Chapter 490: Even the Rich Have Troubles
Chapter 490: Even the Rich Have Troubles
Wang Sheng Real Estate secured a plot of land worth over 8 billion yuan in one go, and their investment department was still in the process of negotiating for two old buildings and three plots of land.
Real estate companies typically need to pay a minimum down payment of 20% when purchasing land, and the rest can be financed through bank loans. However, according to Wang Sheng Real Estate's financial reports (as a listed company, their finances are transparent), this move clearly exceeded their cash flow.
Mr. Hu was puzzled and called Hu Zhifeng to inquire, "Wang Sheng Real Estate recalled a portion of their funds before the stock market crash to repay bank loans. With just over a billion yuan in liquid assets, how are they able to afford such large land purchases?"
Hu Zhifeng was equally clueless. "I chatted with Nie Zhan about this two weeks ago while playing golf. He mentioned that they didn't have sufficient funds, otherwise, they would have seized the opportunity to hoard more land."
However, Wang Sheng Real Estate's recent aggressive moves didn't seem to reflect any financial constraints. Having known Nie Zhan for over a decade, Hu Zhifeng knew he wouldn't deceive him, nor was there any need to.
Noting his son's bewilderment, Mr. Hu instructed, "The auction for the Tsim Sha Tsui land is next month. Invite him for a meal and subtly inquire about his plans. Find out if he intends to bid for that land as well."
Mr. Hu also wanted to acquire more land, but the recent stock market crash had caused their company's stock price to plummet, and he intended to repurchase some of the stocks. Moreover, he had his eyes on the Tsim Sha Tsui land for a while, and the company needed to retain some working capital. It was impossible to emulate Nie Zhan's massive land acquisition strategy. Such a move would be too risky, and in the event of significant fluctuations in the real estate market, the monthly interest payments would become a major burden.
"Will do," replied Hu Zhifeng.
Upon returning to his office, Hu Zhifeng called Nie Zhan to arrange a game of golf over the weekend.
Nie Zhan suggested with a smile, "Are you free tonight? I heard that Fulingmen has introduced several new dishes. Feng Qinglei went there and raved about the flavors. How about we go there for dinner tonight?"
Hu Zhifeng exclaimed in surprise, "Dinner tonight? Aren't you spending the evening with Lu Xiaojie?"
Ever since Nie Zhan started dating, it had become challenging to schedule get-togethers with him. It was only because their wives had become good friends that they now had more opportunities to meet as couples.
Nie Zhan seemed surprised as well, apparently unaware that Lu Jiaxin was not in Hong Kong City. It seemed that Zong Shimeng hadn't been in touch with Lu Jiaxin lately. He explained, "Jiaxin had to travel back to the mainland due to some matters, and she won't be returning for a while."
Only then did Hu Zhifeng understand why Nie Zhan was available, "My eldest son sprained his ankle a couple of weeks ago, and last week, my younger son caught a cold and had a fever. Both of them are fine now, but your sister-in-law has worn herself out taking care of them."
"Jiaxin might have left in a hurry and forgotten to inform your sister-in-law," Nie Zhan said.
Hu Zhifeng chuckled, "Or perhaps your sister-in-law forgot to mention it to me in the midst of her busyness. Nie, shall we invite Tao Yong and Fu Yan as well?"
"Tao Yong is probably not in the mood these days, so let's not bother him. As for Fu Yan, he's engaged now, so let's not disturb him either. It might ruin his dinner if his fiancee shows up," Nie Zhan replied.
Lu Jiaxin hadn't complained to him about the previous incident, and Nie Zhan, being a man, didn't pay it much mind. However, during one of their tennis gatherings, the woman had shown up and they'd ended up arguing.
During their dinner that evening, Hu Zhifeng commented on Nie Zhan's recent bold moves, "Nie, you certainly have guts! Snatching up so many plots of land all at once. I wanted to do the same, but my father thought it was too risky and turned down the idea."
There was a hint of frustration in his tone. He trusted Nie Zhan's judgment that the Hong Kong City property market would remain robust, and this was indeed a golden opportunity to acquire more land. However, his father had rejected the idea due to concerns about the company's cash flow. In reality, it wasn't a matter of insufficient cash flow, but rather his father's reluctance to increase the company's debt burden.
Nie Zhan shared, "My grandfather used to be conservative as well. He opposed the company's fundraising efforts through rights issues in the past two years, thinking it was too aggressive. Fortunately, when I took over the company, I requested that all shares be transferred to my name. Otherwise, I would have faced constraints too."
With the shares in his hands, the old man could only stand by and watch as the company followed the development strategy that Nie Zhan had formulated. However, seeing the tremendous success of Wang Sheng Real Estate, as well as their forays into hotels, jewelry, and clothing, the elder Nie eventually let go of the reins completely. This time, he didn't interfere with the rights issue in September.
Hu Zhifeng smiled and changed the subject, "Enough about that. Nie, are you going to participate in the government's auction for the Tsim Sha Tsui land next month?"
Nie Zhan nodded, "Xin Xin Real Estate will be bidding, but Wang Sheng Real Estate won't be involved."
It's not that they didn't want to participate, but they simply didn't have the financial means to do so anymore. Fortunately, Xin Xin Real Estate had ample funds, and they should be able to secure that piece of land.
Hu Zhifeng was taken aback, "What? Xin Xin Real Estate is bidding? They mainly handle leasing and don't have the capabilities to develop properties."
Nie Zhan smiled, "Xin Xin Real Estate will secure the land, and then we'll collaborate with Wang Sheng Real Estate for the development."
Recalling what Nie Zhan had said earlier, Hu Zhifeng suddenly understood, "So, Miss Lu told Shimeng that she made 79 million in the stock market, but it's more than that, right?"
Most of Lu Jiaxin's wealth was tied up in several companies, and having a cash flow of one or two hundred million was already impressive. For her to make such a bold move, she must have made a killing in the stock market, just like Su Heyuan.
Nie Zhan didn't want to take credit away from Jiaxin, so he explained, "She did make that amount in the stock market, but she also mortgaged the stocks of several companies and Wang Sheng Real Estate to obtain a loan. That money was then used to short the Hang Seng Index."
Hu Zhifeng was a well-traveled man, but even he was astonished by this news, "Shorting the Hang Seng Index? That's an enormous profit!"
"Yes, more than four times the initial investment," Nie Zhan confirmed.
Hu Zhifeng's composure wavered as he processed this information. Four times the investment—even with a loan of four to five hundred million, she would have made a profit of over two billion. No wonder they could afford to buy so much land.
Fortunately, Hu Zhifeng was also a third-generation rich kid who had weathered many storms. He quickly regained his calm and smiled, "Nie, you didn't even mention such a big move to me?"
Nie Zhan sighed, "I strongly opposed her decision, but she wouldn't listen and insisted on going through with it. I was helpless."
"You don't agree with her approach?" Hu Zhifeng asked.
Nie Zhan admitted, "I didn't invest a single cent. I've prepared the funds to redeem the Wang Sheng Real Estate shares when she inevitably faces margin calls and loses everything."
Realization dawned on Hu Zhifeng, "So, Su Heyuan followed Lu Jiaxin's lead?"
Nie Zhan didn't hide the truth, "Su Heyuan believes that Jiaxin has good fortune when it comes to finances, so he follows her investments. The last time with foreign exchange was also because of her. However, that time she listened to my suggestion. This time, she wanted to take the risk herself, but at least she promised not to be so impulsive in the future."
(End of Chapter)
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