Chapter 314: Wealth Report of 1962 (Part 2)
"Alright," Wang Fengzhi continued, "shall I report on the status of Changxing Real Estate?"
"Go ahead," Yang Wendong replied.
Wang Fengzhi explained, "Changxing Real Estate is currently divided into two segments: Changxing Real Estate and Changxing Properties. In the past year, Changxing Real Estate developed 14 residential communities and 4 commercial office buildings—all of them sold as presale units.
The total floor space sold reached 2.7 million square feet, with total sales revenue of HK$110 million, and a net profit of approximately HK$9.4 million."
"Hmm, looks like a low profit margin," Yang Wendong nodded, "but considering it's all financed through loans and presales, the actual capital outlay was minimal."
Real estate was a unique industry. If you calculated profit as a percentage of total sales revenue, it never looked high. But the sector was driven by leverage. With good bank relationships, developers could get up to 80% financing, and presale income from unbuilt apartments provided even more liquidity. Aggressive developers could leverage $1 of their own capital into $20 of investment.
In terms of actual capital invested, the returns were often several times over.
Wang Fengzhi agreed, "Yes, and we've been able to recycle the same capital across multiple projects."
"Good," Yang Wendong nodded. "Now, what about Changxing Properties?"
Wang Fengzhi said, "Last year, Changxing Properties invested heavily in acquiring real estate in Kwun Tong, Tsim Sha Tsui, Causeway Bay, Admiralty, and Central, with a total investment exceeding HK$100 million.
Of that, around HK$30 million was transferred from Changxing Industries; the rest came from loans. The current model is 'rent-to-pay,' and while it's tight, it's manageable.
At present, Changxing Properties holds a total commercial space of 5.5 million square feet in Hong Kong—2.3 million on Hong Kong Island and 3.2 million in Kowloon. We also own 1.4 million square feet of industrial property, split roughly evenly between the two regions."
Yang Wendong asked, "Land Holdings owns around 8 million square feet of property, right?"
Wang Fengzhi nodded. "Yes, Hongkong Land is the largest property holder in Hong Kong. Most of its properties are on Hong Kong Island and in top-tier locations—about half are in Central alone."
"Then Changxing Properties still has a long way to go," Yang Wendong smiled. "Jardine's underlings like Wheelock Wharf also own a huge amount of space—even if it's not quite as much as Hongkong Land, it's not far off."
Despite his rapid development, Yang Wendong knew he was still some distance from the old British conglomerates that had controlled Hong Kong's economy for nearly a century.
Wang Fengzhi added, "Yes, we're still behind in terms of holdings. But profitability is a different story. According to Jardine's public financials, many of their ventures—especially overseas—are losing money."
Yang Wendong nodded. "That's true. But big firms like that have many ways to legally shift profits around. You can't just look at their published financial statements."
"Understood," Wang Fengzhi replied. "Still, I believe our group is now on the same level as Jardine. If we were a British firm, we'd already be considered a top-tier trading house in Hong Kong."
"Maybe so, but I don't plan to go public anytime soon. And let's not disclose our financials too openly," Yang Wendong said with a shake of his head.
During the colonial era, even though the government was trying to court Chinese business, most Chinese conglomerates kept a low profile. Take the Ho Tung family in the 1930s—they acted boldly, but never publicly released their assets or profits.
By contrast, Liu Po-shan, who regularly disclosed his wealth to attract idle capital, ended up getting "butchered" by opportunists.
"I understand, Mr. Yang," Wang Fengzhi said. "All group-level financials are strictly confidential. Other than a few key people, most employees only know figures relevant to their own divisions."
"Good." Yang Wendong nodded.
Wang Fengzhi added, "Still, given the scale of our operations and property holdings, anyone who really wants to investigate could estimate a rough figure."
"Let them," Yang Wendong said casually. "I've already talked to several newspapers—told them not to report too much on Changxing Group.
A large enterprise can't be completely hidden, but public perception can be controlled. If no one is reporting on it, and if few people are investigating, who really knows how big the group is? And even if they do, they can't spread that information easily."
To the general public, a business might seem "very big," but how big? They wouldn't know.
"Understood," said Wang Fengzhi. "Next up is Changxing Shipping. You're already aware of the ship count. Excluding the new ships ordered at the end of the year, we had 37 vessels.
Half of our second-hand ships are transporting water, the other half are carrying goods for Changxing Industries. On the return trips from Europe and America, they bring back small shipments—none of it very profitable. After accounting for loan repayments, annual net profit was HK$10.28 million.
As for the five new ships we leased to Japanese companies, total rental income was US$3.7 million. After deducting operating costs and loans, net profit was US$1.4 million, or roughly HK$7.5 million."
"Mm. The profit margin on new ships really is higher," Yang Wendong nodded.
This was why most shipping companies, once they had capital, preferred to buy new vessels. Higher returns and better efficiency.
If not for his plans regarding the Middle East crisis, he too would have done what most shipowners did—buy new ships.
Wang Fengzhi added, "Yes, and the operations are much simpler. We just ensure the ships run smoothly.
As for the second-hand fleet, it's a special case—mainly hauling water and suitcases. Neither is high-margin. Return cargo from the West is scarce. Without that, our total annual profit could easily hit HK$15 to 20 million."
"Right. Once the drought is over, things will improve," Yang Wendong said. Then he added, "After the holiday, I'll discuss with Old Wei whether we can raise the shipping rates a bit. Changxing Industries is profitable enough now."
The original purpose of founding Changxing Shipping was to lower logistics costs for Changxing Industries' rolling suitcases.
Back then, Changxing Industries was the group's foundation, and its numbers had to look as good as possible.
Now, although it remained critical, the group had diversified. It was time to optimize across the board.
Wang Fengzhi added, "That would help. The year-end purchase of new ships means next year's debt pressure will increase significantly. Even if we don't shift profits, we may still need to transfer funds from Changxing Industries."
"Yes. Debt pressure next year will be heavy," Yang Wendong acknowledged.
Before delivery, a ship didn't require much cash up front. These large deals were paid in phases. But still—US$50 million is no small number. Even a 10% initial payment was a major strain.
That's why so many shipping firms struggled to expand rapidly. Without deep capital reserves, even bold visionaries with complete confidence in the market had no choice but to grow slowly, step by step.
"But once we make it through," Wang Fengzhi said with a smile, "once the ships are delivered, profits will skyrocket. Especially from oil tankers—their rental income is far higher than that of regular cargo ships."
"Exactly. Otherwise, who'd dare to invest this much in the first place?" Yang Wendong nodded.
A 120,000-ton oil tanker cost more than US$10 million. In this era, if you couldn't make that back in three years, your operations were just bad.
Japanese leasing companies were already offering US$8 million per year for chartering, while Changxing Shipping only needed to handle operations and maintenance. After deducting expenses and taxes, the rest was pure profit.
Tycoons like Tung Hao-yun, who ran their own logistics, could make over US$1 million from a single run to Europe or the U.S. with a full tanker—and sometimes much more.
Once the Middle East crisis hit, those numbers could double or triple.
Wang Fengzhi moved on to summarize, "Mr. Yang, Changxing Industries, Changxing Real Estate, and Changxing Shipping are the group's core pillars right now. After that comes Changxing Media, which brought in HK$4.8 million in revenue last year, with HK$2.5 million in profit.
The main growth driver was Oriental Daily, which surpassed 30,000 daily copies sold. Also, the commercial radio station saw its listener base triple, thanks to falling radio prices, which significantly boosted advertising revenue."
"A 50% profit margin—not bad at all," Yang Wendong smiled.
Wang Fengzhi nodded. "That's right. It helps that we own most of the real estate, which cuts a big chunk out of costs compared to other media companies. And we've kept pace with Hong Kong's growing economy. More readers means more advertisers. Compared to last year, profits more than doubled."
"Good work," Yang Wendong said, pleased.
Wang Fengzhi added, "The only issue is that Changxing Media's reach is basically limited to Hong Kong. Given the nature of the local news industry, we may already be at our ceiling—unless Hong Kong's economy and population grow further."
"This year, I plan to expand Oriental Daily abroad," Yang Wendong said. "We'll push into other countries. But yes, it won't be easy. Sing Tao Daily tried that and did okay, but even they didn't have great results."
"Exactly. Hong Kong newspapers are tailored to local readers," Wang Fengzhi explained. "To go abroad, we'd need to rewrite most of the content. It would be like starting over. And some countries impose strict controls on foreign media."
"Right," Yang Wendong agreed. "That's why we shouldn't expect too much in the short term. Rather than betting on overseas newspaper expansion, we should focus on Changxing Culture. Cultural products—stories, characters—are more universally appealing."
In his previous life, the only media companies that succeeded internationally were backed by powerful political forces—mainly American capital. Without it, it was almost impossible to influence public opinion abroad.
The UK, while still powerful in this era, wasn't about to endorse Chinese firms from Hong Kong.
Wang Fengzhi said with a smile, "My kid loves Calabash Brothers."
"Exactly. Animation, movies, novels, TV dramas, music—those are the true vessels of cultural exports," Yang Wendong nodded.
Even in the U.S., culture wasn't exported through news organizations. It was Hollywood and American TV shows that carried the cultural payload.
After all, even when media outlets were controlled by U.S. capital, they were under scrutiny. Within the U.S. itself, media companies had to battle for public opinion. But film and television? As long as it wasn't breaking laws, cultural messaging could be broadcast freely—hidden in plain sight.
Wang Fengzhi continued, "At Changxing Culture, the weekly manga magazine—distributed in Hong Kong and Taiwan—sells about 30,000 copies per issue. But the accompanying sticker line has already sold over 6 million pieces.
Both revenue and profit from the stickers far exceed the comics themselves."
"Of course," Yang Wendong said. "And that's just stickers. We haven't even launched toys yet. After the New Year, we'll push into Southeast Asia's Chinese communities."
A single sticker cost only a few cents. That made it an easy, low-resistance purchase—perfect as a high-volume derivative.
Once a comic magazine was sold, the profit ended—unless they published a collected volume. But stickers? They could be sold indefinitely. People often bought duplicates, and Changxing could endlessly release new variations.
Toys followed the same logic.
Wang Fengzhi laughed. "Even so, Changxing Culture only made about HK$200,000 in net profit last year. Not a lot, but based on current trends, it'll surpass Changxing Media by next year."
"Exactly. This is a trend-driven business. Short-term profit isn't important," Yang Wendong said.
For Changxing Real Estate, Industries, and Shipping, capital operations mattered—they needed heavy bank loans, so profitability was essential.
But other ventures—like culture and media—were all about long-term trends and growth potential.
"Alright, next we have Rongyao Electronics, Watsons, and Carrefour," Wang Fengzhi continued. "Rongyao is now profitable, thanks to the electric mosquito swatter and electric kettles, bringing in HK$370,000 last year.
We're also preparing to expand into Taiwan and markets beyond Hong Kong. Plus, the rice cooker is now on sale.
Sales should grow rapidly this year. The only uncertainty is the R&D costs in the U.S.—I can't give an accurate figure for that yet."
"No problem. Electronics is an R&D-heavy industry," Yang Wendong said. "R&D investment in the U.S. is absolutely necessary.
Even if we lose money for a few years, it doesn't matter. If we succeed, the return on investment will be tenfold—maybe even a hundredfold."
Their U.S.-based R&D was currently focused on developing the magnetron for microwave ovens. The basic tech already existed, but miniaturization was the challenge.
It was one thing to have an idea in your head—actually building a functional prototype was something else entirely.
Even future giants like Sony, Apple, and Samsung had to carefully choose their R&D directions. A misstep could lead to enormous losses and wasted time. For example, many Japanese tech giants in the early 2000s bet on plasma TVs, only for the market to go in a different direction. A decade later, many of the same firms bet heavily on hydrogen fuel cells for vehicles—and again came up short.
To hedge their bets, some big companies invested in multiple R&D directions, knowing full well that some would fail.
But a time traveler like Yang Wendong had no such uncertainty. Once he identified the correct path, he could go all in. This massively lowered R&D costs and gave him a key advantage in tech development.
The only regret? Hong Kong lacked enough engineering talent. That's why all advanced R&D had to be based in the U.S. for now.
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