Chapter 262: The Shocking Annual Profit
Zheng Zhijie continued, "We also acquired some properties for Carrefour and Yiran's Home. Those have already been handed over to the respective companies for management. The Queen's Road No. 2 site will be managed by Four Seasons Hotel once it opens. After all the subsidiaries are fully operational, the associated debt will also be transferred away from Changxing Properties."
"Good," Yang Wendong nodded.
The initial investment in self-owned properties had been enormous, most of it funded by Yang Wendong transferring profits from Changxing Industrial. However, asset appreciation wasn't counted in the annual profit—only realized gains counted. Yang Wendong had no interest in playing financial tricks just to boost the company's paper value for investors, since he had no plans to list.
As for properties acquired on behalf of sibling companies, those would eventually be transferred to their ownership. Of course, the liabilities would also go with them. If any company ended up short on cash, it would be Yang Wendong's responsibility to arrange for emergency funding.
Zheng Zhijie added, "We also have some smaller street-front shops in Hong Kong Island and Tsim Sha Tsui—about 20,000 square feet total."
"That's good. Keep acquiring more street-facing commercial spaces this year. Go all out," Yang Wendong paused, then said, "If there are good deals, don't hesitate to come to me for funding."
The value of street-front retail shops lay in their scarcity. Unlike suburban shopping centers, which could be built from scratch, city-center shops were finite and couldn't be easily added to.
Yang Wendong's rule for scarce real estate assets was to purchase heavily during the 1966 downturn, but even outside of that period, he wouldn't pass up opportunities unless the market was clearly about to crash.
The so-called 1966 real estate collapse might have looked terrifying in hindsight, but it was merely a small dip in a long upward trend. Compared to the massive rise in land values over the following decades, it was almost insignificant.
"Understood," Zheng Zhijie agreed.
Yang Wendong continued, "I'm quite bullish on Hong Kong's economy, especially the real estate sector. While your non-property businesses aren't allowed to develop land, if you need property for operations, you can request it."
Using business development needs to acquire land was one of the most convenient methods. Applications to the government for land would only be approved if there was a legitimate operational requirement.
"Got it," the core department heads responded in unison.
Yang Wendong nodded and said, "Alright, let's move on from real estate. Next is shipping."
Zheng Yuhua, head of the shipping division, said, "Mr. Yang Wendong, currently Changxing Shipping has eight vessels in active operation, primarily used to transport Changxing Industrial's rolling luggage to Europe, the U.S., and Japan.
Last month, we signed cooperation agreements with several European and Australian shipping companies to purchase 19 vessels. These ships are currently undergoing inspection and maintenance at certified dry docks in their countries of origin. If all goes well, they'll arrive in Hong Kong between March and April.
Additionally, in December, we signed a contract with Mitsubishi Shipbuilding in Japan for five new vessels. According to the agreement, the first ship will be delivered in October this year, with the rest following over the next six months.
Assuming we don't make any further acquisitions this year, we'll be operating 32 ships by then, totaling about 470,000 tons of capacity."
The meeting wasn't focused on profits, only on the overall development of each division. This information wasn't exactly top secret. Any diligent journalist could probably estimate it with enough research.
"We'll continue buying second-hand vessels," Yang Wendong added. "Ms. Zheng, your main focus going forward is on talent development and team building—get ready for more ships.
Also, keep a close eye on the Kwai Chung shipyard. Once the first dock is completed, we'll start on the second and third. We need enough in-house repair capacity to keep up with our fleet."
Shipping might not be as evergreen as real estate, but its short-term profitability far surpassed it. More importantly, it brought in immediate cash—unlike real estate, where capital was often locked in assets.
Even if the global shipping market eventually collapsed, its ability to secure huge orders and government contracts made shipowners valuable people everywhere—something real estate moguls could never compete with.
As for Kwai Chung, it held even more long-term value. The land was still cheap now, so docks and warehouses could be built with little resistance. But once the container port development started, any other repair companies trying to enter would find the land prices sky-high.
In the original timeline, both Whampoa and Swire had to relocate their shipyards to Tuen Mun for this very reason.
"Understood, Mr. Yang Wendong," Zheng Yuhua replied. "I'll continue to follow up on both fronts."
Yang Wendong nodded, then turned to Qin Zhiye. "Old Qin, tell us about your division."
"Yes, Mr. Yang Wendong," Qin Zhiye began. "Compared to everyone else here, our media company is still small. Currently, Ganghua Daily has a daily circulation of about 10,000. Oriental Daily is at 15,000."
"That's already very good," Yang Wendong smiled. "Media isn't supposed to make a ton of money. Our internal businesses—real estate, supermarkets, even shipping logistics—all rely on you for communication and promotion."
"I'm happy to be of service to our group," Qin Zhiye replied. "Besides, these are large and stable clients for us."
Yang Wendong nodded. "That's the kind of internal synergy I love to see. Oriental Daily still has huge potential. I'd like to see it hit a daily circulation of 30,000 as soon as possible."
Currently, the best-selling newspaper in Hong Kong barely exceeded 30,000 daily sales, which was considered the market ceiling for now. Of course, that ceiling would rise alongside the economy.
"Don't worry, Mr. Yang Wendong," said Qin Zhiye. "Oriental Daily has been on an upward trend. I think we'll break 20,000 in a few months.
Also, we've partnered with East Asia Bank to support local residents in Kowloon in applying for government-approved newspaper kiosks. That will boost both Ganghua Daily and Oriental Daily sales."
"Excellent," Yang Wendong nodded. "What about the radio station?"
Qin Zhiye replied, "Hong Kong currently has about 400,000 radio users. We've captured 100,000 of them for daily average listeners. That's basically our upper limit for now.
If we want to grow, we'll need the market to expand. Radio prices have dropped, but if Japan raises tariffs on transistor exports, it could affect us—we're still waiting for confirmation."
"I'm already working on that," Yang Wendong said. "I'm bringing in a transistor production line from the U.S. Once Hong Kong can manufacture its own, our prices will undercut even Japanese imports."
He had already brought on Wang Zhiqun to run Glory Electronics. Wang hadn't returned to Hong Kong yet; he was still in the U.S. scouting production lines and talent.
It was a complicated project and couldn't be rushed.
"If that happens, and with Hong Kong's economy growing, radio listenership should definitely rise," Qin Zhiye said.
"Maybe not," Yang Wendong chuckled. "People might prefer watching TV."
As incomes improved, radios wouldn't disappear, but TVs would slowly take over.
"True, but TV sets are still too expensive. Plus, commercial cable TV like Rediffusion costs HK$25 a month—that's too steep for most families," said Qin Zhiye.
"Yeah, we'll revisit that later," Yang Wendong nodded. Until TVB came online, radios would remain king.
HK$25 a month for cable was a luxury few could afford.
He then addressed the whole group. "Alright, we've covered our four core businesses.
The point of this meeting is to give everyone a clear picture of our overall direction. Going forward, please cooperate and support each other wherever you can.
We also have Liu Huayu's Carrefour supermarkets, the upcoming Glory Electronics, and the Four Seasons Hotel. These are major future ventures, but they're still in the early stages, so there's not much to report just yet."
"Understood," everyone responded in unison.
Several attendees looked toward Liu Huayu, who hadn't spoken yet. Everyone knew how important Carrefour had become—it was practically a pet project for the boss, backed by the group's full might.
Yang Wendong paused before adding, "There's one more thing. Many of you have been with Changxing for years. After the New Year, we'll be increasing everyone's salary. The details will be sent by Finance."
"Thank you, Mr. Yang Wendong," several people said happily.
Climbing the ladder was about rewards, after all. Everyone welcomed a raise.
Yang Wendong added, "Besides the salary increases, there will also be new benefits. You all know I have a few villas in Happy Valley. You can stay there for free, with housekeeping included. No need to worry about day-to-day chores."
"Thank you, Mr. Yang Wendong," the executives responded, even more elated than before.
Yang Wendong grinned. "Do your best, and there'll be even more rewards down the line."
He wasn't stingy with people who helped him. High pay and good perks were standard.
For now, it was just residence rights—not ownership.
"Alright," everyone replied.
"That's all for now," Yang Wendong said. "Wang-jie, please stay behind."
Soon, the meeting room was empty except for Finance Director Wang Fengzhi.
Yang Wendong asked, "Wang-jie, all our major divisions are profitable now, correct?"
Wang Fengzhi thought for a moment and replied, "Yes. Changxing Industrial and Changxing Media have been profitable for a while. Changxing Real Estate is also profitable if we exclude Changxing Properties.
Even Changxing Shipping is now in the black—if we don't count the cost of the newly acquired vessels."
"Right. Don't include major investments—just amortize them over time," Yang Wendong said.
"Understood," Wang Fengzhi said. She then pulled out a folder and added, "Here's the breakdown of profit by business. This doesn't include unrealized gains from property appreciation or any major investments from last year."
"Let me take a look," Yang Wendong smiled.
He already had a rough idea of the numbers, but Finance needed time to finalize everything and submit an official report.
Wang Fengzhi explained, "This first page is the summary. Last year, Changxing Industrial had a net profit of 51.26 million. Changxing Real Estate made 9.67 million, Changxing Shipping brought in 3.66 million, and Changxing Media earned 1.22 million. However, we made significant investments last year as well, including the industrial park and land in Kwun Tong, the Four Seasons Hotel plot, 24 new and second-hand cargo ships, and the shipyard in Kwai Chung. Although we tried our best to leverage bank funding, we still invested nearly 40 million of our own money."
"The numbers are impressive," Yang Wendong said with delight. "If these figures were made public, they'd probably hit the headlines again."
Tens of millions may not sound like much decades later — for many people, it would just be considered modest wealth. But in 1960s Hong Kong, these were earth-shattering figures. If a single company made that much profit in a year, it would leave many jaws on the floor.
To put things in perspective using real estate prices, a luxury 1,000-square-foot apartment in Central would cost around fifty to sixty thousand Hong Kong dollars. That meant Changxing Group's annual profits could buy 1,000 such apartments — the equivalent of tens of billions in later decades.
Just last year, the average salary in Hong Kong was only about 150 HKD. Office clerks in Central earned three to four hundred, and many regular folks earned around a hundred.
Wang Fengzhi said, "Yes, based on the public data from Jardine Matheson's IPO, their annual profit is just over 100 million. Swire Pacific has only seventy to eighty million."
"These public companies are playing tricks. You can't just look at the financial reports," Yang Wendong said, shaking his head.
There are too many ways for public companies to manipulate numbers. Even an ordinary person knows that once a company goes public, it can collaborate with other companies to siphon profits away through 'partnerships.' This kind of vampire tactic is common.
And it's not just Hong Kong — many public companies around the world do this. On one hand, they use the stock market to raise funds. On the other hand, they use all sorts of methods to funnel profits into their privately held companies.
And all of it is entirely legal. Even if the Independent Commission Against Corruption were to investigate ten years later, they'd have no way to stop it.
You could even say it's an unspoken rule of capitalism.
"I understand, but the numbers still offer some reference value," Wang Fengzhi said with a smile. "If we went public, our market cap could easily reach several hundred million."
"Going public isn't under consideration for now," Yang Wendong said, rejecting the idea.
In a typical company, once it reaches a certain stage, listing on the stock exchange to raise capital is a logical move. But for Changxing Group, the core of many of its ventures wasn't its existing assets — it was the future knowledge in the mind of its founder.
Going public during the early growth stage would be a foolish move. Only when his foresight, his "golden finger," became less effective would it make sense to consider it.
Wang Fengzhi continued, "Mr. Yang, although we haven't gone public, the scale of our exports, real estate holdings, and shipping operations can't be hidden. Anyone paying attention will be able to gauge our position."
"I've never tried to hide it," Yang Wendong replied casually. "If outsiders find out, then so be it. As a business grows, it's impossible to stay low-profile like those rent-collecting landlords."
Many of Hong Kong's hidden tycoons were able to stay under the radar because they focused on low-profile industries like real estate and trading — and often for two or three generations.
But for a newly emerged tycoon rising rapidly, creating employment, paying taxes — their industrial footprint couldn't be hidden.
As for profits, experienced professionals in the industry could more or less estimate them. That part wasn't controllable.
"Understood," Wang Fengzhi nodded. Then she asked, "Mr. Yang, will next year's investment direction be the same as this year's?"
"I remember we still had 50 million HKD in the company's account at the end of last year," Yang Wendong thought for a moment and asked, "How much do we have now?"
"Precisely 65 million HKD," Wang Fengzhi responded. "It's been fluctuating. Also, we currently owe the banks 116 million HKD. Our owned properties and cargo ships are valued at over 100 million. And with our annual profits between 50 and 60 million, which will continue to grow, our debt ratio isn't too bad."
"That's good," Yang Wendong nodded. "Next, I'll be focusing more on our shipping operations. Real estate will get slightly less investment. Be sure to prepare the funding accordingly, because we'll need to inject more of our own capital when buying second-hand vessels."
The main issue was still funding. Even if he ruthlessly leveraged everything, a few hundred million wasn't enough to shake up the shipping sector.
He would still invest in both real estate and shipping, but in the short term, the property market was headed for a crisis in a few years. So for now, investing in a few premium properties would be enough.
Shipping, on the other hand, was about to enter a golden opportunity period in a few years, so it required heavier investment.
"Alright. I'll work on optimizing the company's cash flow," Wang Fengzhi agreed. "But Mr. Yang, Hong Kong banks have recently relaxed their stance on shipping. Restrictions on second-hand vessels are also far looser than before. We should proactively communicate with a few of the banks."
"Mm, I know," Yang Wendong nodded again. "HSBC, Standard Chartered, Hang Seng, and Bank of East Asia are our long-term banking partners. Feel free to strengthen ties with them."
Since HSBC loosened its policies on shipping investments, the other major banks in Hong Kong followed suit. It was a classic leader-follower effect.
The great expansion of Hong Kong's shipping industry in the 1960s may well have stemmed from this — before 1967, the industry scaled up dramatically. Then fate intervened, and the outbreak of the Middle East conflict — which dragged on for eight years — helped birth three world-class shipping magnates.
"Alright. I'll work closely with those banks," Wang Fengzhi agreed.
Although major deals were usually discussed by the company's boss, they typically only determined the direction. The details were still negotiated by department heads like her — especially those in charge of finance.
And for smaller transactions, those were entirely her team's responsibility.
Thank you for the support, friends. If you want to read more chapters in advance, go to my Patreon.
Read 40 Chapters In Advance: patreon.com/johanssen10