WOULD YOU LIKE to know why my single largest shareholding by a wide margin is Sun Hung Kai Properties? I shall tell you. It is because three brothers obviously took their father's death-bed advice to heart. 'Buy land cheap,' he is said to have told them just before he died. You could say they did not always get this advice straight at first and you can understand why a particularly harrowing kidnap experience might have unsettled one of them for a period, but they are certainly back on track at the moment. Father would have been proud of them. Last week, they managed to settle lease conversion premiums with the Lands Department for seven development sites with a total permitted gross floor area of more than 7.1 million square feet. Their total premium cost was only HK$2.1 billion. Haul out your calculator. This works out to only HK$296 a square foot. As I say, father would have been very proud of them. Work it out some more. Most of the land was bought for a song or on a joint-venture arrangement. Let's put construction costs at HK$800 to HK$1,000 a square foot and agree that we should not need more than HK$200 for financing costs with today's low interest rates. We are probably at little more than HK$1,500 a square foot for the total cost of the completed buildings. Now the other side of the equation. Let's put the sales price of the finished product at HK$4,000 a square foot. No way, you say. It's HK$3,000 at best and you will have to cross your fingers to get that. Yes indeed, at today's prices, and this is where father's insight comes into play once more. Buy land cheap when everyone agrees it has much further to go down and magic happens. When the time comes to sell the completed property the price has bounced back up. Father got this one right time and time again. So I'll go with the odds here. I say HK$4,000 a square foot and you are free to prove me wrong when the time comes. Now haul out the calculator again to give a little away to the joint venture plus some profits tax for the Government and you will not be too far off a HK$14 billion profit for me and the other shareholders of Sun Hung Kai Properties. This is why it is my biggest holding. So away with those of you who say this system of lease conversion premiums is a pernicious one in giving that supreme advantage of timing to the developers alone. I want those three brothers to have absolute free rein in forcing the Government to strike premium deals only when they choose to do so. Don't get in the way of me and the share price of my favourite stock, you bureaucrats. And away with those of you who say this premium system has concentrated property development in the hands of three big players alone. This is the way I want it. Let the small fry pay top price at land auctions and struggle to show any profit. I want the big boys free forever to amass private land cheaply, sit on it for years, and then nail the Lands Department to the wall just when prices are their lowest. Let's not have any interference in that golden rule (golden for me) that those premiums be settled on the basis of prevailing property prices when the big boys call. And let's not have any talk about changing our land policies to give the public a fairer share of the loot from these big deals. There is to be no discussion of land-use taxes or other development taxes to supplant this archaic system with something more equitable for Hong Kong people. I want this share price back up and racing for the ceiling. There should be no difficulty at all in getting it up there with the sort of deal the three brothers managed to strike last week and this is the way things should be. It is their right and mine. Do you hear?
