Chapter 583: Golden Potential Stock

As soon as this question was asked, Bao Yugang and Huo Yingdong both stopped eating and drinking, staring intently at Xia Yu.

"Xia Yu, are you planning to acquire Hong Kong Electric Company?" Bao Yugang inquired.

Xia Yu calmly admitted, "Yes, I have this idea."

Suppressing his inner surprise, Bao Yugang nodded and said, "My Luk Fung International Company holds 7.6% of the shares in Hong Kong Electric Company. I'll transfer them all to you. I'll have my people organize the details when I get back."

"Old Bao, thank you!" Xia Yu said with a smile, showing his gratitude.

"No need for thanks between us, that would be too formal!"

"By the way, Xia Yu, since MacLehose returned from his trip north, some of the British capital is becoming uneasy and considering retreating to the UK. It seems a few of the directors at Hong Kong Electric have the same inclination. Should I step in to help you acquire their shares?" Bao Yugang suggested with a smile after some thought.

As a director of Hong Kong Electric, though not deeply involved in the company's operations, Bao Yugang had maintained good relationships with other directors over the years. Whether British or Chinese, he was on good terms with them.

Now that Xia Yu was planning to acquire Hong Kong Electric, Bao Yugang was willing to offer his assistance, especially since Xia Yu had helped him a lot in the past, and he felt indebted. Even though Xia Yu didn't seem to mind, Bao Yugang couldn't help but keep track and felt uncomfortable not returning the favor.

Seeing Bao Yugang offering his help, Huo Yingdong couldn't stay indifferent. Coincidentally, he also had connections that could be useful. Three Chinese shareholders in Hong Kong Electric had good relations with him, and one of them was even a fellow countryman. Although Hong Kong Electric was just one of their investments, Huo Yingdong believed that with his influence, acquiring their shares shouldn't be an issue.

Huo Yingdong immediately said, "Xia Yu, I should be able to help with this. I can reach out to acquire some shares for you."

Xia Yu's face lit up with joy. "That's great! Old Huo, thank you!"

"No need to thank me! You've helped me so much, and I haven't had a chance to return the favor. I've been feeling restless about it!" Huo Yingdong said with a laugh.

"Old Huo is right. You've been looking out for us all along, and it's been weighing on our conscience!" Bao Yugang joked, making Xia Yu laugh.

"Ha ha..."

"Let's not talk about it. Here's to our everlasting friendship!" Xia Yu raised his beer, and the three clinked glasses and drank heartily.

After drinking, the three continued discussing Hong Kong Electric.

"Xia Yu, Hong Kong Electric was once one of the top ten British companies. However, it seems the stock price has dropped significantly now. Are you planning to enter the power industry, or are you looking to bolster your real estate portfolio?"

"Both, I'd say. Hong Kong Electric holds many valuable land assets. Besides, with the recent surge in oil prices driving up their power generation costs, their stock price has dropped, making it a good time for acquisition," Xia Yu explained without hiding his intentions.

Since Bao Yugang and Huo Yingdong intended to help with the acquisition, it was clear they had no intention of competing with Xia Yu for Hong Kong Electric. So there was no harm in sharing his plans.

After Xia Yu's annexation of Wharf, many Chinese capitalists in Hong Kong realized the enormous value in British companies. However, most Chinese capitalists didn't have the resources to accomplish what Xia Yu had. Although Bao Yugang and Huo Yingdong were powerful, directly competing with the original four major conglomerates was risky. However, acquiring second-tier or even lower-tier British companies was entirely feasible, so there was no need to offend Xia Yu by vying for Hong Kong Electric.

The two nodded in understanding. Huo Yingdong thought for a moment and then offered some advice: "Hong Kong Electric is currently building a large fuel-fired power plant on Lamma Island, which is a significant investment and is expected to be completed by 1981. Xia Yu, if you're interested in the power industry, why not consider acquiring China Light & Power Company? They control over 70% of the power market in Hong Kong and are also building a new power plant. It will be tough for Hong Kong Electric to catch up to them."

Xia Yu smiled lightly and said, "It doesn't matter if the market is small. With lower immediate returns, the acquisition cost is also lower. However, Hong Kong Electric holds the exclusive power supply rights for Hong Kong Island. At worst, I'll increase investment later to expand the power plants."

"China Light & Power is in the hands of the Kadoorie family. Their shares aren't as dispersed as Hong Kong Electric's, so acquiring them would be much more difficult."

Hong Kong's power market has only two giants: Hong Kong Electric Company and China Light & Power Company. Hong Kong Electric was founded earlier, in 1889, when Hong Kong's economy and population were almost entirely concentrated on Hong Kong Island, with the New Territories and Kowloon still underdeveloped. Hong Kong Electric held the exclusive power supply rights for Hong Kong Island.

As Hong Kong Island developed and the company's operations were confined to the island, Hong Kong Electric began diversifying into real estate and engineering, with power no longer being its only pillar.

However, most of Hong Kong Electric's power plants were oil-fired, which caused significant air pollution. As Hong Kong Island grew, the power plants in the northern part of the island began affecting the health of urban residents, leading to many complaints. Because of this, last September, under pressure from the government and public opinion, Hong Kong Electric was forced to relocate its power stations from the urban area and start building a large power plant on Lamma Island.

Even though the real estate industry is looking up, the enormous investment in the power plant, coupled with the government's pressure and public dissatisfaction, forced Hong Kong Electric into making this significant investment. Adding to their woes, the revolution in Iran led to a surge in global oil prices, further increasing their costs. However, their electricity prices were fixed under an agreement with the government, so while their revenue remained stable, their profits plummeted.

Even the new power plant on Lamma Island was overshadowed by this crisis.

The capital market is highly sensitive, which is why Hong Kong Electric's stock price dropped against the market trend.

The other giant in Hong Kong's power market is China Light & Power Company, established by Paul Chater and later taken over by the Kadoorie family, who have maintained majority control. Over the years, it has become one of the Kadoorie family's three main businesses.

China Light & Power was established in 1922 and holds the exclusive power supply rights for the New Territories and Kowloon. As these areas developed and more people moved there, the demand for electricity skyrocketed, giving China Light & Power over 70% of the power market.

China Light & Power is also building a new power plant in Tuen Mun, New Territories, in cooperation with ExxonMobil's subsidiary, Oriental Energy Company. The new plant is coal-fired, which is more environmentally friendly compared to oil-fired plants.

Although coal transportation is more challenging, coal-fired power generation is more stable than oil-fired, given the greater volatility in oil prices compared to coal.

To be honest, Xia Yu was also tempted by China Light & Power. However, as he mentioned, acquiring it would be much more challenging. After careful consideration, he decided to focus on acquiring Hong Kong Electric first.

Hong Kong Electric was currently in a downturn due to various factors. However, if history followed its usual course, the company would see a significant surge in the 1980s due to the booming real estate market, with its market value surpassing 10 billion, making it one of the top ten British companies in Hong Kong.

Such a golden potential stock is definitely worth grabbing.

Moreover, the power industry is a public service that directly affects people's lives. Acquiring Hong Kong Electric would significantly increase Xia Yu's influence on Hong Kong Island, impacting thousands of households.