Building slowly but surely

City talk | Siu Sai-wo 3 Jun 2020

Tai Cheung Holdings, an infrequent bidder for land, won a tender for an Ap Lei Chau residential plot for HK$1.33 billion - a price nearly 30 percent lower than that paid for another government site in the district a few years ago.

Part of the finished project will enjoy a sea view, and since such outlooks for homes on Hong Kong Island are limited the purchase is seen as a bargain for the buyer.

Tai Cheung is an old-time real estate establishment, and its second-generation chairman, David Chan Pun, 69, has been pursuing a rather unique approach by investing in less-coveted properties.

He takes part in land bidding only occasionally and never puts in a high bid, apparently targeting sites that others aren't too keen on buying. And after securing a site he does not rush to market a project.

Most developers seek a quick turnover on projects to ensure a fast return even at a lower margin, while Chan seeks a high profit for every venture - even if it takes longer to realize.

The company turned heads years ago by buying sites at low prices in fringe areas like Tuen Mun to build office towers, which later proved to be quite lucrative.

Before Ap Lei Chau the company's last successful land bid was for a Repulse Bay luxury residential site eight years ago. It has prepared a sales brochure for homes the property but has yet to put them on the market officially.

While many developers arrange financing for projects, Tai Cheung is not anxious about fast cash returns because it has been free of debt for years and seems quite impervious to market hitches.

Against such operating strategies, trading in Tai Cheung shares has been relatively thin. And as the company is cash rich and its portfolio of rental and luxury home properties has been growing over the years, its shares carry a substantial discount to net asset value.

And whenever the market is down there will be renewed speculation about the company planning to be privatized.

But Chan does not appear to have heeded such rumors. nor made any move in that direction. He just holds his course steady and pays shareholders their dividends as usual year after year.

Siu Sai-wo is publisher of Sing Tao Daily

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