Golden Harvest was founded in 1970 by Zou Wenhuai, He Guanchang, and Liang Feng. Zou held the largest stake, Liang the smallest.
After leaving, John Woo returned to Golden Harvest and reported that Starshine Films was poaching staff. Zou immediately convened He, Liang, and other executives.
For Golden Harvest, a capital tycoon entering the film industry was a huge shock — especially since he was already luring away employees and partners.
Lin BaoCheng's entry into film was unstoppable. Zou and the others discussed how to respond to the poaching and how to face the changes Starshine would bring to the market.
After discussion, Golden Harvest reluctantly made adjustments: Raise salaries for directors, actors, writers, cinematographers, stuntmen, etc., to match Starshine's offers.
Speed up box office settlements with producers, no more long delays. The split ratio remained unchanged, since Starshine Cinemas wasn't yet fully established.
Executives would personally persuade staff to stay and encourage partners to continue working with Golden Harvest.
These measures meant higher costs and lower profits, but were unavoidable. Without change, Golden Harvest would eventually decline.
Lin BaoCheng didn't know of their response, and even if he did, he wouldn't care. With Asia Television and ample capital, his film company would grow regardless.
On Monday, April 24, Lin BaoCheng and Iwasaki FengLong went to the Hong Kong Stock Exchange.
At 10 a.m., the agreed settlement time with Niu BiJian arrived. Iwasaki released his long options at the agreed price, which were taken by the shorts, completing the settlement.
Li JiaCheng, Feng JinXi, Niu BiJian, and Bob settled their HK$220 million short options at HK$910 million total.
They had to settle early. Hutchison's stock was still above HK$30, with less than two weeks until expiry. If they returned shares, they'd have to buy heavily in the market, preventing the price from falling and forcing them to pay more.
Lin and Iwasaki calculated their gains:
The shorts against Li JiaCheng's group earned HK$690 million.
The HK$140 million long options settled Friday at an average HK$25.35, with costs of HK$4.2. Profit: just over HK$700 million. Net after fees: HK$1.39 billion.
As for shares: They had bought 55 million shares. Selling too fast would crash the price, so they sold gradually.
By last Friday, 15 million shares had been sold at an average HK$32.6, totaling HK$489 million.
The remaining 40 million shares could sell above HK$25, bringing at least HK$1 billion.
Their stock cost was just over HK$200 million, yet would yield at least HK$1.5 billion — profit of HK$1.3 billion.
Altogether, Lin and Iwasaki stood to earn around HK$2.7 billion — far beyond Lin's expectations.
This was thanks to Li JiaCheng's group initially suppressing the price, allowing them to buy cheaply. When the stock soared, profits multiplied.
Less than HK$600 million invested, 4.5x returns in under a month — rare indeed.
Had Lin revealed the truth earlier, the price would have jumped immediately, and profits would have been far smaller.
No wonder securities firms liked partnering with company chairmen — insider knowledge was immensely profitable and safe.
Hong Kong's trading rules were still loose, easy to exploit. In the 21st century, such cooperation would have to be hidden from regulators.
Meanwhile, Li JiaCheng's group calculated their losses: They shorted HK$400 million in options. HK$180 million earned HK$88.3 million. The remaining HK$220 million lost HK$690 million. Net loss: HK$607 million. With fees, HK$610 million.
Li JiaCheng and Bob bore 20% each (HK$122 million loss each). Feng JinXi and Niu BiJian bore 30% each (HK$183 million loss each).
Worse, Feng, Bob, and Niu had also shorted HK$40 million worth of shares near HK$3, losing even more.
Later, realizing they couldn't win, they switched to long positions to recoup some losses. These might earn them over HK$100 million, with Li JiaCheng recovering about HK$20 million.
Thus, Li JiaCheng lost the least — about HK$100 million.
But secretly, he had bought HK$15 million worth of shares when Hutchison was below HK$4, acquiring 4.3 million shares. When the price broke HK$25 last week, he sold for HK$115 million.
After costs, taxes, and fees, his loss was only a few million.
Compared to Feng, Bob, and Niu's massive losses, Li's was negligible. He kept quiet — if word spread, his reputation would be ruined.
After all, it was Li who had urged them to short Hutchison. In the end, he escaped with minor losses while his partners lost billions. If exposed, his name would stink, and no one would trust him again.