24 October 2016
Lee Shau-kee (left) says he is not as worried as fellow property developer Li Ka-shing. Photo: HKEJ
Lee Shau-kee (left) says he is not as worried as fellow property developer Li Ka-shing. Photo: HKEJ

A less optimistic Uncle Four sees home prices continuing to fall

Hong Kong may not have a Warren Buffett who can answer shareholders’ questions from nine to five, but we have two senior tycoons who like to talk to their many followers about business, the stock market and life.

“Uncle Four”, Henderson Land Development Co. Ltd. (00012.HK) chairman Lee Shau-kee, rarely shows up at his company’s post-results news conference.

But he did Monday, following the well-received town hall meeting CK Hutchison Holdings Ltd. (00001.HK) chairman Li Ka-shing put on last week.

Lee may have disappointed those who thought his presence might suggest a group restructuring a la Cheung Kong, which he denied.

As with his previous talks to investors in the past decade, the focus was on how he sees the property and equity markets.

Many hang on Lee’s every word. After all, he presides over what Forbes noted last year is the richest family in Hong Kong that has lasted for at least three generations.

Speaking from his gut, Uncle Four foresees a drop in home prices of as much as 30 per cent from their peak last year, suggesting that oversupply indicates a downside of 15 per cent from here.

The tone is consistent with his stance last year, when he foresaw the equity market performing better than the property market.

Now, after the stock market’s rapid ascent early last year was followed by a crash and ongoing volatility, Lee thinks the Hang Seng Index will not rise to 24,000 in the next two years.

Despite not being as optimistic as his usual self, Lee was not as negative as fellow octagenarian Li, who reminded investors that economic growth is the worst in 20 years and that the retail sector is in its worst shape since the severe acute respiratory syndrome pandemic in 2003.

“I am not as worried as Li Ka-shing,” Lee said.

“I believe China’s economy will still grow 6.5 per cent [this year] and Henderson Land will still grow in the years to come.”

Sales at Li’s CK Hutchison, a sprawling conglomerate with nearly 40 per cent of its assets in Europe, declined last year although the firm reported a strong bottom line that beat estimates.

Profit at Henderson Land grew 27 per cent last year.

While Li owns 30 per cent of his main conglomerate and property flagship, Lee owns over 72 per cent of his property flagship.

Li, Hong Kong’s richest man, grew his wealth by operating a range of businesses in more than 50 countries, in contrast to Uncle Four, the city’s second-richest tycoon, who has focused on property development in Hong Kong and mainland China together with a stable natural gas distribution business.

On a lighter note, Lee said Monday he did not like western food. He said he would continue to focus on Hong Kong, where 90 per cent of the group’s business is based. 

Hong Kong will benefit hugely from China’s “One Belt, One Road” initiative, he said. 

Businesses related to the raising of capital, such as banking, accounting and legal firms, will prosper in the years to come, Lee said.

In the face of widespread gloom about the city’s prospects, he said: “Hong Kong will need to be defensive, but I hope it will not be a long time before it recovers.”

Both tycoons praised Chief Executive Leung Chun-ying for his hard work but stopped short of lending their support to his likely candidacy for a second term.

Well, there is little difference between the two men on how they look at things, and they are always right.

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EJ Insight writer

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