Hong Kong consortium injects new energy to recreate the real estate miracle of the past 20 years?

Few people realize that the neglected year 1998 was a turning point for Chinese real estate.

At that time, the most expensive Jinyang Building in downtown Shanghai sold for a historic 4,500 yuan / square, and the second ring road in Beijing sold for more than 2,000 yuan / square. The restless housing prices have attracted the earliest "brick households" to sing bearish songs, believing that high housing prices are source water and cannot be maintained for long.

As everyone knows, the golden age of real estate has just begun.

China's real estate market is growing at a high rate of more than 10% to 20% per year, and China's economy has also entered 20 years of rapid development, and house prices have skyrocketed.

Those who have enjoyed this wave of dividends are not only mainland real estate enterprises, but also the famous "four major families of Hong Kong".

Behind many large commercial centers in "North, Shanghai, Guangzhou and Shenzhen", there are four major families in Hong Kong. For example, the Li Ka-shing family's Oriental Plaza in the core area of Chang'an Avenue in Beijing, Sun Hung Kai Properties controlled by the Kwok Desheng family, the well-known projects Shanghai IFC and Shanghai International Trade Center in Shanghai, and the Zheng Yutong family's New World Department Store in many cities in the mainland.

At the beginning of its listing in the 70s, the Li Ka-shing family's Cheung Kong Industrial had a market value of only HK$157 million. By 2015, Li Ka-shing's "Changhe Family" had a total market value of HK$1.222 trillion, becoming the largest family consortium in Hong Kong.

Fast forward to 2023, with the transformation of new and old momentum of economic growth, real estate will gradually withdraw from the historical stage, replaced by the current hot "new energy".

In recent years, the four families with a keen sense of smell have been making moves for a long time, and in recent years, they have continuously laid out the mainland market, entered the energy sector, and invested heavily in the new energy industry chain. For example, the huge investment of the Li Ka-shing family in the UK electricity and gas market, and the "Hong Kong Smart Energy" of the Lee Shau Kee family from gas transformation to the new energy market.

The four major families in Hong Kong, from left to right, are Guo Desheng, Li Ka-shing, Lee Shau Kee, Zheng Yutong, source: Baidu Encyclopedia

On May 31, Nasdaq-listed new energy service provider Energy Chain Smart Power (NASDAQ: NAAS) completed an additional offering of 3.5 million American Depositary Shares (ADS). As one of the "Four Families of Hong Kong", Cheng Yutong's eldest grandson, the current CEO of New World Development Company Limited, Cheng Chi Kong, and Hong Kong Zhongyu Group (00985. HK) and others jointly purchased a total of 3.5 million American depositary shares in the offering.

Zheng Zhigang, the third-generation successor of the Cheng Yu Tung family, one of the "Four Great Families of Hong Kong", source: Southern Press

It is worth mentioning that Zheng Zhigang participated in NIO's D round financing in November 2017 and Xpeng Motors' B round financing in August 2018, both of which have since become companies with a market value of more than 50 billion yuan.

The target that Zheng Zhigang is optimistic about this time is Energy Chain Zhidian, one of the largest and fastest growing electric vehicle charging service providers in China, and it is also the first stock of charging services in China. Its charging capacity accounted for 20% of China's public charging volume in 2022.

01 Finding the next golden twenty years

From real estate to new energy, on the surface, the investment layout of the four major Hong Kong families in the mainland seems to have undergone earth-shaking changes.

However, after careful study, you will still find that its core investment logic has never changed, that is, the "first principle" of complying with the policy east wind and investing in leading enterprises on the gold track.

This is also the ultimate wealth code for the four major families in Hong Kong to achieve huge accumulation of assets and get rid of "three generations of wealth".

Every major investment by the four major families in Hong Kong is very strategic and forward-looking.

Back in 1997, when the Asian financial crisis hit, Hong Kong's property bubble burst, and the mainland including Shenzhen, Shanghai and other places suffered a depression. At that time, Hong Kong developers, who were at the eye of the storm, did not slow down the pace of inland layout due to the financial crisis, but entered the real estate market at the same time.

At that time, when foreign enterprises were pulling out their investment, Li Ka-shing saw a series of favorable policies promulgated by the central government, entered the mainland market in a big way, and became the largest investor in Hong Kong's Chinese mainland real estate in one fell swoop.

Shenzhen, the closest to Hong Kong, was first concerned by the four major families in Hong Kong, and high-quality land was "bought" by them.

In 1997, China Real Estate Information magazine published an article entitled "Shenzhen introduces Hong Kong capital of 6 billion yuan to develop housing", mentioning that as the focus of Shenzhen's development in the next few years, about 400,000 square meters of residential land in the new urban center of Futian, Shenzhen has been "snapped up" by several Hong Kong consortiums this year, and these Hong Kong consortiums plan to invest 6 billion yuan to build large-scale residential complexes.

Sun Hung Kai, controlled by the Kwok family, began to develop high-end commercial complexes in 1997, including the Pearl River Delta cities with Guangzhou as the core, the Yangtze River Delta cities with Shanghai as the core, and hot cities such as Beijing and Chengdu.

"Shenzhen Introduces Hong Kong Capital to Develop Housing with 6 Billion Yuan", source: China Real Estate Information magazine

In 1998, the state introduced a series of policies favorable to real estate development, such as the abolition of welfare housing, the commercialization of housing, and the implementation of housing mortgages, which began to inject fuel into the take-off of real estate, and the status of real estate as a national pillar industry became more and more solid.

The four major families in Hong Kong bet on mainland real estate on the basis of accurately grasping the general trend of national policies and identifying the trough opportunities in the industry at the point of investment.

The "V-shaped reversal" has paid off handsomely. From 1996 to 2014, the net assets of Cheung Kong Industrial increased from HK$70.9 billion to HK$406 billion, an increase of 5.72 times, while the net assets of Sun Hung Kai, New World and Henderson Land Development also grew explosively, with growth rates of 4.95 times, 5.72 times and 5.82 times respectively during the same period.

Because they are firmly optimistic about the real estate track, even when the real estate industry is in a short downturn, the leading enterprises have made them a lot of money.

In addition to investing in real estate projects, the four major families will also choose to buy the bottom at a low level and support mainland real estate leaders, one of the most classic cases is Evergrande.

In the golden two decades of China's real estate industry, Evergrande Group is undoubtedly the leader of private real estate enterprises, and it has also encountered a trough. In 2008, just after Evergrande's land reserves reached the first place in the country, the financial crisis broke out, and the capital chain crisis swept the entire real estate industry, and Evergrande's capital gap was as high as 10 billion, and the listing plan had to be stranded.

Under the crisis, Xu Jiayin's first thought was to solve the capital dilemma by increasing capital and attracting strategic investors to invest in shares. To this end, he went to Hong Kong to seek assistance from the four major families.

In the three-month "hoe D" story, Zheng Yutong saw the opportunity and not only invested 150 million yuan in Evergrande, but also found several international institutions to invest a total of 210 million US dollars to subscribe for Evergrande shares, and then pulled Li Ka-shing, Liu Luanxiong and other rich people to publicly support Evergrande and successfully rescued Evergrande from the crisis.

Evergrande returned to normal after getting out of danger and was listed on the Hong Kong Stock Exchange in November 2009. On the day of listing, Evergrande's market capitalization surpassed Country Garden in one fell swoop, becoming the largest private housing enterprise in the mainland at that time.

It is unknown whether Xu Jiayin received financial support from the Zheng family and the other three major families by virtue of his "year-end friendship" with Zheng Yutong. However, it is clear that at that time, Evergrande, as one of the few high-quality enterprises in the mainland, was favored by the Zheng family, which was the fundamental reason.

However, with China's urbanization process and population growth slowing, the golden age of China's real estate has come to an end. The four major Hong Kong families began to shrink their investment in mainland real estate early and cash out.

Around 2015, at the height of China's real estate boom, the Li Ka-shing family's Changshi Group and Zheng Yutong's New World Group began selling a number of mainland real estate projects.

While withdrawing from the real estate market, Hong Kong's four major families began to look for China's golden track for the next two decades. According to public reports, in recent years, the four major families have begun to accelerate the layout of new energy tracks in the mainland.

With the strong support of national policies, the domestic new energy automobile industry has continued to grow explosively, with new energy vehicle sales maintaining a growth of about 1 times for two consecutive years, and the penetration rate of new energy vehicles reaching 25.6% at the end of 2022.

In the future, the industry is still expected to continue the trend of high growth, Cui Dongshu, secretary general of the Passenger Association of China, believes that the penetration rate of new energy vehicles will still increase rapidly, and it is expected to reach 36% in 2023, with a year-on-year growth rate of more than 30%.

Among the four major families in Hong Kong, the Li Ka-shing family and the Lee Shau Kee family have a particular preference for the new energy field.

Li Ka-shing has already made huge investments in the UK electricity and gas market. Recently, the media also broke the news that Li Ka-shing is competing for oil sands development rights in many foreign countries and many domestic central enterprises, with the intention of competing for the leadership of new energy.

Li Ka-shing's biggest investment in the new energy market was in January 2010, when he purchased 400 million shares of Sinopoly Battery at a price of HK$0.73 per share, and later invested an additional 200 million shares in the company. After multiple investments, with a cumulative amount of up to HK $720 million, Li Ka-shing even became the second largest shareholder of Sinopoly Battery.

In terms of the Lee Shau Kee family, in October 2021, Hong Kong China Gas, a Hong Kong listed company controlled by the Hong Kong Lee Shau Kee family, changed its name to "Hong Kong China Smart Energy", thus cutting into the field of new energy. Ganghua's business orientation has changed from traditional gas and related businesses to integrated energy operations, providing investment and construction and smart operation of distributed photovoltaic, energy storage, charging and swapping projects.

As the third-generation heir of the Zheng family, Zheng Zhigang has a keer sense of investment opportunities in the new energy industry than the "old bosses" of several major families.

After participating in the investment in new energy vehicle manufacturing forces such as Xpeng Motors and NIO, Zheng Zhigang once again made a move to Zheng Zhidian, presumably "taking the lead" for the four major families, and increasing the layout of charging service segments in the new energy track.

02 A premium blue ocean in the golden track

The vigorous development of China's new energy automobile industry is inseparable from the supporting support of the new energy charging industry as infrastructure.

With the continuous increase in the penetration rate of new energy vehicles, charging services have also become one of the subdivisions of high prosperity and high growth. According to the data, the number of charging infrastructure in China increased from 2.62 million units in 2021 to 5.21 million units in 2022. It nearly doubled in one year, keeping pace with the doubling of sales of new energy vehicles.

Since 61% of the domestic housing stock is biased towards multi-family housing, the charging pile facilities are mainly public charging piles. According to the "China Charging Service Downstream Market" report released by MacQuarie, a well-known Australian investment bank, in the past five years, the installation of public charging piles in China has increased sharply, from 300,000 in 2018 to 1.3 million in 2022. It is expected to rise to 26.3 million by 2030, with a compound annual growth rate of 46%.

At the same time, the construction of China's public charging market has accelerated. In 2022, the annual increase in public charging stations in China will be 37,000, and the number of public charging stations will reach 111,000. It is expected that 60,000 new public charging stations will be added in 2023, and the number of ownership will reach 171,000.

The rapid development of the new energy charging industry is inseparable from the strong support at the national level and the frequent and continuous launch of favorable policies.

In terms of state support, new energy vehicles have been mentioned in the work reports of the two sessions from 2014 to 2020 for seven consecutive years. In the 2020 Government Work Report, new energy vehicle charging infrastructure was included as one of the seven major industries of "new infrastructure" for the first time.

The 2021 Government Work Report included "carbon neutrality" in the report for the first time, and proposed to "increase parking lots, charging piles, exchange stations and other facilities". In 2022, "continue to support the consumption of new energy vehicles" will be written into the Government Work Report again.

In terms of favorable policies, since 2023 alone, there have been countless favorable policies for the new energy charging industry. Important departments, including the Ministry of Industry and Information Technology and the National Development and Reform Commission, have spoken out to vigorously promote the construction of charging pile infrastructure.

In April this year, the Political Bureau meeting of the CPC Central Committee pointed out that "it is necessary to consolidate and expand the development advantages of new energy vehicles, accelerate the construction of charging piles, energy storage and other facilities and the transformation of supporting power grids." ”

In May, the executive meeting of the State Council pointed out the prominent bottleneck restricting the rural development of new energy vehicles - that is, to build charging infrastructure moderately ahead.

The rural new energy vehicle market has a vast space, and accelerating the construction of charging infrastructure is not only conducive to promoting the purchase and use of new energy vehicles and releasing rural consumption potential, but also conducive to the development of new formats such as rural tourism, adding impetus to rural revitalization.

In the same month, the National Development and Reform Commission and the National Energy Administration issued the Implementation Opinions on Accelerating the Construction of Charging Infrastructure to Better Support the Rural and Rural Revitalization of New Energy Vehicles, mainly involving the construction of charging infrastructure in rural areas and the supply policy of new energy vehicles. Charging facilities "going to the countryside" is expected to add new market space for the new energy charging industry.

03 Chain builders, building an "ecological lake"

If new energy is China's golden track in the next two decades, then from the perspective of development prospects, growth speed and policy support, the subdivision of new energy charging is a trillion-dollar high-quality blue ocean market that has just started. However, while developing at a high level, the charging industry has many pain points that need to be solved urgently on the supply and demand side.

First of all, from the demand side, the user's charging experience needs to be greatly improved. When new energy vehicle owners use charging piles, the common complaints are mainly focused on the difficulty of finding piles, long queuing time, long charging time, and the need to download multiple apps.

Secondly, from the supply side, on the one hand, in the construction and operation of public charging infrastructure, it is widespread: insufficient structural supply in various regions; Information islands are formed between the charging networks of different charging operators; Low utilization rate of charging facilities and single profit model; inefficient operation management, etc.

On the other hand, for charging pile manufacturers, there is a lack of effective channels to connect customers, especially small and medium-sized customers; For small and medium-sized operators, the lack of reasonable site selection schemes, the bargaining power of power purchase and pile purchase, and weak operation and service capabilities lead to low station traffic and poor profitability.

In addition, in the past two years, China's charging market has shown a trend of decentralization, charging operators CR5 (the top 5 enterprises market share) from 87% in 2018 to 67% in 2022, and small and medium-sized operators are expected to account for more than 60% in the future.

A large number of operators from different industries and backgrounds have joined the market, most of them lack experience in the construction and operation of charging facilities, and the industry has not formed unified industry norms and service standards, so the market needs standardized construction and operation solutions specifically for operators.

In response to the above many industry pain points, third-party charging service providers often play the role of industry "connectors" to integrate all parties in the new energy vehicle charging industry chain and effectively improve the industry's scattered and inefficient supply pattern. The energy chain smart electricity that has attracted the attention of the Zheng family this time belongs to this track.

In the entire new energy charging industry, third-party charging service providers such as Nenglian Zhidian play the role of "super platform", similar to Meituan Dianping in the local life field, Manbang in the freight logistics field, and Ctrip in the tourism service field.

The performance growth of Nenglian Zhidian also verifies its high-quality growth and Zheng Zhigang's vision.

According to the financial report, the revenue of Nenglian Smart Power in 2022 will reach 92.8 million yuan, a year-on-year increase of 177%, and it is estimated that the revenue will be between 500 million yuan and 600 million yuan in 2023, a year-on-year increase of 5.4 to 6.4 times.

Whether the new energy industry will become the real estate of the next 20 years is still unknown, but with the market penetration rate of electric vehicles exceeding 30%, reaching 40% and 50%, the scale of users is growing rapidly, and the "chain builders" who can operate, understand cooperation and set standards will eventually become super players across the field of charging services.