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Cheung Kong's future harvest

Cheung Kong

WHEN Cheung Kong announced its thumping great profit rise of 56 per cent on Thursday, most people were too busy applauding to look at what was happening with the company's land bank.

Land being the sustenance of all Hong Kong developers, Cheung Kong, like any other, likes to keep its supply topped up and a very good way is the practice of buying agricultural land.

The land may not be for property development use, but it could end up receiving an exchange entitlement allowing it to be developed in the future.

To date, Cheung Kong has not held such land, preferring to stick with another sort zoned for development. But recently, sources said, the developer has been a big buyer of agricultural strips out in the New Territories.

Holding agricultural land is always a game for the big boys since much time and effort is required to convince the Government of the desirability of ripping up cabbages and replacing them with tower blocks.

Not only that, it requires a strong balance sheet to keep non-performing assets with only the vaguest hope that an exchange entitlement will be granted.

Perhaps Mr Li has realised that after making so much money in securities disposals and trading during 1993, a more cautious strategy was called for in 1994.

Few are betting on his going into the market garden business and, as handover time approaches, he who has the best guanxi will no doubt be moving the tractors in fastest. IT was Henry V at Agincourt who let up the cry: ''Once more into the breach my friends'' and this week battle-weary China investment bankers have used similar rallying calls in the last great push for the H-share mandates.

One US banker said: ''Our team is still out hunting in China and we're all waiting to see what they bring home for us.'' While none is yet prepared to go public with the hard-fought spoils of war, news of the early winners is seeping out - and they are mainly American.

Word has it that Lehman Brothers, which of late has been fighting internal wars of its own, has apparently pulled in the mandate for Huaneng International Power and Goldman Sachs that of the airline China Southern.

But the biggest of them all goes to those mercurial China bulls, Morgan Stanley, who are said to have acquired China Eastern, which is going on an estimated $US1 billion (About HK$7.74 billion) fund-raising spree.

Further down the list, we hear that new operators Smith Barney Shearson have roped in Qingling Automobiles, and Schroder has been keeping the British end up by convincing Nanjing Panda Electronics of its suitability.

The wild card so far is the success of the Bank of China's merchant banking arm, China Development Finance, in securing the lead mandate on Luoyang Glassworks, which is one of the smallest issues coming in at an estimated US$50 million.