Chapter 391: Fierce Fire Cooking Oil
In a bull market, everyone is chasing the rising prices, which was vividly reflected in the Hong Kong stock market in November.

Although the two companies that stole the show were Hong Kong Land and Dairy Farm, the overall rise in the Hang Seng Index was not just due to these two companies.

All listed companies are making big promises.

Although Li Bancheng's Cheung Kong Industries was only listed last year, his business plan was particularly good. Taking the rental of two industrial buildings in Kowloon as an example, with an annual rent of more than 1000 million Hong Kong dollars, Cheung Kong Industries will soon have two industrial buildings ready to be built and rented out.

Li Bancheng took advantage of the stock rise and decisively issued a large number of stocks again to raise funds. When Cheung Kong Industries was first listed last year, it was valued at only 1 million Hong Kong dollars. After one year, after the financial report was released, it directly priced itself at 1 million yuan. Then he issued another 2 million Hong Kong dollars.

Companies such as Sun Hung Kai Properties followed suit and issued additional shares to raise funds.

Generally speaking, issuing 1/3 of the additional shares is very risky. The issuing company was determined not to agree at the beginning, but Li Bancheng used some small tricks to increase the issuance fee by 1 point and gave another 20 Hong Kong dollars privately.

What shocked the issuing company was that one-third of the additional shares were quickly sold out. Cheung Kong Holdings, a real estate company that had only been listed for two years, raised 1 million Hong Kong dollars in cash through stock financing.

Faced with such a sharp rise in the stock market and the drastic increase in risks, it is not that no one has come forward to speak out.

HSBC Chairman Sanders gave a rare television interview to Rediffusion Television, specifically on the Chinese channel.

In the interview program, he repeatedly emphasized his point of view, "Hong Kong's stock market has become a pure speculation, and the stock prices of most listed companies have exceeded the normal range."

The host asked at the right time: "Chairman Sanders, which company among the listed companies do you think has a stock price that is seriously deviated from its valuation?"

Sanders hesitated for a few seconds and said decisively: "Of course it's the Dairy Company!"

He said: "Although Dairy Farm has several plots of land in strategic locations, these plots of land have not yet been developed, so their potential value is not reflected in the stock price."

"Even if it is to develop the land, it would require an experienced company, and the dairy company itself does not have the ability to do so."

"Although the dairy business of Dairy Farm covers the whole of Hong Kong, the annual net income is, in my opinion, only 1000 million Hong Kong dollars at most. This does not include the renewal of the dairy cow population."

The host was stunned by Sanders's statement. She just asked politely. Under normal circumstances, as the chairman of HSBC, Sanders would never mention that stock.

But something unexpected happened. The accident caught the host off guard and he was immediately stuck.

Fortunately, the director outside the scene also noticed her problem. He waved the manuscript paper in his hand at her desperately and mouthed the words to her silently: buy land and acquire.

The host understood instantly and smiled sweetly, then asked, "Chairman Sanders, we all know that the Dairy Farm Company is being acquired by Landmark Land. What do you think of Landmark Land's current stock price?"

"Of course!" Sanders criticized without hesitation: "Although Hong Kong Land is the top real estate stock in Hong Kong, its current share price has also deviated from its value. The fact that its price-to-earnings ratio is over 90 times shows the problem."

“That’s why I concluded that the risks in the Hong Kong stock market have greatly increased and have seriously deviated from the value orientation.”

"So what P/E ratio do you think is normal?"

Sanders thought for a few seconds and replied, "For Dairy Farm, I think a P/E ratio of 20 to 30 is normal. For Landmark Land, I think a P/E ratio of 40 to 50 is more appropriate, because Chunghwa Real Estate will be officially occupied in March next year."

"Then the company will receive a large amount of rental income."

"Thank you for your time today, Chairman Sanders." The female host stood up and shook hands with a smile, and unnoticedly put a small note in Sanders' palm, while winking at him, "I hope I can have the opportunity to interview you again in the future." Sanders smiled more sincerely, gently holding the host's soft hand, "I will definitely."

After Sanders sent off the TV station's interview team, he immediately stopped smiling and dialed a number, "Mr. Wang."

"Yes, it's me." Wang Deming had been waiting by the phone, waiting for Sanders' call. "How's it going, Sanders? What about the interview with Rediffusion today?"

"Mr. Wang, I will follow your instructions and focus on analyzing the two companies, Dairy Farm and Jardine Matheson." Sanders repeated the content of today's interview.

"Very good!" Wang Deming's lips curled up slightly on the other end of the phone. "I think the Rothschild & Sons company will also find you. Do you know how to answer?"

"Well, HSBC is responsible for the central bank of the entire Hong Kong region. With the stock market so abnormal, it is necessary to cool down the market. And if necessary, we will raise interest rates."

"it is good!"

Wang Deming put down the phone and continued to think in his mind that even if the milk company had any countermeasures, it would probably be difficult to turn the situation around.

If I remember correctly, the acquisition of Dairy Farm by Hong Kong Land was the trigger for the Hong Kong stock market crash in 73. At that time, Wheelock Properties, which had just acquired Federal Development,
There was nothing wrong with Niu Bijian's strategy, but when it came to acquisitions, one had to cut the Gordian knot quickly, and it would take almost a month.

Remember that you can't relax easily until the last moment.

Although Swire did not spend a penny, the golden signboard of Swire alone was enough to suppress the Dairy Farm and make it difficult for the company to recover.

But if Zhou Xinian really takes out real money, it is not certain who will win.

"Deming?" Zhang Shouchun was wearing a light silk nightgown, standing at the door of the study room. She gently lifted her hair and cast a seductive glance, "Huai Ru and Yu Qing are waiting for you tonight."

"Haha, what about you?"

Zhang Shouchun held Wang Deming's hand, put his front paws on the ground, and said lazily like a cat that just woke up: "What do you think?"

What Sanders and Wang Deming said was correct. HSBC's position in Hong Kong is that of a central bank, because HSBC is the largest note-issuing bank. The other two are Standard Chartered, both of which are British.

That night, after his talk show was broadcast, the stock market opened the next day, November 11, and immediately began a round of plunges. Dairy Farm plummeted by 13 yuan, a drop of 202%; Landmark Land also fell, but only by a few dozen yuan.
In order to save the situation, Zhou Xinian of the Milk Company found Wang Dehui of Chinachem Real Estate and announced the establishment of a new real estate company: Milk Real Estate Co., Ltd., to develop the Milk Company's land, and the new company would distribute 25% of its shares to shareholders.

Wang Dehui of Chinachem Real Estate is now most famous not for his wife, Ruby Kung, but for his wage arrears, pettiness, and stinginess, which are well known to everyone in Hong Kong.
What Zhou Xinian didn't expect was that once the announcement of the cooperation with Chinachem Real Estate was issued, it turned out to be another bad move.

Zhiye Real Estate immediately announced that it already owned 40% of the shares of Dairy Farm and was the largest shareholder, and vetoed the resolution.

It also pointed out the quality problems of the residential communities sold by Chinachem Real Estate in Hong Kong.
On November 11, the Dairy Farm Company could only publish an advertisement in the newspaper that read “A harmonious family brings prosperity”: the acquisition of Dairy Farm by Swire Properties would not have good results and would be detrimental to shareholders.

On the same day, Hong Kong Land announced a bonus issue of 5 new shares.
It was announced on the same day that the acquisition of 51% of the dairy company had been completed.

Zhou Xinian’s milk company was beyond repair.

(End of this chapter)