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1. Earnings at steel firm build to $81m

2. Lai Sun nears $3.6b debt deal

3. Memories of a changing HK - 50 years of public housing

4. Super-jail island's rare lizard goes to ground

5. Huge bids prompt big questions

6. Auction result baffles analysts

7. Switch from pessimist to aggressive bidder dazzles

1. Earnings at steel firm build to $81m
Eli Lau, The Standard 2 June 2004

Van Shung Chong Holdings has posted a 34 per cent rise in net profit to HK$81.06 million for the year ended March 31 due to a strengthened business model.

The leading local maker and supplier of steel for the construction industry said the company posted turnover of HK$3.55 billion, a leap of 34 per cent from HK$2.76 billion a year earlier.

Chairman and chief executive Andrew Yao attributed the profit growth to the impressive performance of both industrial products and construction material divisions.

``The Camp [China Advanced Material Processing] and CMB [Construction Materials Group] business divisions have perfectly linked the two poles of the supply chain with end customers and steel producers,'' Yao said.

Camp and CMB reported an 18 per cent and 3 per cent surge in net income to HK$70 million and HK$68 million respectively.

While the company has recorded a double-digit growth in turnover over the past two months, Yao said China's austerity measures would not affect their steel businesses.

The company's capital expenditure for this year would be around HK$20 million-HK$30 million, he said. As at the end of March, the company had HK$110 million cash on hand.

``In the coming year, one of our major tasks is to maximise the synergistic effects brought by the group's two complementary business divisions to provide integrated services along the value chain and supply chain,'' Yao said. ``Such a vertical relationship will greatly enhance our market position and maintain the group's profit margin.''

A final dividend of 2.8 HK cents per share was declared, compared with 5.8 HK cents a year earlier.

Shares of Van Shung Chong yesterday dropped 10.14 per cent to close at HK$1.33.

2. Lai Sun nears $3.6b debt deal
Raymond Wang, The Standard 2 June 2004

Lai Sun Development is expected to reach a deal with creditors on its HK$3.6 billion debt restructuring plan this month, which involves a liability cancellation of about 50 per cent.

The company is believed to have submitted its proposal to creditors, which include Morgan Stanley, Citigroup and four other banks.

Lai Sun owes bond holders about HK$2.1 billion and technology affiliate eSun Holdings up to HK$1.5 billion.

It will repay the debt by issuing new shares to eSun, which will become the substantial shareholder of the company, and both parties will establish a cross-holding relationship, sources said.

eSun chief executive Lee Po-on said last week that he expected the company to map out terms this month for the recovery of HK$1.5 billion it is owed by parent Lai Sun Development.

The debt stems from HK$1.9 billion eSun paid to Lai Sun in early 1999 to acquire the retail and hotel portion of Furama Hotel. The deal was cancelled in June 2000 without eSun ever gaining control of the assets or recovering the money.

Lee said eSun hoped to recover more than half the outstanding amount after a proposal regarding loan repayment is submitted by Lai Sun this month. eSun will then present the proposal to its independent financial adviser for assessment.

The debt will be settled with a small sum of cash, a tranche of new bonds and shares representing 30-40 per cent of the enlarged issued share capital of the company, valued at about HK$700 million, the Oriental Daily newspaper reported yesterday.

Lai Sun has also proposed settling HK$2.1 billion debts owed to bond holders with the equity interest in Causeway Bay Plaza, two five-star hotels in Vietnam and a 10 per cent stake in The Waterfront above Kowloon Station, as well as new shares representing 20-30 per cent of the enlarged issued share capital and a put option against the Lam family that are valued at about HK$1 billion, the report said.

Major shareholder Lim Por-yen currently owns about 47.55 per cent of the company through Lai Sun International. Upon completion of the debt restructuring, Lim's shareholding in the company will be significantly diluted. Shares of Lai Sun Development fell 9.09 per cent to close at HK$0.14 yesterday.

Trading in the shares of Lai Fung Holdings, the mainland property affiliate of Lai Sun Garment (International), was suspended yesterday pending the issue of an announcement of a rights issue.

Market sources said Lai Fung planned to announce a one-for-four or one-for-five rights issue to raise HK$100 million.

3. Memories of a changing HK - 50 years of public housing
POLLY HUI, SCMP 2 June 2004

Hui Po-king, a veteran of public housing, at the opening of the exhibition with Housing Authority chief Michael Suen. Picture by K.Y Cheng

Public housing has come a long way since the early estates

Sixty-five-year-old Hui Po-king conjured up an image of drug syringes, rats, filth and illegal businesses when she talked about the earliest public housing estates in the 1950s.

"The lock of our communal shower room was loose. I had to guard the door with a pair of sticks when my elder sister was taking a shower, as drug addicts and shady figures were all over the building," said Ms Hui.

After a fire destroyed her home and those of thousands of others in the Shek Kip Mei squatter area in 1953, Ms Hui was resettled with her family in a first-generation public housing estate in the district and lived there until 1990.

Limited living space caused conflicts in the estate. "Some neighbours argued all day long. There were always arguments when people queued up for buckets of water, which at one time was only available three hours every four days. Some people had their buckets thrown away when they offended the gangsters," she said.

Ms Hui, who used to live in a family of seven in a 120 sq ft flat, recalled how she felt like she was living in a paradise when she moved into another public flat of the same size in 1962 - with only her husband and daughter.

Mrs Hui was invited to open the exhibition "Memories of Home - 50 Years of Public Housing in Hong Kong" at the Hong Kong Heritage Museum in Sha Tin yesterday. Officiating was Michael Suen Ming-yeung, chairman of the Hong Kong Housing Authority, and Choi Suk-kuen, deputy director of Leisure and Cultural Services.

Featuring life-sized models of old flats, pictures, relics, and video interviews of residents, the exhibition is aimed at increasing understanding of how the continual changes in public housing design have raised the quality of life for many families.

When the housing scheme was launched to accommodate the 53,000 people made homeless overnight by the Shek Kip Mei fire, living conditions in the estates were "relatively primitive", said Poon Kai-tik, head of corporate and community relations in the housing department.

"The function of a flat in the 1950s was to sleep and keep your belongings, as communal toilets, basins, and cooking stoves were all placed outside," he said. Mr Poon said it was typical for a family of eight to share a bunk bed in a 100 sq ft flat, with ventilation provided by holes drilled through common walls shared by adjacent rooms.

Hygiene was improved over the following two decades with private washrooms, kitchens and balconies.

There are now about 3 million people living in public estates. Housing Department senior architect Stephen Yim Yu-chau said future public flat designs would include more communal facilities and better access. Although she now lives in a subsidised home ownership flat in Tai Po, Ms Hui said she was pleased with the rapid transformation of public housing design.

But she added: "The remaining Shek Kip Mei estates should be repaired as soon as possible. I remember cement falling off the wall before I moved out."

The exhibition will run till October

4. Super-jail island's rare lizard goes to ground
CHEUNG CHI-FAI, SCMP 2 June 2004

Stray cats and dogs instead of a rare species of lizard were found on the Hei Ling Chau site of the proposed $12 billion super-jail, according to an engineering company.

The firm, Mott Connell, said in its preliminary feasibility study for the jail that no Bogadek's burrowing lizards were found on the island during three field surveys carried out earlier this year.

Terry Chung Tak-man, a consultant with the company, suspected the lizard might have migrated for the winter when they visited between February and March.

"We did not spot any lizards during the trips. Instead, we found some cats and dogs living both on Hei Ling Chau and its adjacent Sunshine Island," he said.

"When we talked to some conservationists later, they expressed fears that the stray dogs and cats could be preying on the lizard."

Under the super-jail plan, the woodland on the island would not be affected and most work would be carried out on 80 hectares of reclaimed land, Mr Chung said.

The lizard was discovered by Father Anthony Bogadek on the island in 1987 and confirmed as a new species in 1992. The female has no legs; the male has two legs.

Environmentalists are worried that building the super-jail would threaten the rare species which has not been seen on Hei Ling Chau for 17 years.

Apart from the island, the lizard was also seen on Sunshine Island once and three times on Shek Kwu Chau, where the latest sighting was in 2002 by conservation officers.

"The lizard likes to live in a damp environment and soil under the decomposing leaves. It was really lucky for our staff to spot one two years ago," said Simon Chan Kin-fung, a government conservation officer.

Michael Lau Wai-neng, an amphibian expert with the Kadoorie Farm and Botanic Garden, said it was hard to say if the company had done its best to locate the lizard of which little was known.

"You can't use ordinary ways to find the lizard and you need a specialist to do the job. You also need some luck as well."

5. Huge bids prompt big questions
PEGGY SITO and SANDY LI, SCMP 2 June 2004

The surprisingly large winning bids at last Tuesday's government land auction have prompted a debate on whether the land sales mechanism can be used to adjust imbalances in land demand and supply.

Property experts say the government, the largest provider of land in Hong Kong, can stabilise the market by supplying sites for sale through the application list system. But they point out that not enough sites have been reserved this year to satisfy the appetites of land-hungry developers.

They have urged the government to correct an expected shortage of residential units in 2006 and 2007 by making more sites available and by releasing projects controlled by the MTR Corp and Kowloon-Canton Railway Corp ahead of their original schedules.

The government introduced the application list system as a market mechanism to determine land supply.

Under the system, a developer proposes a price to the Lands Department and undertakes to offer that amount of money. If the developer's proposed price meets the government's target price, the parcel of land goes to tender or auction.

At last Tuesday's land auction - the first after a moratorium of 20 months - Cheung Kong (Holdings) outbid 12 other developers to win a site of 150,760 square feet in Ma On Shan with an offer of $2.09 billion.

KWah International bought the second site, a smaller plot of land in Sha Tin, for $865 million. The figures were more than 70 per cent higher than the government's reserved prices.

Analysts wondered this week if the high price levels could be sustained when more sites on the application list were released.

The market will be tested when a residential lot in Sa Po Road, Kowloon City, is auctioned off later this month.

Eddie Hui Chi-man, associate professor in the building and real estate department at Hong Kong Polytechnic University, said the high bids at last week's auction were an expression of strong demand built up among developers during the 20-month freeze. But prices would drop if more land was made available, he said.

Professor Chau Kwong-wing of Hong Kong University's department of real estate and construction said the land sale system could be used to control the balance between land supply and demand.

"If the government sets a higher reserve price, the developers' desire for sites will not be as keen," he said.

On the other hand, the government could generate strong developer interest by setting reserve prices below the market level.

Landscope Realty managing director Koh Keng-shing predicted bidding for the remaining sites on this year's application list would be strong.

"Only 17 sites are scheduled for sale this year. This isn't enough to meet developer needs," he said.

Analysts said developers could afford to pay high prices for all 17 sites.

Tuesday's aggressive bidding prompted property consultants to revise their total sales forecast for all 17 sites to $30 billion from $14billion, just over $2 billion less than the $32.24 billion developers paid for government land during the market peak of 1997.

Hang Seng Bank criticised the lack of transparency in the land sales mechanism in its May economic report.

It urged the government to disclose reserve prices and explain how these had been determined for the sake of greater transparency.

The report said such transparency would contribute to the market's stability.

Land prices were an important indicator of future property prices, the report said, adding that winning bids gave a true reflection of developers' perceptions of the market.

Without land prices for reference, the property market would lack an important piece of information for deciding on its future directions, the report said.

HSBC analyst Derek Cheung said the existing system was acceptable. But he said developers had different ways to replenish their land banks and did not have to make high bids for government sites.

For example, developers were negotiating with the government for a change in land use for nine million square feet of farm land in the New Territories, he said.

6. Auction result baffles analysts
PEGGY SITO, SCMP 2 June 2004

Observers have been trying to explain the unexpected outcome of last Tuesday's government land auction, at which Cheung Kong (Holdings) and KWah International bid much higher than predicted for two residential sites.

While sceptics believe the developers' aggressive bidding was aimed at rejuvenating the slowing housing sector, some market watchers suggest they have made a mistake - again.

Last week's auction evoked memories of leading developers being forced to make huge provisions for their projects after aggressively buying sites at the market's peak in 1997.

At the time, Cheung Kong and Hutchison Whampoa paid $6.06 billion for a government-auctioned site in Hunghom, now occupied by the Harbourfront Landmark residential development.

The crash in the property market forced them to write billions in provisions on the development.

In 1998, Cheung Kong and Hutchison made a $1.5 billion provision for the Caribbean Coast residential project in Tung Chung, for which they had won development rights from the MTR Corporation in 1997.

Sun Hung Kai Properties, defeated by Cheung Kong in last Tuesday's fierce bidding for a Ma On Shan site, wrote off $1.1 billion on its Park Island development in Ma Wan and Ocean Shores phase three in Tseung Kwan O, to which it committed at the market's peak in 1997.

Henderson Land Development recorded a write-off on its Tai Po luxury project Beverly Hills, as did Sino Land on its Island Resort in Siu Sai Wan. Sino Land led a consortium that paid a record $11.82 billion for the site in 1997.

Eddie Hui Chi-man, associate professor of the building and real estate department at Hong Kong Polytechnic University, said: "Everyone makes mistakes; big developers are not an exception."

Merrill Lynch analyst Clifford Lam said: "The aggressiveness of developers was never a good benchmark for property prices. If history is anything to go by, we might see some kind of provision in the next three years."

7. Switch from pessimist to aggressive bidder dazzles
ERNEST KONG, SCMP 2 June 2004

The mystery bidder has the audience guessing. On the right is Cheung Kong (Holdings) deputy chairman Victor Li. Picture by Dickson Lee

When a middle-aged man in a baseball cap raised his paddle to outbid 12 rivals at last week's land auction with a jaw-dropping bid of $2.09 billion, perhaps no one present, except those sitting with deputy chairman Victor Li Tzar-kuoi, associated the winner with Cheung Kong (Holdings).

Even a staffer from the usually well-informed Sun Hung Kai Properties was overheard asking who the mysterious bidder represented.

But a Cheung Kong bidder in disguise should not come as a surprise. Cheung Kong executive director Justin Chiu is known for his flamboyant costumes. Most recently, he appeared at a company sales booth dressed as Napoleon, in keeping with the French theme at The Pacifica, a residential project in Cheung Sha Wan.

It was Cheung Kong's dramatic transformation from outspoken pessimist to belligerent bidder that most dazzled the market.

Before the auction, Cheung Kong was outspoken on the discrepancy between property prices and buyer affordability. Both Mr Li and Mr Chiu said just a week before that a downward price adjustment was needed in the market.

Cheung Kong backed up its apparent concern by slashing prices at Caribbean Coast, a residential project in Tung Chung.

Nan Fung Development followed, lowering prices at Tseung Kwan O Plaza by 10 per cent.

But it turned out that Cheung Kong's much-publicised price cut applied to only 10 flats, although Mr Chiu was quick to say more cuts were planned.

Continuing to talk down sentiment before the auction, Mr Chiu said he had spoken to other developers and many planned to bid more conservatively than they would have previously. But two weeks in the property market is a long time.

Questioned after the auction, Mr Chiu said: "I said there would be adjustments in our projects' prices only, but did not say it would be price cuts."

He said some projects were still too expensive and prices at these would have to come down, but most Cheung Kong projects were not under the same pressure.

Talking down the market to upset rival developers' plans is a common practice, according to a veteran real estate agent.