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Chapter 466: Real Estate Promotion
Chapter 466: Real Estate Promotion
The new building developed by Wansheng Real Estate in Causeway Bay, named La Xin Lou, was scheduled to open in July. With the rising property market, prices fluctuated monthly, always increasing. However, for this particular development, Nie Zhan chose not to raise prices and instead sold the units at the same price as three months prior.
By mid-August, the building in Mong Kok was set to open for sales. The lowest floors and less desirable units were discounted by 20 Hong Kong dollars per square foot. Furthermore, there were lucky draws with gifts, and all homebuyers received a souvenir upon their purchase.
News of this quickly spread, and many people thought that Nie Zhan had gone crazy. There were also speculations about whether Wansheng Real Estate was facing financial difficulties, as it seemed unusual to lower prices in such a booming market. When interviewed by reporters, Nie Zhan attributed the decision to the company's high debt ratio, explaining that they wanted to recoup funds early to repay a portion of their debts.
Wansheng Real Estate had indeed incurred a high debt ratio of 68%, far exceeding the normal range, due to their aggressive borrowing for land purchases. Nie Zhan's explanation was plausible enough to gain public acceptance.
Hu Zhifeng had previously advised Nie Zhan against operating with such a high debt ratio and was pleased to see that his advice had been heeded, as evidenced by the efforts to recoup funds and repay debts. Tao Yong, on the other hand, took advantage of the situation and asked Nie Zhan for an internal price when buying two units in Mong Kok for his girlfriend, Shi Xinyu.
After purchasing the properties, Shi Xinyu immediately called Lu Jiaxin: "Jiaxin, guess what I won? I won a gold necklace!"
Wansheng Real Estate had prepared a variety of prizes, including electric fans, rice cookers, gold necklaces, and the grand prize of an air conditioner.
Lu Jiaxin laughed and said, "That's quite some luck you have there!"
Shi Xinyu excitedly replied, "Yes, Tao Yong also said I'm lucky. Jiaxin, let me treat you to afternoon tea tomorrow."
The gold necklace they were talking about was actually quite thin and inexpensive, worth only a few hundred dollars. But it was a good omen, and Tao Yong felt that his fiancee had been having a smooth run of luck lately, so he couldn't help but praise her. For Shi Xinyu, who had often been denied and overlooked, her boyfriend's praise meant more to her than the prize itself.
Lu Jiaxin happily accepted the invitation.
Shi Xinyu, curious, asked, "Jiaxin, aren't you bored staying at home all day?"
Lu Jiaxin laughed and said, "Not at all."
How could she be bored? Her mornings were packed with classes, and after her afternoon nap, she would work on her assignments. Occasionally, she would even have a date in the evening. It was Shi Xinyu who had invited her for afternoon tea; otherwise, she would have been playing tennis.
Shi Xinyu paused before saying, "Mei Tong has to work tomorrow, so I won't be inviting her. I'll treat her separately when she's free."
She still felt that her current lifestyle was the best. She only needed to drop by the store occasionally to check in with the manager, and if she felt like it, she could even help entertain guests. When she didn't feel like going out, she would stay at home or meet up with a couple of friends. Unlike Yu Meotong, who worked from Monday to Friday and sometimes even attended lectures on the weekends, Shi Xinyu knew her friend was improving herself, but it all seemed so tiring!
"Let her know about it then."
"I will."
Soon after hanging up with Shi Xinyu, Lu Jiaxin received a call from Su Heyuan, who wanted to discuss the real estate matter. With the booming property market, everyone was raising prices, but Wansheng Real Estate had not only lowered their prices but also organized lucky draws to attract buyers. Su Heyuan was skeptical about Nie Zhan's explanation of recouping funds to repay debts.
Considering that Su Heyuan had a new building scheduled to open next month, Lu Jiaxin suggested, "It's hard to explain everything over the phone. Come over after work, and we can talk in person."
Su Heyuan, sensing something unusual, was reluctant to wait that long. "I'll come over now."
"I have a class right now, so I don't have time. Come by during lunch instead." Lu Jiaxin reminded him, knowing that a visit now would be pointless as she didn't have the time for an in-depth discussion.
"Alright, then I'll come for lunch," Su Heyuan agreed, remembering that she had a class in the morning.
Knowing his fondness for sashimi, Lu Jiaxin smiled and said, "Perfect timing! Feng Qinglei just sent over some bluefin tuna and Australian lobster, so you're in for a treat today."
Su Heyuan arrived at the Lu family mansion just as Lu Jiaxin finished her class. She wasn't particularly hungry, so she led him to the study instead.
Su Heyuan asked eagerly, "Why did Nie Zhan decide to sell the properties at a discounted price?"
Taking a sip of water, Lu Jiaxin replied slowly, "As reported, it's to recoup funds and reduce the debt ratio."
"And?" Su Heyuan prompted.
Lu Jiaxin smiled and said, "The debt ratio is 68%, which is extremely high. Not only will the funds from the property sales be used to repay debts, but next month, there will also be another round of fundraising. The money from that will also go towards debt repayment."
Wansheng Real Estate had conducted similar fundraising campaigns in the previous two years. However, the upcoming fundraising round next month was orchestrated by Lu Jiaxin. Of course, the funds raised would not be used for debt repayment but instead for bottom-fishing opportunities after the impending stock market crash, with the intention of profiting and then acquiring more land.
Su Heyuan asked, puzzled, "A debt ratio of 60% is considered healthy for the real estate industry. With the proceeds from these two buildings, the debt should be mostly cleared, right?"
Instead of answering his question directly, Lu Jiaxin asked, "How much money have you invested in the stock market?"
Without hesitation, Su Heyuan replied, "I've bought 4.6 million worth of stocks, and so far, I've made a profit of over 2.4 million. My grandfather said that the stock market is getting a bit too heated, so he advised me to sell half of my holdings. I've already instructed my stockbroker accordingly, so I'll be getting my principal back soon."
No wonder Su Heyuan's grandfather had managed to emerge unscathed from the stock market crash years ago. His level of prudence was admirable and far beyond that of most people. While many felt uneasy about the overheating stock market, greed often got the better of them, leading them to desire even more profits.
Lu Jiaxin explained, "Just like your grandfather, Nie Zhan also feels that the stock market is too heated right now. That's why he wants to quickly recoup funds to repay a portion of the debts. With such a high debt ratio, if there's a significant fluctuation in the stock market, the bank will come knocking for debt repayment."
"So, Nie Zhan also thinks the stock market is overheated?" Su Heyuan asked.
Lu Jiaxin countered, "Don't you think the stock market is overheated?"
Su Heyuan's uncertainty mirrored his own doubts. That was why he had heeded his grandfather's advice to sell half of his stock holdings by the end of the month. Knowing that Lu Jiaxin had a knack for financial matters, he asked, "Have you also invested significantly in the stock market? Are you planning to sell everything next month?"
Lu Jiaxin didn't hide anything from him. "I'll be selling all my stocks next month, and the stock index futures will also be closed out by then. I've made quite a profit this time, but we mustn't be greedy. Otherwise, we might end up crying if we get stuck with losses."
Upon hearing this, Su Heyuan immediately said, "Then let me know when you're selling, and I'll sell everything too."
"Sure," Lu Jiaxin agreed.
Su Heyuan asked, "Jiaxin, do you think I should also organize a promotional event?"
As the second largest shareholder, Lu Jiaxin was well-informed about Yuan Sheng Real Estate's situation. Their debt ratio was 46%, which was considered healthy for the industry. However, with the impending stock market crash, it would be wise to sell the properties earlier and recoup the funds. Otherwise, when the crash happened, many people would suffer losses and wouldn't be in a position to buy properties. This would result in the company having to pay high-interest rates to the bank, increasing their costs.
Lu Jiaxin smiled and said, "The gifts don't cost much, but some people are frugal by nature. When the prices and locations are similar, they will definitely choose the one with the added perks."
Su Heyuan thought about it and decided to follow Lu Jiaxin's suggestion, planning to organize a promotional campaign next month. With the funds recouped, he could either repay debts or stockpile land.
(End of Chapter)
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