27 October 2016
Joseph Lau, Hui Ka-yan and Cheng Yu-tong (from left) make a rare appearance together during Evergrande's stock market listing. Photo: HKEJ
Joseph Lau, Hui Ka-yan and Cheng Yu-tong (from left) make a rare appearance together during Evergrande's stock market listing. Photo: HKEJ

Evergrande the super shopper just can’t stop buying

In every boom market, a super player emerges with enough cash to spend on eye-popping deals.

The Carrian Group in the 1980s, China Everbright during the red-chip frenzy and PCCW at the height of the internet bubble are just a few of them.

Add Evergrande Real Estate Group to that list.

Three weeks after paying Joseph Lau’s Chinese Estates a record HK$12.5 billion (US$1.61 billion) for the Mass Mutual Tower in Wan Chai, Evergrande chairman Hui Ka-yan has struck again.

On Wednesday, the Guangzhou-based property conglomerate bought three mainland residential projects — a seaside luxury villa in Hainan, a golf villa in Huizhou and a metro station project in Wuhan — from Hong Kong tycoon Cheng Yu-tung’s mainland flagship New World China.

The tab came to a jaw-dropping HK$16.36 billion.

Like his previous deals, this one will be paid by installment over two years.

That’s enough breathing room but only if you have billions to spare.

The deals are a high-stakes poker game reminiscent of the popular “Big Two” card game Hui, Cheng and Lau like to play.

According to press reports, Hui found the way to riches through his two Hong Kong mentors who showed him the ropes.

That’s how Hui mastered IPOs, the property market and some financial short cuts such as buying shell companies.

The two Hong Kong tycoons made a rare appearance together during Evergrande’s 2009 listing in Hong Kong.

Now it’s payback time.

In the past 15 months, Hui has spent HK$20 billion on several property deals with Chinese Estates.

These allowed Lau to cash in on his listed flagship.

New World China, which New World Development has been trying to privatize, will pocket a HK$6.5 billion net profit from the Evergrande deal.

Evergrande explained the philosophy behind its three latest acquisitions.

We’re giving the one-sentence explanation full play, in all its long-winded glory. 

“The favorable terms offered by New World, including the favorable price and payment by installments over two years for the disposal of four projects to Evergrande in one go, have demonstrated the long-established and close partnership between the two parties, indicating New World’s high recognition of Evergrande’s development capability, strength and brand name, which in turn deepen the win-win cooperation model between Hong Kong and PRC leading enterprises.”

Evergrande watchers are feeling a sense of deja vu — haven’t they seen this movie before?

We do not have the answer. So far, Evergrande — it’s in everything from property and football to media and healthcare — has been holding up well, judging by its share performance.

Evergrande showed its Midas touch when it quietly took over Albert Yeung’s small New Media flagship for about HK$1 billion and turned it into a successful healthcare company.

Renamed Evergrande Health, the company is up at least 15 times, with a market cap above HK$20 billion — all within a year.

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EJ Insight writer

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