hong Kong dollars, including the rezoning fee. With our current revenue, it's hard to finance such a large project. Plus, we still have a five-billion-dollar loan. Although housing prices are still rising, who knows what the market will look like in the future?" Burton said.
Burton was a capable operator but didn't know how property prices would behave.
Cheung Chau Cement's monthly profit now exceeded 10 million Hong Kong dollars—the highest ever in its history.
Still, developing 800,000 square feet and building over a dozen towers plus a mall would cost at least 700 to 800 million, and construction costs would rise over the years, pushing total costs possibly over 1 billion Hong Kong dollars by completion.
Fortunately, cement, a major construction material, could be self-supplied, saving some costs. However, other materials like steel, stone, and sand would still need to be purchased.
"Don't worry about funding. We'll have a solution," Lin Haoran said with a smile.
He had long made plans for this project.
Since last year, he had instructed Cheung Chau Cement to start stockpiling land and properties.
Building a dozen towers wouldn't happen overnight; the entire development would take at least seven to eight years, so there was no need to raise all the funds at once.
Since acquiring Cheung Chau Cement, Lin Haoran had rarely taken profits out, allowing the company to invest in land and property acquisitions.
Moreover, Cheung Chau Cement had taken a 500 million Hong Kong dollar loan from HSBC by mortgaging the Hung Hom land.
Given the surge in land prices, the site was now worth over 1 billion Hong Kong dollars, making the loan easy to secure.
Thus, Cheung Chau Cement currently owned several valuable central properties, acquired for over 600 million dollars.
Many of these properties had appreciated significantly within just a few months.
By next year, Lin Haoran planned to sell these properties at the market's peak to recover cash.
His goal wasn't high—if they doubled in value, they could be sold for about 1.3 billion dollars, leaving 700 to 800 million dollars of profit after repaying loans and interest.
Meanwhile, Cheung Chau Cement's core business would continue generating stable profits and even more once the overseas markets expanded.
Thus, Cheung Chau Cement alone could fund the land development project without needing Lin Haoran to inject more capital.
When he acquired these companies, his goal was for them to grow self-sufficiently—not to require constant investment.
(This chapter ends.)
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