Tai Shing (泰盛): the Heung family’s eight decades journey from Canton to HK and from Weaving and Dyeing to Properties and Stocks

August 7, 2020 York Lo Articles, Banks and Finance, Hong Kong Companies, Manufacturing, Non-Hong Kong Companies, Property

York Lo: Tai Shing (泰盛): the Heung family’s eight decades journey from Canton to HK and from Weaving and Dyeing to Properties and Stocks

Heung Chit-kau and others at the Tai Shing Investment booth with models of properties developed by the firm at a real estate exhibition organized by the Real Estate Developers Association of HK in 1966.

For eight decades starting from the fall of the Manchu empire in 1911 to the British handover of HK to China in 1997, the Heung family had played an important role in the business scene in Canton and Hong Kong starting with Heung Yu-po and his brothers who built one of the largest dyeing & weaving mills in the two cities to Heung Chit-kau (香植球, 1927-2003), the legendary developer and stock investor known for his investment acumen and extravagant lifestyle.

Tai Shing Dyeing & Weaving Works (泰盛染織廠): 1911-1961

The Heung family are natives of Dongguan in Guangdong province and according to the obituary of the family patriarch Heung Yu-po (香裕甫, 1898-1988) who also went by the name of Heung Kin (香健), he started Tai Shing Dyeing & Weaving Works on Shu Po Street in Foshan in 1911, although he would have been only 13. As the business grew, Tai Shing moved to a larger factory on Fuk Ning Road in Canton in 1919. The firm quickly became known for its “Coconut Tree” (椰樹) brand of poplin, fancies, stripes, colored drills and other cotton piece goods and became one of the largest dyeing and weaving mills in the city. In 1923, Tai Shing became one of the first factories in China to use indanthrene dye in China to make bright blue cotton fabric which became very popular for making qipao dresses for women at the time.

Yu-po was joined at Tai Shing by his younger brother Heung Chiu-luk (香超六) and Heung Choi-mui (香在梅, 1909-1950). Choi-mui learned English at night school while working at Tai Shing and then studied textiles at the University of Hangchow (later in HK he studied at night at HKU). In the early 1930s, he brought his technical knowledge and new machines from Shanghai back to Tai Shing in Canton, resulting in the launch of a series of new products and improved product quality. As a result, Tai Shing’s products were carried for the first time in major retailers in HK and Canton which previously only carried imported fabric. (Epitaphs of Famous Chinese Figures in HK)

When the Japanese occupied Canton in 1938, the Heungs like many other industrialists moved to Hong Kong where they acquired the site at 7 Tam Kung Road in Kowloon and built a 20,000 sq ft factory to continue their business.

Left: Ad for Tai Shing’s fabric in the late 1940s; Centre: Tai Shing ad for its Coconut Tree cloth in 1947 (KSDN, 1947-6-25); Right: Tai Shing’s former factory building on Fuk Wing Street (House18)

When the Japanese occupied HK in 1941, they took over Tai Shing’s factory for two months before returning it to the Heungs but $30,000-40,000 worth of damages was already done to goods and equipment in the factory. After the War, Tai Shing resumed its business in HK with sales office at 131 Wing Lok Street in Sheung Wan and factory location still at Tam Kung Road and re-opened its Canton plant at Ming Him Lane in August 1946 with assistance from Yu-po’s eldest son Chit-kau, who recently graduated from Wah Ying College (華英中學) in Foshan. In the late 1940s, the HK factory had 80 weaving looms, 5 dyeing machines with 30 full time technical staff and over 100 part time workers. The firm was doing about HK$300,000 in sales per month and daily production of around 100 yards of fabric with the Canton factory supplying the mainland market while the output from the HK factory were sold locally and exported to Southeast Asia.

When the Communists took over Canton (hereafter refer to as Guangzhou) in 1949, Heung Chit-kau stayed behind to manage the factory. Meanwhile in HK, tragedy struck in 1950 when Heung Choi-mui died at the age of 40.

In the 1950s, the Heungs incorporated Tai Shing Dyeing & Weaving in 1950 and Tai Shing Textile (泰盛紡織) in 1957 with $600,000 in capital, the latter operated out of the same premises as earlier as a manufacturer of cotton piece goods with Heung Chiu-luk’s son Heung Dick-kau (香滌球, graduate of Pui Ching Middle School in 1949) listed as a shareholder alongside his uncle Yu-po. In the 1950s, Heung Yu-po resided in 19 Tat Chee Avenue in Yau Yat Chuen (where many industrialists reside) and was on the board of the HK Weaving Mills Association alongside Ng Yue-kwong, Shum Choy-wah and Wan Tat-ming covered in other articles earlier. Aside from “Coconut Tree”, it also marketed fabric under other brands such as “Pearl River Bridge”, “Mui Fa Tsuen” and “Hang Fa Tsuen”. (CMA Members Directory, 1958) By 1958, Tai Shing’s factory had relocated to 350-360 Fuk Wing Street in Sham Shui Po, which was also home to Kwoon Kwen Hardware (see article). (HK Industry Handbook, 1958)

In August 1964, a fire broke out at Tai Shing’s plant in Sham Shui Po but the 20 workers who were on duty at the time managed to put the fire out by themselves before the six fire engines arrived and only six looms and some cotton were destroyed resulting in $5000 in damages. At the time, Tai Shing occupied all floors of the 4-story building with 60 looms on the first floor and several dozen looms on the other floors and 20 workers working on each floor. (WKYP, 1964-8-30)

In the 1960s, Heung Choi-mui’s son Heung Tung-kau (香棟球) returned to HK to join Tai Shing as a director after receiving his B.S. from the Textile Institute in Manchester, UK and graduation from North Carolina State University with MS in textile technology in 1960 with his master thesis entitled “The mechanism of fabric shrinkage in washing”. As a firm, Tai Shing Dyeing & Weaving was dissolved in 1994 while Tai Shing Textile was dissolved in 2001.

As for Tai Shing in Guangzhou, it was renamed Chaoyang Dyeing & Weaving in 1966 and then No. 4 Dyeing & Weaving Factory in 1969 during the Cultural Revolution but reverted to its original name in 1982. By 1990, the firm had over 1000 workers making “Coconut Tree” brand of fabric.

Tai Shing Investment (泰盛置業): 1962-1972

Ad for Ho King Building in Kwun Tong (WKYP, 1962-8-15)

In September 1961, Heung Chit-kau was given the permission to leave Guangzhou and joined his family in Hong Kong. A keen student of economics with highly analytical mind, Chit-kau believed that the prospects for real estate in HK was much brighter than industries with the massive influx of refugees like himself from the mainland and limited supply of land. He convinced his relatives to pull together $1 million to establish Tai Shing Investment in January 1962 to engage in property development.

Two of the first projects Tai Shing, which operated out of 546 Nathan Road, were involved in back in 1962 were residential projects – the 13-story Ho King Building (好景樓) at 71 Yuet Wah Street in Kwun Tong which was designed by architect Cheng Chung-chow (鄭頌周) and Wan Chui Yuen (環翠園, not to be confused with Villa Verde on the Peak which has the same Chinese name) at 325-331 Tai Hang Road in Jardine’s Lookout which was designed by Edward Lee Wei-kwong (李為光). Both projects placed huge emphasis on greenery, with the building itself only represented 32% of the site and the remaining 10000 sq ft was earmarked for garden. These were followed by Shun King Building (順景樓) at 17-33 Ka Lok Street in Kwun Tong in 1964 and Mido Mansion (美都大廈, not to be confused with Mido Apartments in North Point developed by Lyndhall Land a few years before with the same Chinese name) at 51-63 Yue Man Square in Kwun Tong and the nearby Bonds Theatre (寶聲戲院) in 1965. Chit-kau was one of the founding directors of the Real Estate Developers Association of HK in 1965 and was very close to fellow developers such as K.C. Pang of Goodyear, Eddie Chan of Tai Cheung and Stanley Ho (who later served on the board of Tai Shing Development).

Tai Shing’s ad for Villa Verde in 1962 (WKYP, 1962-8-14)

Later in the decade, Tai Shing Investment shifted its focus and developed five industrial properties in San Po Kong in 1969-70 – Chiu Tat Industrial Building (超達工業大廈) at 708-710 Prince Edward Road, Tai King Industrial Building (泰景工業大廈) at 700-702 Prince Edward Road, Shing King Industrial Building (盛景工業大廈) at 9-11 Ng Fong Street, Lee King Industrial Building (利景工業大廈) at 12 Ng Fong Street and Wong King Industrial Building (旺景工業大廈) at 192-198 Choi Hung Road.

Tai Shing ad in 1969 promoting its five industrial buildings in San Po Kong (WKYP, 1969-4-15)

In 1971, Tai Shing developed its highest profile building – the Yue King Building (愉景樓) at 1-7 Leighton Road in Causeway Bay. Heung Chit-kau invited the owners of the popular Blue Heaven Restaurant & Nightclub in Central led by Henry S.H. Fung (to be covered) to establish the Kingsburg restaurant (京寶酒樓) on the first few floors on the building. A frequent and generous customer of nightclubs, Heung set up his own Yue King Club (愉景俱樂部) on the top floor of the Yue King building with private kitchen and dance floors to entertain his friends. Another building completed by Tai Shing that year was Hong King Building (康景樓) at 86 Tseuk Luk Street in San Po Kong with six floors of garage space enough for 450 cars and price per sq ft only HK$80. (see below ad)

Ad for Yue King Building in 1970 promoting 10% discount for 30 days (WKYP, 1970-1-6)

Ad for Hong King Building in San Po Kong in 1970 (WKYP, 1970-5-1)

Heung Yu-po had 5 sons – Heung Chit-kau, Heung Kam-kau (香錦球, who died early) and Kenneth Heung Kin-kau (香建球) are sons of his wife Fok Lai-ching (霍麗澄) while Edmund Heung Wai-kau (香衛球) and Heung Yik-kau (香翊球) are sons of his concubine Hung Yiu-ching (孔堯靜). In 1972, Heung Yu-po decided to retire and his sons and nephews also decided to split up. By that time, Tai Shing’s original $1 million had grown to $100 million, of which Chit-kau received $6 million and his brother Kenneth received $3 million. Chit-kau and Kenneth started Tai Shing Development while his brothers from another mother – Edmund and Yik-kau took over Tai Shing Investment, which was dissolved in 1975. It appears to have been succeeded by Tai Shing Investment (1975) Ltd which was incorporated the same year but dissolved nine years later in 1984.

Tai Shing Development (泰盛發展): 1972-1990

Left: Heung Chit-kau offering his view on the stock market in 1987 (TKP, 1987-3-5); Right: Tai Shing Commercial (Yaumati) Building which was built in 1975.

When Fung King-hey opened Sun Hung Kai Securities in 1970, Heung Chit-kau was one of his first and biggest clients. While many of his peers traded stocks based on speculation or insider tips, Heung conducted extensive research and analysis of each stock which he bought and focused on a sector he was most familiar with – real estate. In October 1972, Heung listed his Tai Shing Development on the Far East and Kam Ngan exchanges at $2.7 per share. Shortly after the IPO, Tai Shing issued another 5.8 million new shares to acquire $11.6 million worth of properties including 28 Hong Keung Street and 192 Choi Hung Road in San Po Kong and 4 store units in Shun King Building in Kwun Tong, which increased the firm’s net assets by 30%. (KSEN, 1972-10-25) Within three weeks, the stock rose to $5 per share and Tai Shing announced another deal acquiring two companies which controlled $27 million worth of properties in Tai Hang and Ngau Tau Kok through the issuance of 14 million shares, bringing the total assets of the firm to over $51 million. (WKYP, 1972-11-14) In March 1973, Tai Shing acquired Shui Hing Building (瑞興大廈) at 134-136 Des Voeux Road Central for $38 million from fellow listed developer Michaelson Ltd (萬生), who bought the building weeks earlier for $17 million. (KSEN, 1973-3-12) With the magical formula of using its stock as a currency to accumulate real assets, Tai Shing’s stock rose to a high of $15.7 during the height of the stock market bubble in 1973. The same year, Tai Shing also established Tai Low Enterprises (泰廬企業, perhaps a play on the phrase “buy low”) to invest in stocks and in the 1970s and 1980s, Heung frequently expressed his views on the market to the press based on his analysis of cash holdings, market multiples and property market and even published his analysis of individual stocks and distributed them in his office.

In 1974-75, Tai Shing Development built the 23-story Tai Shing Commercial (Yaumati) Building (泰盛商業油麻地大廈) at 498-500 Nathan Road, Wei King Building (蔚景樓) at 275 Chatham Road North in Hunghom, the 22-story Yick King Building (億景樓) at Chun Fai Road in Tai Hang, Siu King Building (兆景樓) in Ngau Tau Kok and Man King Building (萬景樓) at 49 Shek Pai Wan in Aberdeen. Despite of all the activities, the stock and real estate market slump in the mid-1970s negatively impacted the earnings of the firm which went on the following downward trajectory in the first few years after it went public: 1973 – $18.6 mil, 1974 – $11.6 mil, 1975 – $10.4 mil and 1976 – $6.8 mil. As a result, the stock hit a low of $0.99 per share in 1976. (KSEN, 1976-8-6) In 1975, Heung Chit-kau decided to shift his focus from property development to stock investments and that year, Tai Shing Development did not acquire any new sites.

In 1977, Tai Shing recorded net profits of $9.9 million, of which $4.7 million came from rental income. That year, the firm developed Ho King Building (好景樓) at 110 On Ning Road in Yuen Long and disposed of land in a 20 million sq ft property development project in Indonesia. (KSEN, 1978-7-11) In 1978, the firm developed Yue King Building (裕景樓) at 287-297 Shanghai Street and Grandview Building (宏景樓) at 8-8A Nelson Street in Mongkok. In 1979-80, Tai Shing announced its intention to sell all its properties but because their asking prices were too high, the firm only managed to sell the first six floors of the Tai Shing building in Yaumatei for $25 million. By 1981, Tai Shing’s property holdings had reduced from 1.1 million sq ft in 1973 to 447,263 sq ft and its shift to stocks had paid off with the firm recording profits of $171 million in 1980, of which 94% came from stock trading, up from 40% in 1976. (KSEN, 1981-6-22) The value of its stock portfolio had increased from $35.9 million in 1978 to $791 million in 1981 and in the first 6 months of 1981 alone, Tai Shing made $119.6 million in profits, 86% of which came from stock trading and the stock itself bounced back to over $6. (KSEN, 1981-7-31) But when the stock market reversed its course in the second half of 1981, Tai Shing ended up the year with $20.8 million in profits, a 87.9% decrease from the prior year and the stock dropped to below $2 in 1982. For the fiscal year ending December 1983, Tai Shing Development recorded profits of $24 million and its stock portfolio as of year-end 1983 was valued at $196 million.

In 1984, Tai Shing recorded profits of $28.2 million, a 15% increase from the prior year. As the stock market remained sluggish, the firm shut down its fund management arm Tai Hang Fund Management (泰亨基金管理, incorporated in 1980, dissolved in 1985) and returned to its real estate roots that year and built the 21-story Tak King Industrial Building (德景工業大廈) at 27 Lee Chung Street in Chai Wan and announced plans to re-develop Shui Hing Building in Central and nearby sites into Tai Shing Commercial Building at the cost of $35 million. That being said, Heung did not give up on stocks as Tai Shing increased its stake in Hopewell Holdings from 10% in 1982 to 15% with interest to raise it to 20% although Heung indicated to the press that he saw it purely as a stock trade and had no interest in joining Hopewell’s board. (KSEN, 1984-5-25) In February 1985 however, Tai Shing sold its 15% stake of Hopewell and booked $4 million in losses. As explained by Heung, he was concerned with Hopewell’s liabilities and unclear about the firm’s profit outlook. At the annual shareholder meeting in May 1985, Heung announced that he was turning more bullish on the stock market and would no longer invest in properties although the firm had recently acquired the site of Kingsburg Restaurant in the Yue King Building. At the time, Tai Shing’s portfolio consisted of 20% in utilities, 20% in bonds, 40% in property stocks and 20% in cash and the securities in the portfolio was worth a total of $250 million. (WKYP, 1985-5-23) Heung put his money where his mouth was and by December 1985, Tai Shing’s securities portfolio which was worth $379 million was 97% invested in high quality property stocks, with Hang Lung being the largest holding followed by New World Development. At the annual shareholder meeting in 1986, he predicted that the Hang Seng Index had 70% chance of reaching 2500 in 1987 and crossing 3000 in 1988 and predicted at least 3 years of bull market as the banking crisis was in the rear view and the environment was relatively stable. (TKP, 1986-5-22)

For fiscal year ending December 1986, Tai Shing recorded profited of $85.6 million, of which only $14.8 million came from rental income. (WKYP, 1987-3-5) In March 1987, Heung Chit-kau predicted that the Hang Seng Index could reach 3200 that year (TKP, 1987-3-5) In August 1987, Tai Shing Commercial Building was completed and was quickly 80% leased with projected annual rental income of $15 million.

In October 1987, Tai Shing announced the intention to spin off the firm’s securities investment arm Tai Low Enterprises, selling 25% for $1 per share to raise $400 million with Citicorp handling the listing. Heung revealed that Tai Sing had made $310 million from stock trading in the first nine months of 1987. Heung believed that the average market PE of 18-20 at the time was reasonable compare to the stock market bubble in the 1970s and early 1980s and with economic growth of 8-12% and relative political stability he expected the Hang Seng Index to climb to 4800 by 1988. (WKYP, 1987-10-10)

Then the next month, stock market crash which wiped out a lot of Tai Shing’s gains and Tai Low’s spinoff plans were called off (and Tai Low was renamed Tai Shing Portfolio Investments 泰盛金融投資 in 1988). Despite of that, Tai Shing still made $42.8 million for the entire year and its stock portfolio was valued at $867 million (which included $200 million worth of Hang Lung stock or 3% of the firm, $200 million in Wharf and World International Holdings, the rest in stocks such as SHKP and New World) as of the end of 1987, which was a 38.9% increase from the prior year compare with the drop of 10.4% for the Hang Seng index over the same period, a testament to Heung’s investment acumen. (TKP, 1988-4-14)

In April 1988, Heung Yu-po died at the age of 90 at the Adventist Hospital in HK. He was survived by 4 sons, 5 daughters, several dozen grandchildren and 4 great grandchildren (a son and a daughter predeceased him). (WKYP, 1988-5-7)

In June 1988, Tai Shing Development was renamed Tai Shing Development Holdings (泰盛發展集團). Heung predicted that the stock market correction in 1987 was short lived as property prices remained resilient and once again he was proven correct and in 1988, Tai Shing recorded profits of $240 million thanks to its stock investments which had appreciated to $1.3 billion by year end with Wharf, Hang Lung and New World being the top three holdings. At the shareholder meeting in March 1989, Heung was bold enough to predict that the Hang Seng would cross 4000 with real estate stocks doubling in the next three years. (TKP, 1989-3-30) Two months later however, Heung became disillusioned with the HK and Chinese markets and announced his intention to exit the market. In March 1990, Heung Chit-kau and his family sold their 34.9% of Tai Shing Development to Kwong Sang Hong for $477 million (or $2.50 per share). As a result, Peregrine’s founders Philip Tose and Francis Leung became the chairman and managing director of Tai Shing respectively and the firm was reorganized as Peregrine Investments Holdings in July 1990. (TKP, 1990-3-1). Tai Shing Commercial Building was sold to Cheung Kong which in turn sold it to Sin Hua Savings Bank for HK$320 million in October 1990. (TKP, 1990-10-20)

Genesis and Exodus: 1991-2003

Left: Heung Chit-kau in his later years; Right: Heung’s mansion on the Peak

Outside of investments, Heung Chit-kau was known for his extravagant lifestyle. He was chauffeured around town in a Rolls Royce with the No 7 license plate and frequently had abalones from the expensive Fook Lam Moon restaurant. In 1970, Heung Chit-kau acquired 23 Severn Road on the Peak, which was formerly occupied by American shipping executive Charles Kelsch and his wife Grace for the bargain price of HK$1.6 million. He spent over 6 years and over $100 million to build a 28000 sq ft mansion on the site which became known as the “Glass House” because of its 20 feet windows and featured ornate bathrooms and bedrooms, tiger and zebra carpets and a dining table that could sit 24 guests. He frequently hosted friends from newspaper editors such as Lam Shan-muk and George Shen to economist Milton Friedman whom he was a big fan of and even gave the latter an expensive Lalique table as a gift. In late 1996, Heung made headlines when he sold his beloved Severn Road mansion for HK$540 million to the listed firm Pearl Oriental, making it the most expensive home in the world at the time and was renamed “Genesis”. Allegedly, he predicted that the HK real estate market would tank after 1997 and better opportunities elsewhere. Once again, he was proven correct and five years later, the cash strapped Pearl Oriental sold the property for $230 million to Hui Wing-mau, less than half of what they paid for.

After the sale of his mansion in HK, Heung relocated to Singapore but did not stop investing. He became a major shareholder of Thai Asia Fund, a HK-listed mutual fund investing in Thai equities which was trading at significant discount to its NAV and announced a general offer in February 1997. (WSJ, 1997-3-18)

Heung Chit-kau died in Singapore in 2003. According to his father’s obituary, Heung Chit-kau had two wives – Yuen Yee-ping (袁綺萍) and Chan Wan-han (陳蘊嫻) and five sons. His sons were named in the order of the five Chinese virtues – 仁義禮智信 (humanity, justice, propriety, wisdom, trust) and his fourth son Eugene Heung Lap-chi (香立智) and fifth son Heung Lap-sun (香立信) served on the board of Tai Shing Development before its sale.

In 1992, Eugene launched Television Daily (電視日報) with Kennedy Wong Ying-ho but the newspaper only lasted for three years and closed in 1995. He became one of the largest shareholders of two listed technology companies – Computime founded in 1974 by Auyang Ho and Perception Digital founded in 1999 by Professor Jack Lau from HKUST. In 1999, he took up Tai Chi for health reasons and became one of the first disciples of Master Eddie Wu Kwong-yu of Wu’s Tai Chi Chuan Academy in 2004.

Sources (other than those cited above):

Collection of articles about Heung Chit-kau:

https://tokuhon.blog/?p=1319

This article was first posted on 7th August 2020.

Tai Shing (泰盛): the Heung family’s eight decades journey from Canton to HK and from Weaving and Dyeing to Properties and Stocks

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