Hong Kong 1980: The Savage Era

Chapter 391 392 [Privatization Process]

It is certain that Wong Yuk-long will reduce his stake in Yuk-long International Group, otherwise he will go bankrupt and his shares will be sold at a low price.

"Let Zheng Jinghan slowly deal with Huang Yulang, but don't relax your data collection on Yulang International Group." Luo Qihong pondered for a moment and continued to ask, "How much cash has the company accumulated so far?"

"It's only 1 million yuan, but the company has no debt. If we face an acquisition, we can borrow some from the bank." Wu Xiaohao said with some difficulty.

In fact, Luo Qihong had asked him to save cash a long time ago, and now he only has this amount, which is really not enough.

Luo Qihong nodded. He was now wealthy and powerful, with tens of billions of yuan in cash, so he would not be short of money from Fujia Newspaper.

He also knew that Wu Xiaohao had tried his best. Although newspapers such as "Tiantian Daily" were very profitable, compared with the securities, stocks and property markets, it was really the difference between an elephant and an ant.

However, the media industry is steady and there are not too many risks.

Stability is above all else.

"What is the current newspaper market situation?" Luo Qihong changed the subject.

Wu Xiaohao said, "Competition in the newspaper industry has become increasingly fierce. Many up-and-coming companies have come to grab the market, and sales have decreased to varying degrees. However, the price of advertising has increased a lot, so it remains in a balanced state."

There is now a significant inflation, and employees' salaries have increased a lot. For example, the monthly salary of white-collar workers in the 80s was two to three thousand yuan, but now it is around six thousand yuan.

Therefore, advertising fees are also increasing, and in the final analysis, Fujia Newspaper's actual profits are decreasing.

Luo Qihong clearly knew that in order to make greater profits, he had to expand his scale, and the best way to expand was through mergers and acquisitions.

"Can we organize one or two acquisitions? Newsprint, magazines will do." Luo Qihong stared at Wu Xiaohao and asked.

Cluck! !
Yu Jichang knocked on the door and came in, holding a few pieces of paper in his hand.

"There should be a newspaper company that wants to sell its publications. I need to investigate it carefully." Wu Xiaohao said.

"Mr. Luo, this is the latest report from the Tiantian Daily." Yu Jichang sat down and couldn't help but glance at Wu Xiaohao.

Luo Qihong took it, flipped through it, and said, "Not bad. The advertising expenses for the first three quarters are about 5 million."

"Editor Yu, how many magazines targeting students are there on the market?"

"There should be more than a dozen. Since the purchasing power of the student group is very low, not many companies are willing to make student-type magazines," Yu Jichang explained.

"Since there is a gap, we can definitely enter the student-type magazine market. Editor Yu, do you have the confidence to do a good job on this magazine?" Luo Qihong smiled faintly.

"I have confidence, but there is really not much money to be made. You may even lose money. Luo Sheng, you have to think it through carefully." Yu Jichang advised.

"How much can the most popular student magazine earn? Approximately." Luo Qihong lit a cigar.

"The net profit of 5% is not as much as that of the worst pornographic magazine, and that includes advertising fees," said Yu Jichang.

"It's indeed very low. What if there are other derivative products?" Luo Qihong smiled.

"Hmm? What derivative products are you planning to sell?" Yu Jichang became interested, thinking that Luo Qihong was not aimless. "Some celebrity cards or something like that, and after collecting all the cards, you can redeem the corresponding prizes." Luo Qihong said, "Of course, we have to share some of the profits with the celebrities, and we can make 7% or 8% of it."

"The corresponding profit ratio needs to be determined after further investigation. If you can ensure that this type of magazine does not lose money, we can use derivatives to make money."

"Okay, I'll prepare it right away." Yu Jichang felt that this new magazine might be able to monopolize student publications in Hong Kong, and might make a lot of money from advertising fees in the future.

The advertising fees of a magazine naturally depend on the sales volume of the magazine itself. If the sales volume is high and the magazine is famous, the advertising fees will not be low, and may even be higher than some well-known entertainment magazines.

Within a field, there are also small fields. If you can become the "number one" in a small field, it will be of great benefit to your personal reputation.

Luo Qihong's purpose was naturally to use this to accumulate funds so that Fujia Newspaper Company could become an independent company without having to rely on his personal strength to do things. Perhaps he could accomplish his pioneering work with his own strength.

Late September

The impact of the stock market crash became increasingly severe. The Hang Seng Index in Hong Kong alone fell to 1500 points, a drop of more than 3900 points from its peak of more than 2400 points.

Some major institutions predict that the Hang Seng Index is very likely to fall below 1000 points next year, or even return to 800 points.

The market value of many companies has dropped by half. Some companies, like Yulang International Group, have a market value of only 2% to 3% of its peak period. If it were not for the real assets supporting it, it would have gone bankrupt long ago.

Although Wah Kwong Properties has many excellent assets, such as the Lijing Centre in Central, the Harbour Crystal Centre in Tsim Sha Tsui, the Golden Plaza in Mong Kok and the Wah Kwong Building, it also has a large amount of debt and is barely able to stay afloat. Its share price has fallen by 55% and its market value is only 16.3 billion yuan.

The Furama Hotels & Resorts fell even more sharply, with only 43% of its peak market value remaining.

Even if these two companies were to be acquired at a premium, their market value would not exceed 6% of their peak period. Once Zhaoan Real Estate Company launched the acquisition, it could be said that it had gained a great bargain.

"Boss, we expect to launch the acquisition in mid-December and privatize Huaguang Real Estate and Furama Hotel at the same time, with a premium of 12%, involving a capital of about 2 billion yuan," Cheng Jianshen reported.

"To what extent do you expect the market value of the two companies to drop by mid-December?" Luo Qihong asked.

"The market value of Huaguang Real Estate Company can be reduced to below 50%, and the market value of Furama Hotel is around 37%. The funds required are the 14 billion yuan mentioned just now." Cheng Jianshen replied.

"Should the company have this amount of funds?" Luo Qihong asked unnecessarily.

"The company has sufficient funds, and we can still do some bargain hunting after the privatization is completed." Cheng Jianshen said, "The main reason is that the severity of this stock market crash was beyond our expectations, which can save us about 3% of our funds."

"Okay, then let's start in mid-December. There's no need to start at the lowest point." Luo Qihong nodded slightly.

"After the successful privatization of Huaguang Real Estate, the company will need to assume Huaguang Real Estate's previous debt of 18.3 billion yuan. How should we deal with this debt?" Cheng Jianshen asked.

Luo Qihong frowned. "What suggestions do you have?"

The market is not booming now, so it is impossible to raise funds through share offering, let alone sell the properties at a low price. This is a big problem.

"Huaguang Real Estate Company previously privatized Legu Properties and owns so many assets in Central. Together with the existing properties, it should be able to survive until the peak season, right?" Chen Zhilong looked at Kang Wenyi and said.

(End of this chapter)