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for. 1.
Developer demands freeze on HOS sales 2.
Paliburg delays vote on tech buy 3.
Sun to launch Linux desktop 4.
Industry struggles to get access to $5b of innovation
funding 5.
Mid-Levels site may fetch $2 billion 6.
Land revenues way off target 7.
Hong Kong Zhuhai Bridge 8.
Non Sequitur by Wiley Miller 9.
A Siren in Hong Kong 10.
Alarm grows at record smog level
1. Developer demands freeze on HOS sales
The
Standard, 19 September 2002 K
Wah Group chairman Lui Che-woo called yesterday for a two-year freeze of land
and Home Ownership Scheme (HOS) flat sales after subsidiary K Wah Construction
Material suffered a 45 per cent drop in net profit to HK$35.98 million in the
first half of this year. The company said turnover fell 10 per cent for the six
months ended June 30 as the construction sector reeled from the effects of the
downturn in the property market. ``Property prices have bottomed out,'' Lui said.
``If the situation continues to deteriorate, the banking sector will suffer as
well.'' Lui said he believed the government intended to stabilise the real estate
market and Secretary for Housing, Planning and Lands Michael Suen would give developers
a clear direction on housing policy in November. ``I believe the market will be
much better if the government stops selling land and HOS flats for two years,''
said Lui, who holds a 64.7 per cent stake in the group. ``Actually Hong Kong people
have the purchasing power but they are hampered by the general market sentiment.''
Despite reporting a loss in the construction materials business, the group's parent
- K Wah International Holdings - posted a 11 per cent rise in net profit to HK$56.28
million for the first half. The company acquired K Wah Construction Materials
in May 1997. The directors said profit generated from property sales in Hong Kong
and the mainland had offset losses of the construction materials subsidiary. The
company is to launch 700 flats at the La Costa project in Ma On Shan in November,
while The Palace in Ho Man Tin would be released for sale next year. The two projects
are expected to bring in HK$1.4 billion and HK$900 million respectively. The company
would continue to focus on the mainland market by putting 60 per cent of its investments
in China in the next few years, vice chairman Francis Lui said. He also revealed
the construction materials unit on the mainland enjoyed an HK$8 million gross
profit last year. That surged to HK$20 million in the first-half and was expected
to reach HK$30 million by the end of the year. Both K Wah International Holdings
and K Wah Construction Materials declared an interim divided of 10 cents per share.
2. Paliburg delays vote on tech buy
The
Standard, 19 September 2002 Paliburg
Holdings yesterday postponed to next month a vote by shareholders on a resolution
to approve the acquisition of a 50 per cent stake in a technology business. Paliburg
chairman Lo Yuk-sui said the postponement was due to technical issues, adding
the terms of the proposed acquisition would not be changed. The listed Century
City International Holdings, together with its listed property arm Paliburg Holdings
and listed hotel arm Regal Hotels International Holdings, last month announced
a series of transactions. Paliburg proposes to buy Venture Perfect Investments,
which owns a 50 per cent stake in Leading Technology Holdings and HK$70 million
cash, within the price range of HK$345 million to HK$475 million. The consideration
is to be settled by issuing around 3.5 billion to 4.8 billion new Paliburg convertible
preference shares at 10 cents each. Leading Technology is engaged in intelligent
building systems and high-tech security systems. The company's net asset value
was HK$137.1 million as at June 30. It achieved net profit of HK$13.5 million
for the period from January 12, 2001 to June 30, 2002. Meanwhile, shareholders
yesterday approved three other resolutions. They included the transfer of Paliburg's
stake in a property project in Stanley to Regal Hotels, Paliburg's issuance of
convertible bonds and the share swap deal. A shareholder who would only be identified
as Mr Leung said he agreed with most of the resolutions that were approved. But
he questioned why the company had decided to acquire a 50 per cent stake in Leading
Technology by issuing more than 3billion new shares of Paliburg at 10 cents each.
Leung described the proposed acquisition as spending a large sum of money to ``buy
a piece of rubber''. He said he did not know why the related resolution was postponed.
Trading of the three listed companies was suspended from 9.30am yesterday, pending
the release of an announcement setting out the results of the special general
meetings. On Tuesday, Century City shares closed at 2.6 cents, Paliburg's at 7.9
cents and Regal Hotels' at 8.1 cents.
3. Sun to launch Linux desktop
SCMP,
19 September 2002 Sun
Microsystems plans to launch a desktop Linux initiative aimed squarely at rival
Microsoft's desktop dominance, and China will probably play an important role.
The strategy will for the first time see Sun move from its stronghold in the corporate
data centre to designing low-cost desktop personal computers. Although the initiative
is worldwide, much of the engineering and product design will come from Sun's
Engineering Research Institute in Beijing, according to its director, Gong Li.
In a telephone interview from his office in Beijing, Mr Gong said China would
play a large role in the initiative. "A significant part of the engineering
and product work will be done in Beijing," he said. These systems will be
made from commodity hardware and components and will be accessed using a JavaCard,
much as Sun's Sun Ray terminals are. The Linux clients will be able to run standard
software including Sun's StarOffice, the Mozilla Web browser, Evolution e-mail
software and Gnome, the desktop user interface. "This is the first time that
a secure yet open desktop is integrated within the entire system. This especially
fits the need of the Chinese market and we shall certainly see this develop further,"
Mr Gong said. In San Francisco, Jonathan Schwartz, the executive vice-president
of software at Sun, said the offering fitted in with the technology Sun had been
promoting. "We've been advocating the move to browser-based applications
for the past six years. We believe our customers are now ready to take that next
step." He said by combining JavaCard authentication with an open-source desktop
software stack and off-the-shelf hardware, the firm could deliver military-grade
security with profound savings in acquisition and operational costs. "The
power, security and economics customers have long enjoyed through Sun's end-to-end
architecture are finally coming to the PC desktop. We are disrupting traditional
computing economics to benefit our customers while completing our client product
line," Mr Schwartz said. Sun is promoting this solution as a secure and easy-to-use
system that can handle more clients, more securely than a Windows-based system.
It will also be cheaper to run, according to Sun. "One of the design goals
for this has been to bring down the cost so that it can be affordable to all enterprises,
government, educational institutions and consumers," Mr Gong said. For security-minded
customers, Sun hopes the JavaCard authentication will be well received. Mr Gong
was the chief architect and designer of the security application programming interfaces
for the Java programming language and specialises in secure and trusted systems.
The JavaCard had been used by organisations including American Express and the
United States Department of Defence, he said. Each card has a unique identification
and can be assigned to an individual by the system administrator. By building
this into the PC, Sun hopes to provide one of the most secure client platforms
available. Mr Gong said Sun had already spoken to several PC manufacturers in
China and they had shown an interest. He declined to name the companies. Sun expects
to launch these desktops next year, but it hopes to have demonstration systems
available at Sun offices and iForce centres soon. The exact configuration of the
boxes might be a matter for discussion, he said. Sun sells systems, not individual
computers, and the system that a customer may buy will depend on his needs. Sun's
executive vice-president of the volume systems group, Neil Knox, said the announcement
was a further extension of the company's networking strategy. "This systems
approach to the network client marks another milestone in the company's edge computing
strategy and was preceded by Sun's recent LX50 server announcement. "The
announcement builds on Sun's Linux momentum with enterprise-class security and
authentication as well as the essential communication, collaboration and desktop
services users need in these targeted applications," he said. Mr Schwartz
said it would be essential to talk to the customers. For now, Sun will not target
ordinary office desktops, but customers looking for a cost-effective but secure
desktop system.
4. Industry struggles to get access to $5b of innovation funding
SCMP,
19 September 2002 Companies
are finding it increasingly difficult to qualify for funding from the government's
HK$5 billion Innovation and Technology Fund (ITF). According to the Innovation
and Technology Commission, only a fifth of applications have been successful since
the fund was launched in 1999. By July 31, the commission had received 1,345 applications
for ITF funding, worth a total of HK$4.5 billion. Only 295 projects got the green
light, with permission granted for projects worth HK$668.3 million. More than
85 per cent of the funding remains untapped, while the success rate for applications
was only about 22 per cent. Industry players said getting funding was extremely
difficult. "It needs to be really innovative," said Judy Leung Wai-chu,
vice-president of the Hong Kong Information and Technology Federation. "The
funding always goes to academic research. It is really difficult for normal companies
to fit the requirements." Among the 295 successful applications, 89 were
approved under the category of the University-Industry Collaboration Programme,
receiving grants of HK$116.4 million. Only 91 of 526 applications were successful
in gaining support under the Innovation and Technology Support Programme category.
Twenty-six of 187 applications won funding under the General Support Programme
and 89 out of 500 were given Small Entrepreneur Research Assistance. Secretary
for Commerce, Industry and Technology Henry Tang Ying-yen earlier said with the
reorganisation of the government structure under the new accountability system,
"commerce and industry" and "technology" would be merged so
that innovation, technology, information technology (IT) and SME (small and medium-sized
enterprise) support would be "under one roof". He promised to improve
policy and funding co-ordination so local companies could fully utilise the ITF,
the HK$1.9 billion in SME funds and the HK$750 million Applied Research Fund.
Speaking at the opening of the IT Expo at Hong Kong Convention and Exhibition
Centre yesterday, Director of Information Technology Services Alan Wong Chi-kong
said local SMEs had not fully utilised what the government had been offering.
"It is not a usual practice for local SMEs to ask for money from the government.
Even if there is money available, they do not know how to pick it up," he
said. He added there was an urgent need for local companies to upgrade their infrastructure
and equipment as well as receive training if they wanted to be up to international
standards. Meanwhile, the Information Technology Services Department (ITSD) has
set up information technology management units to streamline its operations and
reduce staff numbers. Since the start of this year, 21 bureaus and departments
have set up these units. The ITSD is to set up at least four more in coming months.
The management units comprise analysts and programmers from the ITSD as well as
departmental and contract IT staff. Member numbers range from two to more than
300.
5. Mid-Levels site may fetch $2 billion
SCMP,
18 September 2002 Strong
bidding is expected at the February auction of a luxury residential site in Borrett
Road, Mid-Levels - described as the jewel in the crown of this year's land disposal
programme. Surveyors predicted that the 1.05-hectare site could fetch more than
HK$2 billion, making it far and away the biggest sale this financial year. The
site at 21-23 Borrett Road has a developable floor area of about 570,000 sq ft
and a development plot ratio of five times. Many major developers have privately
expressed interest in the site, which is now occupied by government staff quarters.
The site is scheduled for sale at this financial year's last auction on February
13, together with a 36,380 sq ft residential site in Kowloon Tong. At the next
sale on December 17, an adjacent 27,340 sq ft Kowloon Tong site and a 79,150 sq
ft low-density residential site in Mount Kellett Road on the Peak are expected
to go under the hammer. Knight Frank Hong Kong valuation director Anthony Lau
Chun-kuen expected the Borrett Road site would attract many bids from developers
because of the supply shortage in the surrounding area. Mr Lau put a price tag
of about HK$2 billion on the site, or an accommodation value of HK$3,500 per square
foot. He said his estimate was based on prevailing market prices and took into
account demolition costs for the existing buildings. The finished flats would
sell at HK$7,000 to HK$8,000 per square foot, he predicted. SK Pang Surveyors
was more optimistic, forecasting a sale price of about HK$2.3 billion, an accommodation
value of HK$4,000 per square foot. However, CB Richard Ellis executive director
of valuation and advisory services Yu Kam-hung saw the land fetching only HK$1.16
billion, an accommodation value of HK$2,055 per square foot. He said the large
lump sum required would limit the number of bidders. CS Surveyors executive director
Cheng Wing-ming forecast a sale price of about HK$2 billion but warned of continued
price correction in the mass and luxury markets. "Bidding interest will still
depend on developers' current sales of new projects and the overall market sentiment
at the time of auction," he said. Mr Cheng estimated the average development
cost, including land value, construction and interest expenses, at nearly HK$6,000
per square foot. Given a plot ratio of five, the site would accommodate a a relatively
high-density development, he said. However, a lower-density development would
be more compatible with the surrounding area and could raise the flats' average
value per square foot. So far this financial year, the biggest sale was HK$1.64
billion for a 1.04-hectare residential site in West Kowloon.
6. Land revenues way off target
SCMP,
18 September 2002 The
government's ambitious HK$25 billion land revenue target for this financial year
could fall far short of expectations due to continued weakness in the property
market, according to analysts. Analysts estimated that only about HK$6 billion
has been generated so far from land auctions and tenders, lease modifications
and the private treaty grant of railway-related projects. In a breakdown of revenues,
eight residential sites have been sold through three public auctions since April,
generating HK$3.76 billion. About HK$2 billion was attributable to lease modifications
and the private treaty grant - the bulk of which came from the HK$1.27 billion
premium settlement with MTR Corp's (MTRC) Hang Hau Station property development
in Tseung Kwan O. Developers continued to be cautious about future prospects,
evidenced by their weak interest at last week's land auction which attracted only
three bidders where the bigger of the two sites sold at the opening price of HK$290
million. There are only four residential sites scheduled for definite sale at
two more auctions before the financial year ends in March. According to the government's
forecast, land sales by public auction and tender would contribute HK$10.95 billion
this financial year. Another HK$8.22 billion is expected from lease modifications
and HK$5.59 billion from private treaty grants of railway developments, with the
balance from short-term waiver fees. Total land income for the last financial
year to March 31 was about HK$9.79 billion, well short of the HK$27.55 billion
forecast. SK Pang Surveyors managing director Pang Shiu-kee said the actual revenue
generated by land sale and lease modifications would be extremely lower than expected
as developers were cautious in replenishing their land banks amid the sluggish
market. ''It will be great if the final land revenue could reach half of the original
target,'' he said. Mr Pang said the government's optimistic forecast was based
on the better quality and large-scale sites being allocated on the land sale application
list. Under the list, land will be released for sale only after a developer guarantees
a minimum acceptable price. The government has banked on developers taking the
initiative to apply for more land on the list. Accordingly, only 10 sites, mostly
small in scale, have been scheduled for auction this financial year, with 29 sites,
comprising the most valuable land, left on the application list. However, the
developers have been inactive in triggering land for sale on the application list.
Only two residential sites in West Kowloon and Kowloon Tong were successfully
applied and sold at auction in April. Deputy Director of Lands John Corrigall
said there had been no application for land sales in recent months. He said developers
were slowing down in negotiation of land premiums for lease modifications or private
treaty grants. Cheung Kong (Holdings) executive director Grace Woo Chia-ching
said the group would mainly focus in the projects to be tendered by the two railway
corporations and did not have time to study opportunities on the application list.
Mr Pang said the slowdown of applications and premium negotiation was because
developers were unsure when the market could improve. They therefore took a more
conservative approach and sought to reduce land costs as much as possible to lower
their risk, he said. ''Most of the major premium cases [under negotiation] are
applied by the two railway corporations. They have to bargain for a larger concession
as an incentive to get better offers from developers,'' he said. MTRC is in talks
with the Lands Department on land premium charges for a 2.7 million-sqft residential-retail
development at Tiu Keng Leng Station, on the Tseung Kwan O railway extension.
Kowloon-Canton Railway Corp (KCRC) is negotiating for two residential-retail developments
a 1.5 million-sqft project at Ho Tung Lau depot in Sha Tin and a 2.59-million
sqft scheme at Tsuen Wan West Station along the West Rail. Analysts estimated
the total land premium for the three projects could exceed HK$6 billion. The two
railway companies intended to tender these projects for sale this year pending
the land premium settlement. A Lands Department spokesman said offers for the
projects at Tiu Keng Leng and Tsuen Wan West Station had not been made while the
Ho Tung Lau depot development was under negotiation. KCRC has lodged an appeal
to reduce the premium. Mr Corrigall said the government and KCRC had yet to reach
a compromise on the land value due to different valuations for the construction
cost. Mr Pang said there was no indication when the property market could recover
as uncertainty lingered over the United States economic rebound. Several major
developers have expressed a conservative attitude in land acquisitions recently.
Swire Properties managing director Keith Kerr said the group was inclined to focus
on developments on hand rather than actively replenishing its land bank in the
coming two years. ''The fundamental problem is deflation in the economy ... We
haven't yet quite found equilibrium between what the economy is prepared to pay
and where the market is,'' he said. HKR International managing director Victor
Cha Mou-zing said he could not predict when the property market could recover.
The company would be cautious in selecting investment. ''It becomes more and more
difficult to find lucrative business,'' he said. Mr Cha said the residential market
was pressured by oversupply. ''The government has to reduce the supply by all
means.'' Earlier, Henderson Land Development chairman Lee Shau-kee said the group
was slowing down the replenishment of its land bank because of the sluggish market.
He expected Henderson Land and other developers would slow down their acquisition
of land, including the conversion of agricultural land.
7. Hong Kong Zhuhai Bridge
SCMP,
15 September 2002 
8. Non Sequitur by Wiley Miller 
9. A Siren in Hong Kong
Scmp
10.
Alarm grows at record smog level
SCMP,
8 September 2002 
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