Chapter 944: Hunting for Two Bus Companies

Just as Xia Yu was sipping his tea, Wang Qi walked in with a folder and said, 'Chairman, I've brought over the information on the Kowloon Motor Bus Company and the China Motor Bus Company. There are only these two bus companies in Hong Kong, so I might as well bring them both over, in case they're useful.'

'Yes, just bring them over, we'll look at them together later,'

Xia Yu smiled and said, 'Sure, just bring it over. We'll take a look at it together later.' He then took the folder, opened it, and the words 'Kowloon Motor Bus Co., Ltd.' came into view on the cover.

He took out the file, and left the other file with the words 'China Motor Bus Co., Ltd.' in the box for the time being.

He opened the cover and quietly began to read.

The bus service industry in Hong Kong also has franchises. Kowloon Motor Bus Company (1933) Limited, founded in 1933, has the franchise for the bus industry in Kowloon and the New Territories. At the beginning of its establishment, it was jointly funded by Tang Shiu Kin, Lui Sui Tak, Lui Leung, Tam Woon Tong and Lam Ming Fun.

After more than 40 years of development, Kowloon Motor Bus now has more than 1,700 buses.

In the past, Kowloon Motor Bus's profits were considerable and stable, and shareholders received good year-end dividends, which was very popular with investors.

However, in 1975, the Hong Kong government, considering the impact of the bus industry on people's livelihood, ordered the implementation of profit control, limiting the annual return rate to no more than 16%, which deprived Kowloon Motor Bus of the right to raise prices.

As a result, the profit of Kowloon Motor Bus Company (1933) Limited plummeted, and shareholder dividends were reduced. Since then, the stock price of Kowloon Motor Bus Company (1933) Limited has been weak.

Facing this situation, the founders, the Tam and Lam families, successively reduced their holdings and even considered withdrawing from the bus industry and investing the capital in more promising industries.

Nine years later, the market value of Kowloon Motor Bus Co. Ltd. is only about HK$420 million.

No, considering the current plunge in the share price of Kowloon Motor Bus Co. Ltd., the market value has now fallen below HK$400 million.

Of course, Kowloon Motor Bus Co. Ltd. is a company that has been established for more than 40 years, so in theory, its hard assets should not be lacking. In particular, bus companies occupy a lot of land, so their assets should definitely not be worth just a few hundred million Hong Kong dollars.

However, in reality, in 1961, Kowloon Motor Bus Company (1933) Limited was split up, with the bus business remaining with Kowloon Motor Bus Company (1933) Limited and the original real estate construction business being spun off to become Kowloon Development Company Limited.

After the split, Kowloon Development Company Limited was mainly owned by the Lei and Ng families, the original shareholders of Kowloon Motor Bus Company (1933) Limited.

However, despite the split, KMB still owns a lot of land, which is being exploited in a borderline manner by the people at the helm of KDC and the Lui family, the largest shareholder of KMB.

The current shareholder structure of KMB is as follows:

The Lui family, the largest shareholder, holds 20.33%.

Founder and current Chairman of the Board Tang Shiu-hing holds 9.75%.

The Yu family, which invested later, holds 9.64%.

The fourth largest shareholder and founder's family, the Ng family, holds 9.45%.

The fifth largest shareholder and founder, the Tam family, holds 8.48%.

The sixth largest shareholder and founder, the Lam family, holds 7.46%.

In addition, there are 34.84% of shares in circulation, held by financial institutions and individual investors who are not on the board of directors.

Unless financial institutions and individuals voluntarily disclose their holdings, no one knows who holds them as long as they do not reach the 5% threshold.

For example, Jiuding Securities Company had previously bought 3.75% of the shares, totalling 3.45 million shares.

Jiuding Securities Company did not have to disclose its shareholding, but it did so voluntarily in order to make it easier for buyers to find them if they wanted to buy or sell in the future.

Other financial institutions that are not interested in hostile takeovers will generally disclose their shareholdings voluntarily, because after all, the point of buying shares is to make money, so why not show them off?

After reading the information on the Kowloon Motor Bus Company (1933) Limited, Xia Yu took out the documents on the China Motor Bus Company and read them.

The China Motor Bus Company Limited was established even earlier, in 1924, and initially operated bus services on the Kowloon Peninsula and in the New Territories. Later, in 1933, after the British Hong Kong government implemented bus franchises, it obtained the exclusive right to operate bus services on the more prosperous Hong Kong Island.

Unfortunately, just last year after MacLehose went north, the question of Hong Kong's future was laid bare, and the Hong Kong government announced the construction of the MTR Island Line. These two uncertain factors made the Yan and Wong families, the founders of China Motor Bus Company Limited, feel insecure, and they became conservative in running the company.

A typical incident last year was that China Motor Bus Co. Ltd. had to discount a batch of buses that needed to be returned for purchase. It had originally planned to purchase 50 buses, but only ended up purchasing 32.

What is more, the Yan and Wong families have already begun to reduce their holdings and cash out their shares.

Investment institutions with a keen sense of smell have already begun to vote with their feet.

As of now, the market value of China Motor Bus Co. Ltd. is only about half that of Kowloon Motor Bus Co. Ltd., at HK$230 million.

In terms of shareholder structure, the earlier established China Motor Bus Company Limited is less fragmented than the later established Kowloon Motor Bus Company Limited. The Yan family, the founder of the former, holds 24.74% of the shares, while the Wong family, the founder of the latter, holds 22.12%.

In addition, there are some small shareholders holding some equity, and the rest are scattered among financial institutions and retail investors.

So overall, the acquisition of China Motor Bus Company Limited is even less difficult!

After closing the file, Xia Yu already had a good grasp of the situation of the bus industry in Hong Kong. After thinking for a moment, he looked at Wang Qi and commanded:

'Wang Qi, I have a task for you. Acquire Kowloon Motor Bus Company Limited. The big strategy needs the bus piece of the puzzle!'

'This is a rare opportunity.'

Wang Qi was not surprised. He knew when Xia Yu first arrived that Kowloon Motor Bus Company Limited would be the target of the acquisition.

As for the reason for the acquisition, Xia Yu didn't say, but after the strategic meeting of the consortium, he was able to guess something.

In the 'One Core, Six Pillars' strategy, the trade and logistics industry, and the tourism service industry all need the support of the bus business. Especially the tourism service industry, convenient transportation can drive the tourist and retail business's urgent need for customer flow.

In addition, there should be a calculation of the real estate industry. After all, Kowloon Motor Bus has a lot of land, and it is better to get it and not develop it than to let someone else buy it and develop it.

Moreover, transportation is an important factor affecting the real estate industry. If transportation is convenient, the houses along a transportation line will sell well, and the originally low land prices will rise.

If you think about it the other way around, as long as Kowloon Motor Bus Co. is in hand, it is entirely possible to vigorously open new transportation lines. By then, the importance of the city's houses will lose the huge advantage of convenient transportation.

Originally, it took an hour or two to travel from the suburbs to the city centre, but after the bus line is opened, it can be travelled at any time, reducing the time to ten or twenty minutes. For many residents, the difference between the suburbs and the city centre is not significant. At most, it means spending an extra ten or twenty minutes, so why spend a fortune buying a house in the city centre?

"Chairman, to what extent do we need to acquire Kowloon Motor Bus? Do we need to privatise it?'

Wang Qi thought for a moment and asked Xia Yu.

Xia Yu thought for a moment and said, 'It's not necessary to buy it out and delist it. It's not cost-effective to invest in Kowloon Motor Bus Company (1933) Limited. What I need is its function. I only need to acquire 67% of it and be able to absolutely control the board of directors and the shareholders' meeting.'

'After the acquisition, Kowloon Motor Bus Company (1933) Limited will belong to the Jiuding Transportation Group, and Jiuding Securities will be the second largest shareholder. Don't let Jiuding Transportation Group exceed the line.'

'Then Chairman, what about China Motor Bus Company Limited? Do we need to buy it?'

Wang Qi then asked again.

Xia Yu immediately said, 'Of course you have to acquire it, but don't worry about it for now. Just focus on the more difficult task of acquiring Kowloon Motor Bus Co., Ltd. The Yan and Wong families want to withdraw their investments and leave Hong Kong, so the acquisition shouldn't be too difficult.'

'However, this major traffic accident involving Kowloon Motor Bus Co., Ltd. will also affect the stock price of China Motor Bus Co., Ltd. You should arrange to secretly buy shares on the stock market at that time.'

Wang Qi nodded in understanding and said, 'I understand. I will gather some people for a meeting later and try to come up with an action plan today.'

'By the way, Chairman, this operation will require the assistance of Jiuding Newspaper Company and Global TV.'

Xia Yu said nonchalantly, 'Communicate with them yourself about the specific operational matters. Just don't drag your feet, and hurry!'

'Understood!'

Wang Qi replied with a straight face.

After Xia Yu left, Wang Qi immediately gathered people to form a temporary special action team and got busy.

Early the next morning, major newspapers under Jiuding Newspaper Company reported on the major traffic safety accident that had occurred the previous day.

Not to mention Global TV, last night's 'News 30 Minutes' and this morning's 'Morning News' both focused on the news, and also combed through a series of bus-related traffic accidents that have occurred in Xiangjiang in the past.

It can be said that as long as viewers see the news, they are all shocked.

Because this incident has had a huge impact, other newspapers and radio stations as well as TVB have all focused on reporting and following up on related developments.

Within just one day, this incident became the biggest hot news in Hong Kong, and the Kowloon Motor Bus Company (1933) Limited was put in the spotlight. Tang Shiu Kin and the other company executives were kept busy.

The Hong Kong government's stern questioning, the media outside the company, the plummeting stock price, the unrest among the company's employees, and the public's accusations and insults were like huge stones, knocking them around like crazy.

The water was so murky that it was hard to hide!

Lei Juekun and the others simply did not realise that Wang Qi and the others were fuelling the flames behind the scenes.

The share price of Zhonghua Motors Limited also fell below HK$1.30 per share, and the company's market value fell below HK$200 million.