Who is the investor with a 9 per cent stake in Cathay Pacific in just six months?
Blue chip Kingboard Chemical has quietly spent HK$3.4 billion on the airline’s shares in recent months, led by its ‘acquisitive’ boss
Cheung Kwok-wing raised eyebrows when an industrial company he controls, Kingboard Chemical, piled up a 9 per cent stake in Cathay Pacific Airways.
The HK$3.4 billion investment in one of Asia’s premium international airlines through stock market purchases between last December and June 30 marked the start of the 61-year-old chairman’s entry into aviation, despite having no business experience in the sector.
From the oatmeal offered at Cathay Pacific’s lounges to its frontline crew services and global reach, Cheung considers the airline a jewel in Kingboard’s portfolio, which spans industrial, technology and property sectors.
“I have not made any losses in any investments in the past 20 years,” he said confidently. “I made a lot of money in the financial downturn in 2003, and even more in the global financial crisis in 2008.
And, despite its current challenges, Cheung described Cathay Pacific as one of the best companies to invest in.
“The trick is the company has to be a good one, and all you need is to distinguish the good ones from the bad.”
Boasting a Hong Kong rags-to-riches story, Cheung started modestly in business as a trader of electronic products and laminate flooring in the 1970s.
In 1988, he and some partners set up Kingboard, with its first factory producing laminates in Shenzhen. Following aggressive expansion, the company listed on the Hong Kong stock exchange in 1993.
Kingboard’s core products are laminates and printed circuit boards, which are key components for a wide range of electronic goods such as smartphones, computers, home appliances and automobiles.
The company’s offerings proved star performers in the market, and demand around the world soared. Its other business unit, focusing on chemicals and property interests, has also performed well.
“Starting in humble origins and making it to a corporate level is already an extraordinary achievement,” said GEO Securities CEO Francis Lun Sheung-nim, who has known Cheung for two decades.
“He is a very acquisitive businessman.”
Lun claimed Cheung would be set “to make a killing” once the airline’s share value recovered, having bought his stake when the share price was at an eight-year low.
However, the savvy investor was not about to make a bid for Cathay Pacific, Lun insisted.
“I think if he wanted to operate an airline, it would be a very stupid decision. Anyone wanting to operate an airline must be out of their mind.”
Cathay Pacific still ranks among top five airlines in the world, with other Hong Kong carriers also taking home accolades
By his own account, Cheung is actively engaged in his investment. He claimed to fly at least once a week on the Cathay Pacific and Cathay Dragon network, and said he regularly solicited opinions about the carrier from its frontline staff and customers.
He also claimed Kingboard’s investment in Cathay Pacific had so far generated a HK$500 million profit, while aviation analyst Corrine Png put the figure closer to between HK$200 and 300 million.
Last year, Kingboard bought Moor Place in the City of London for £271 million (HK$2.78 billion), which is the European headquarters of co-working space group WeWork.