The CEO of Hong Kong Land, who bets the biggest bets in the company's history in Mainland China

Author:Forbes China Time:2022.09.09

R o b e r t w o n g

The real estate situation in Mainland China did not scare Huang Youzhong. The CEO of the Land in Hong Kong said it was now brave.

Text | Zinnia Lee

Facing the dilemma of the Chinese real estate market, almost no one dares to invest, but Robert Wong, CEO of Hongkong Land, has increased its investment.

In the past two years, the developer has made its largest investment commitment in 133 years of investment. It will build a new financial center (West Coast Financial City) in Xuhui Binjiang, Shanghai, and add residential projects in some Chinese cities.

In February 2020, when the new crown epidemic swept China and spread the world in the world, Hong Kong landed for a land of 231,300 square meters in Shanghai at a price of $ 4.4 billion. At present, the place is under joint development, with a total cost of $ 8.4 billion.

One year later, when several major real estate developers in China began to have financial problems, Hong Kong landed land purchased 8 new residential land, which was mainly used to build mid -to -high -end housing. As of December 2021, the company's investment projects in mainland China increased to 35, covering 7 cities.

"People should not be hindered by short -term fluctuations." 61 -year -old Huang Youzhong said in an exclusive interview with the company's Hong Kong headquarters, "When the opportunity comes, we should bravely seize them."

With the government's control of over -borrowing, many real estate counterparts have put on investment plans, but Huang Youzhong used two years to double the investment in Hong Kong's land in Asia, from $ 1.8 billion before the epidemic to $ 3.3 billion This includes strengthening the company's core investment portfolio and expanding business in Southeast Asia.

Huang Youzhong, a Hong Kong Land Headquarters in the Trading Square. Picture source: Ken wu for forbes asia

As the crown pearl of Jardine Matheson, Hong Kong has overcome many challenges in its long history. From the invasion of Japan during World War II to the Asian financial crisis in 1997, this company not only successfully survived, but also helped create a famous Hong Kong skyline, and turned Central into one of the world's most famous business districts in the world. Essence

This Singapore listed company can often find a line of hope when economic downturn. During the collapse of the Hong Kong stocks in the 1980s, the Exchange Square developed on its development, and customers include Hong Kong Stock Exchange, international banks, law firms, etc. After the financial crisis in 1997, Hong Kong land used the opportunity to buy land in Southeast Asia, and rely on this to become a major regional developer.

However, the continuous slowdown in the real estate market in Mainland China has defaulted with major local developers including Evergrande and Sunac, coupled with the strict restrictions caused by the new crown epidemic and the rise in Hong Kong's vacant rate. Essence

Huang Youzhong graduated from Hong Kong Polytechnic University in 1985, and later joined Hong Kong land as a surveyer, and then promoted to CEO 6 years ago.

He is known for seizing opportunities and persistence in the crisis. During the Asian financial crisis and the SARS outbreak in 2003, he began to rebuild the residential business of Hong Kong's land in the 1980s.

His first project was to re -develop the Lai Sing Court of an old apartment building in Hong Kong, but the start was not smooth. Huang Youzhong spent two and a half years before persuading at least 90%of the owners, letting them agree to collectively sell it, and overcomes the objections from the relevant departments to relax the height of the building.

Although SARS hit the real estate market in Hong Kong, one of Lixing Building, one of Lixing Building, recalled that Huang Youzhong still kept his promise -even if he could try to re -negotiate -and due to poor environment, the project economy was poor at that time. Under the circumstances, continue to promote the reconstruction of the building. In the end, Hong Kong's land was renamed from this property of about 300 million US dollars in the property of the Serenade.

Today, Huang Youzhong believes again that under the circumstances of the market, the investment of Hong Kong land in Mainland China and the measures to increase the attraction of Hong Kong's investment portfolio will bring returns. His optimism.

Hong Kong Real Estate said in the latest financial report that in the first half of 2022, the company's revenue increased slightly by 0.9%compared with the same period of the previous year to $ 894 million, although its contract sales in the Mainland fell by 69%to $ 419 million. The company realized a net profit of US $ 292 million, and the net loss of US $ 865 million in the same period last year.

In addition, the potential profit of Hong Kong Land (Underlying Profit) is used to measure the indicator of income from continuous business, an increase of 8%to $ 425 million, but the company expects that the construction delay caused by the epidemic is full The annual performance will be "significantly" declined.

As of August 25, the stock price of Hong Kong Land has risen by about 15%in the previous 12 months, and its competitors Heng Genhei and New World Development have fallen by about 26%and 30%, respectively. More than 21%.

In the Shanghai joint venture, Hong Kong Land holds 43%of the shares, and other shareholders include a special purpose entity (SPV) held by a mainland investor and a government, and Huang Youzhong believes that this joint venture has the characteristics of success. The West Coast Financial City Project will be delivered to a building area of 1.1 million square meters, which is equivalent to about 110 Manhattan urban neighborhoods.

According to the company's information and Huang Youzhong, the project will provide 650,000 square meters of office buildings, 230,000 square meters of luxury retail space, 1,700 high -end residential and hotel apartments, two five -star hotels, one exhibition and conference meeting The center, and 1.4 kilometers of green waterfront areas.

Shanghai West Bank Financial City (rendering picture), source: hongkong land

"If we do not acquire that land, it may be divided into a few, and then sell it to different people. In this case, the opportunity will never be lost, no matter how much money is used, you can’t buy it. The correct decision. "Huang Youzhong said.

The betting of land in Hong Kong has initially showed signs of return. Some companies and retail brands have incorporated the West Coast Financial City into its expenditure plan in the next three to five years.

Oscar Chung, an analyst at S & P Global Ratings, predicts that with the opening of the residential part, the project will start to contribute to the cash flow of Hong Kong land in 2022 and 2023. "Although the epidemic is still an uncertainty in the near future, we think the progress of the West Coast project is good."

Huang Youzhong said that he only focused on building high -quality houses in 7 cities including Chongqing, Shanghai and Nanjing, and this strategy made Hong Kong get rid of trouble. "China's market dynamics are changing. In the past, you only need to have the courage to act, because fast urbanization will save you anyway. But as the urbanization process slows down, you need to use the appropriate method to do things to do things. Because people are seeking higher quality today. "

Although the Shanghai project has increased the debt of Hong Kong land, its leverage is still relatively low. As of June 30, the net debt of Hong Kong land was US $ 6.1 billion, higher than $ 5.1 billion at the end of 2021 and $ 4.6 billion at the end of 2020. Decrease and stock repurchase decrease.

Although the company's net leverage has climbed from 15%at the end of last year to 18%, compared with the 177%estimated Morgan Chase estimated, this is just a zero. Moody's and S & P maintained the credit rating of Hong Kong land in A3 and A, respectively.

At the same time, Hong Kong's land is also consolidating its status in Southeast Asia, especially in Singapore -the company jointly developed the Marina Bay Financial Center and One Raffles Quay.

In 2021, Hong Kong's land acquisition of three new residential land in Singapore will jointly develop with Guo Lingming's urban development company. These projects are one of the 18 development projects prepared by Hong Kong land in Southeast Asia, including a high -end apartment project jointly developed with ASTRA International, an Indonesian subsidiary of Ieraton Group.

As of 2021, Hong Kong land has more than 850,000 square meters of commercial properties and can develop an area of about 11 million square meters.

Hong Kong is still the base camp of Hong Kong land, accounting for 67%of its real estate assets, and contributed 49%of the potential profits in 2021. In the case of soaring in the number of vacant office, the developer has minimized the vacancy rate.

In a report in July, Real Estate Service Agency, Colliers said that due to the increase in market supply and the decrease in lease demand, it is expected that by the end of 2022, the overall office vacancy rate of Hong Kong will be 10.9%and 11.2%climbed to 13.5%.

The newly developed projects include two high -quality office buildings built by Li Ka -shing's Yangtze River Industry and Li Zhaoji's Hengshi Real Estate. They will be launched next year, and there are only a few neighborhoods from the Central Business Cluster under the Land of Hong Kong.

However, Hong Kong has launched a flexible office space and transformed the basement into a modern gourmet square and pop -up store, thus refreshing the Central investment portfolio with a history of decades. The latest financial report shows that as of the end of June, the fixed vacancy rate of the investment portfolio rose slightly from 4.9%6 months ago to 5.1%.

S & P analyst Ricky Tsang said the number below 7.9%of Central's overall average level reflects the toughness of the investment portfolio.

Huang Youzhong believes that the relatively low vacancy rate of the company is that it has the ability to retain the largest tenant and the pursuit of high -quality pursuit of high -quality in the environment where rent declines.

As of June this year, the weighted average lease due to the top 30 tenants in the investment portfolio of nearly half of the investment group in Central Land in Hong Kong was 5.6 years. Pwa Yongdao and the Hong Kong Stock Exchange. In terms of retail, Hong Kong Land has George Armani, Hermes, LVMH and other customers.

Although a series of incidents in recent years may weaken the status of Hong Kong's global financial centers, and the dilemma of the mainland real estate market is still intensifying, Huang Youzhong is still optimistic about these two most important markets.He believes that the deleveraging of the Chinese government against mainland developers will help restore the long -term health of real estate and create new opportunities."In difficult times, we need to be cautious, but we can't be too conservative. We should still find and explore opportunities, and the crisis will bring opportunities." Huang Youzhong said.■

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