In Hong Kong, we build a global business empire

Chapter 731 A Shocking Plot: Explosive News That Shocked All of Hong Kong

September 15th, around 9:00 AM.

More than eighty media outlets gathered in the lobby of a building in Causeway Bay.

Of these, more than fifty were invited, while nearly thirty came voluntarily even though they were not on the invitation list.

This building is where the offices of Universal Research Company are located.

Although the Oriental Media Group acquired the research company a few months ago at Lin Haoran's behest, its offices have not been moved from their original location.

Although this place belongs to Causeway Bay, it is located at the junction of Causeway Bay and Wan Chai, and is only a little over 200 meters away from the headquarters of Oriental Press Group in Wan Chai. It is extremely convenient for Cui Zilong, the head of the parent company, to come here.

Previously, it was here that Mr. Yu Zhize, the general manager of Universal Research, announced that Bank of East Asia and HSBC had entered a dual-dominant era, which caused a sensation in Hong Kong and made the research company famous in Hong Kong.

Although it is not large in scale, its reputation is no less than that of those large listed companies.

Therefore, at this moment, all the media reporters present were very curious about what kind of bombshell this research company was going to reveal by making such a big fuss.
Flashbulbs went off, reporters whispered among themselves, and the air was thick with anticipation and speculation.

TVB Jade was already prepared for a live broadcast, with cameras pointed at the stage, waiting for the press conference to begin.

At 10:00 AM sharp, Yu Zhize, General Manager of Huanyu Research Company, dressed in a sharp suit and with a serious expression, walked onto the temporary stage.

Instantly, all eyes in the room turned to him.

Meanwhile, Lin Haoran, who was at his villa on Shi Xun Road, also turned on the television.

He didn't leave home early today, just to wait for this live television broadcast.

Guo Xiaohan left early. The Lin Haoran Charity Foundation was newly established, and with a strong sense of career ambition, she was eager to run the foundation well and maintain the perfect image of her brother Haoran as a philanthropist.

Lin Haoran sat on the sofa, legs crossed, waiting for the press conference to begin.

He wanted to see if Yu Zhize would disappoint him.

Hopefully, what they release will be somewhat interesting!

At this moment, Yu Zhize appeared quite calm, after all, he had experienced even bigger events before, and he was a celebrity in Hong Kong.

After selling the company, he remained the general manager, but he no longer faced the same financial pressures. With Lin Haoran as his backer, he was able to develop the company with even greater ease.

Yu Zhize didn't exchange many pleasantries and went straight to the point.

"Dear media friends, thank you for coming. Universal Research Company has always been committed to revealing the true state of the market through objective and impartial data analysis."

Today, we will release an in-depth research report on the recent financial situation and operational risks of some large enterprises in Hong Kong, aiming to highlight potential market risks and promote a healthy and transparent business environment! Yu Zhize's voice echoed throughout the hall through the microphone.

Global Research cannot simply publish research reports on Hutchison Whampoa; otherwise, it would seem too targeted.

Therefore, the company specifically investigated some well-known listed companies in Hong Kong, such as CLP Power, New World Development, Hong Kong Tunnel, Hutchison Whampoa, HK Electric, Cheung Kong Holdings, Sun Hung Kai Properties, Swire Properties, etc. The company identified a total of ten companies in this survey.

These companies are currently among the top 20 listed companies in Hong Kong, and most of them are even in the top 10.

The reporters below the stage immediately held their breath, and the sound of camera shutters clicking incessantly.

Because they knew that some of these companies were special, otherwise Yu Zhize wouldn't have bothered to hold a press conference.

"Let's start by looking at CLP Power." Following the established order, Yu Zhize began his analysis one by one. "As a public utility stock, CLP Power has stable profits, a healthy debt ratio, and ample cash flow. In our assessment, it is a company with extremely strong risk resistance..."

He provided a detailed analysis of CLP's business structure, future capital expenditure plans, and the stability brought about by the electricity price adjustment mechanism, and gave it a rating of "stable, recommended for attention".

Next are companies such as New World Development and Hong Kong Tunnel.

Yu Zhize's analysis is objective and professional, pointing out the financial pressure that may result from the rapid expansion of some enterprises, while also affirming their high-quality asset reserves and long-term development potential.

The report was both positive and negative, appearing quite fair, and gradually shifted the atmosphere of the meeting from pure curiosity to professional listening.

These are all listed companies, and under normal circumstances, these companies will publish their financial statements.

In reality, most companies only publish annual reports; as for monthly, quarterly, and semi-annual reports, almost no companies publish them.

Therefore, the dynamic assessments derived by Global Research Company based on shorter cycles and more in-depth market research are particularly valuable and forward-looking.

Moreover, as the most well-known research company in Hong Kong, Universal Research Company now enjoys a very high level of authority in Hong Kong.

The reporters quickly took notes, secretly admiring the meticulousness of the work and the depth of data mining by the Global Research Company.

This kind of real-time, dynamic financial health "check-up report" is invaluable to investors.

However, everyone knows perfectly well that the analyses from the previous companies, whether positive or negative, are more like a prelude to the final main event, maintaining the facade of the report's "objectivity and impartiality."

If all the companies reporting such healthy situations had such positive results, there would be no need to hold this press conference.

The real eye of the storm will undoubtedly be those companies that have recently been at the center of the media storm.

Sure enough, after calmly analyzing six or seven companies, Yu Zhize mentioned a company that piqued the interest of everyone present: Hutchison Whampoa.

Hutchison Whampoa is currently at the center of a media storm because its subsidiary, ParknShop, is engaged in a price war.

"Next, we will focus on Hutchison Whampoa, which has recently attracted much attention from the market."

Shi Xun said, "Lin family villa." Lin Haoran also became serious, finally arriving at the topic he was most concerned about.

Lin Haoran naturally appreciated the fact that Huanyu Research Company released a research report from another company first. Yu Zhize had indeed not disappointed him and was a talent worth cultivating.

In addition, there are actually quite a few people in Hong Kong watching the live broadcast.

Although it was only a little past 10 a.m., and a weekday when most people were already at work, this was still a large city with a population of five million. With such a large population base, there would always be people who would turn on the TV at this time.

Stock market investors, in particular, are more interested in this kind of thing. They are well-informed, so many of the viewers are stock market investors.

They also wanted to use the research report from Universal Research to study how to make stock investments next.

"Based on our continuous tracking surveys and modeling analysis, since the decline in the popularity of Hong Kong's real estate industry, Hutchison Whampoa's revenue has begun to drop significantly."

In particular, in the past two months, Hutchison Whampoa's market share of terminals has plummeted, port warehouse vacancy rates have increased, and hotel occupancy rates have declined sharply, all of which have seriously affected Hutchison Whampoa's cash flow.

For the past two weeks, ParknShop, a subsidiary of Hutchison Whampoa, and Wellcome, a subsidiary of Dairy Farm International Holdings, have been engaged in a fierce price war. Based on our on-site random customer interviews and analysis of supermarket traffic, cost price comparisons, gross profit margins, and historical financial data, ParknShop is estimated to be losing between HK$4 million and HK$6 million per day.

In other words, in just half a month, ParknShop's estimated losses will exceed HK$60 million, which is a very serious loss.

"Wow!"

Exclamations erupted simultaneously both on and off the television.

Ordinary citizens may not grasp the concept of hundreds of millions, but the stark contrast of "losing millions every day" is incredibly impactful! How many items would it take to recoup that loss?

"According to our market research model, this price war by ParknShop supermarkets is more harmful than beneficial. The loss of more than HK$60 million in half a month means that if it continues for a full month, Hutchison Whampoa Group will lose more than HK$120 million in cash reserves. This is a wound that is bleeding continuously and difficult to heal in the short term."

Even more serious is its debt structure. According to public information and our calculations, after Hutchison Whampoa was acquired by Cheung Kong Holdings, its total debt ratio had reached over 65% by September. Short-term debt accounts for a staggering proportion, with an estimated HK$12 billion in debt maturing within the next one to six months!

Yu Zhize's voice was clearly transmitted to Lin Haoran's ears through the television speakers, and also reached the homes of all Hong Kong citizens watching the live broadcast.

Lin Haoran picked up his teacup, took a small sip, and a barely perceptible smile appeared on his lips.

The data is solid, and the angle of approach is also very unique.

If this happened during a booming real estate market, a debt ratio of 65% wouldn't be a big deal, since fixed assets are easy to liquidate and their value continues to rise.

However, with the market cooling down and liquidity tightening, high debt ratios have become a Damocles' sword hanging over the heads of enterprises.

Given the current state of Hong Kong's real estate market, it's not impossible for companies like Hutchison Whampoa to sell some of their real estate projects or fixed assets, but the difficulty is much greater. Most importantly, they have no bargaining power, and the prices will inevitably be driven down significantly.

At this moment, many shareholders of Hutchison Whampoa shares, including those at the four major stock exchanges and securities firms, are beginning to worry.

"The key projects that Hutchison Whampoa Group had high hopes for, hoping to quickly recover funds through real estate development, have seen their pre-sales and cash recovery speed fall far short of market expectations due to the recent unexpected cooling of the Hong Kong real estate market."

This puts the core plan to improve cash flow through project sales under significant uncertainty, and may even fail. Yu Zhize continued.

"Based on the above core factors, our risk assessment model shows that, assuming the existing business strategy remains unchanged, the core loss-making business cannot be stopped and no new significant external financing is obtained, Hutchison Whampoa's cash flow situation is very likely to only be able to support its normal operations and rigid debt repayment for about 40 to 55 days."

If any unexpected loan withdrawals or sales fall short of expectations occur during this period, the group will face an extremely high risk of short-term debt default. The possibility that Hutchison Whampoa will need to take emergency measures such as selling core assets or undertaking a major debt restructuring to weather the crisis cannot be ruled out.

"Forty to fifty-five days?"

"Is there a problem with the cash flow?" "Such a large company as Hutchison Whampoa can only last for a little over a month?!"

At this moment, whether at the press conference or in front of televisions in thousands of households, countless people were stunned by this conclusion!
"In addition, just yesterday, we received some unexpected news. As far as I know, the head of Hutchison Whampoa has suddenly made secret contact with some international investment banks. As everyone knows, Hutchison Whampoa has always only cooperated with HSBC, so this contact with international investment banks is quite intriguing."

We speculate that Hutchison Whampoa's recent contact with international investment banks stems from a substantial loan due at HSBC that needs to be repaid. Coupled with recent management changes at Standard Chartered Bank, including Mr. Brown's return to the UK, Hutchison Whampoa is forced to seek alternative sources for this loan.

Yu Zhize has released another insider piece of information.

Immediately, the scene erupted in an uproar.

The release of this "insider information" completely ignited the scene!

This is no longer analysis and speculation, but a "revelation" that goes straight to the heart of the matter!
This indirectly confirms the core point of the Global Report: Hutchison Whampoa's cash flow has reached a critical point, requiring desperate measures!
Has Hutchison Whampoa really fallen to this level?
If that's the case, how dare it let ParknShop and Wellcome engage in such a fierce price war?
At that moment, the press conference erupted in chaos, with reporters' questions flooding the stage like a tsunami.

The television cameras keenly captured the shocked, excited, and incredulous expressions on the faces of the reporters in the audience.

Lin Haoran turned off the TV, and the room instantly became quiet.

He no longer needed to listen; Yu Zhize's performance was flawless.

This report is rich in data, logically rigorous, and has startling conclusions, yet it is disguised as an "objective risk assessment," making it difficult to directly accuse its motives.

Most importantly, the timing of its release coincided with the critical moment when Li Jiacheng was at his weakest and needed time the most.

Moreover, barring any unforeseen circumstances, Yu Zhize will undoubtedly release a preliminary investigation report on Cheung Kong Holdings.

Cheung Kong Holdings, however, is in a much worse situation.

Even if Hong Kong were to face a severe real estate crisis, Cheung Kong Holdings would still be able to weather the storm thanks to its sound financials and high-quality land reserves, provided that it did not acquire Hutchison Whampoa.

However, the acquisition of Hutchison Whampoa, a deal that resembled a "David and Goliath" swallowing a giant, undoubtedly placed a heavy burden on Cheung Kong Holdings.

If Hong Kong's real estate industry performs as well as it did last year, then Cheung Kong Holdings will naturally not be worried about these debts.

However, starting this year, it has become increasingly difficult for them to recoup funds through real estate projects.

This has put enormous pressure on Cheung Kong Holdings' cash flow.

Lin Haoran could even imagine the dire straits Li Jiacheng was facing at that moment: a stock price collapse, banks pressing for repayment, and partners questioning him...

Everything will be accelerated by this report.

"Mr. Li, I hope you are satisfied with this 'meeting gift'." Lin Haoran murmured to himself, his eyes showing no emotion, only the calm and composure of someone who had won a decisive battle in the business world.

This conflict, ignited by Global Research, has now spread to the very foundations of Li Ka-shing's business empire.

Although Lin Haoran no longer paid attention, the press conference continued.

Just as Lin Haoran had expected, Yu Zhize did not keep everyone waiting for long.

After causing a huge uproar about Hutchison Whampoa, he paused briefly before continuing his speech.

“Next, we must pay attention to Hutchison Whampoa’s controlling shareholder, Cheung Kong Holdings.” Yu Zhize’s voice remained calm, but to everyone, this was undoubtedly a continuation of the storm.

“Cheung Kong Holdings is an excellent company with a solid foundation in real estate and high-quality land reserves. However, our analysis shows that in order to complete the acquisition of Hutchison Whampoa and subsequent share increases, Cheung Kong Holdings used a lot of leveraged funds, which has significantly increased its debt ratio.”

"According to our calculations, Cheung Kong Holdings' debt ratio has now climbed to around 60%, which is slightly better than Hutchison Whampoa, but still far higher than its historical average, and has entered a range that requires vigilance."

More importantly, Cheung Kong Holdings provided joint and several liability guarantees for some of Hutchison Whampoa's debts, indicating a high degree of financial linkage and risk transmission between the two.

Everyone understands what this means.

Because of the controlling stake, the two are interdependent; if one prospers, the other prospers; if one suffers, the other suffers. If Hutchison Whampoa is in trouble, Cheung Kong Holdings will also suffer.
The press conference of Universal Research Company is still ongoing, but this storm has already swept through the entire Hong Kong financial market!
Hong Kong United Exchange.

As Yu Zhize's analysis was broadcast live, the trading hall descended into utter frenzy.

Hutchison Whampoa's stock price plummeted like a kite with a broken string, falling without resistance. Numerous sell orders piled up like an avalanche, while buy orders were few and far between, as if the stock had evaporated instantly.

The decline quickly widened to 15%, 20%...

Cheung Kong Holdings followed suit, experiencing the same panic selling.

The market realized that the two companies were now bound together by a common destiny, and selling off Cheung Kong Holdings became an inevitable choice to avoid risks.

Within half an hour, the drop exceeded 20%!

The Hang Seng Index was dragged down by these two heavyweight stocks, plunging more than 300 points, leaving a scene of widespread despair.

Inside the exchange, phones rang, shouts, gasps, and curses filled the air as brokers were frantically busy, constantly receiving calls from clients demanding they sell at any cost.

The red numbers jumped wildly, reflecting the terrified faces on each one.

While everyone was in a panic, the Galaxy Securities Exchange's trading team had secretly accelerated the pace of acquisition.

If we miss such a great opportunity, it will be difficult to encounter it again later.

After all, the shares held by Li Ka-shing, as well as those held by some major shareholders and Galaxy Securities, all indicate that fewer and fewer shareholders hold shares in either Cheung Kong Holdings or Hutchison Whampoa.

Of course, accelerating the increase in holdings is acceptable, but it cannot be excessive, otherwise it will definitely attract the attention of Li Jiacheng's trading team.

However, with so many stocks being sold off now, even if Galaxy Securities accelerates its operations, it won't be particularly noticeable.

While the outside world was in an uproar and the stock market was in chaos, Li Jiacheng was completely unaware of all of this.

At this moment, he is in a high-rise office in a commercial building in Central.

This is Wells Fargo's office in Hong Kong.

Yesterday, he met separately with Morgan Stanley, UBS and Goldman Sachs.

It wouldn't be difficult for him to get a loan, especially since it's a mortgage loan.

However, since a large amount of money is involved, he naturally needs to compare the three companies and find the international investment bank with the most favorable terms for them.

The first three options either had excessively high interest rates, short terms, or required additional warrants, all of which were extremely demanding and unacceptable to him.

At this moment, he is having final discussions with John Anderson, Vice President of Wells Fargo for Asia.

From nine o'clock in the morning until now, a little after ten o'clock, Li Jiacheng has been talking with the other party for more than an hour.

Wells Fargo's terms were slightly better than the previous ones. Although the interest rate was also higher, it was still within an acceptable range. The loan term was two years, and most importantly, no additional equity clauses were required.

“Mr. Li, we are very optimistic about the long-term asset value of Hutchison Whampoa, especially its high-quality port and land reserves.”

Anderson, a well-mannered American in his forties, smiled and said, “Therefore, we are willing to use these assets as collateral to provide this HK$6 million bridging loan to help your group overcome its current liquidity difficulties.”

Li Jiacheng breathed a slight sigh of relief; this was the best news he had heard all day.

Although the cost is still considerable, at least we have seen hope.

As long as the money arrives on time, he can repay the imminent 3.58 million yuan loan from Huifeng, and the remaining 2.42 million yuan can also slightly alleviate the bleeding of ParknShop supermarkets and pay some emergency expenses, giving him valuable breathing room.

Two years is enough.

Based on his many years of experience in Hong Kong's real estate industry, he believes that the Hong Kong real estate market cannot remain in a slump for too long and will soon resume its rapid growth.

By then, Cheung Kong Holdings will have almost finished digesting Hutchison Whampoa.

At that time, Hutchison Whampoa and Cheung Kong Holdings, fully revitalized, will be invincible even if they cannot defeat the companies under Lin Haoran.

Since we can't win in the Hong Kong market, let's invest in the international market!

At this moment, Li Jiacheng was filled with excitement and thought about many things.

“I am very grateful for Mr. Anderson’s and Wells Fargo’s trust. Please rest assured that once market sentiment stabilizes and our real estate projects proceed smoothly, this loan will definitely be repaid on time.” Li Jiacheng tried his best to make his voice sound calm and confident.

“We believe in Mr. Li’s abilities.” Anderson nodded, and was about to signal the lawyer next to him to bring out the preliminary agreement framework.

Just then, there was a gentle knock on the conference room door, and then one of Anderson's Chinese assistants walked in quickly with a nervous expression. He leaned down and whispered a few words in Anderson's ear, while handing him a sheet of A4 paper that had just been received from the fax machine.

Anderson's smile froze instantly.

(End of this chapter)