People

The People

Governance grade: B–. Capability is deep and skin-in-the-game is unusually high — the Zen family owns 63.25% — but accountability mechanics have decayed: three of four "independent" directors have served 21–33 years, the Nomination Committee is chaired by an executive, two shareholder-nominated NEDs vanished in a single day, and the Group's largest customer sits inside a family of companies that is also its 11% shareholder. The Chairman also received a salary increase for FY2025 while the Group posted a record loss.

1. The People Running This Company

The Group is run by the Zen brothers — William (Chairman until June 2025) and Derek (Vice Chairman and CEO, now Chairman) — who between them bring a century of Hong Kong civil-engineering experience. On 20 June 2025 Derek took over as Chairman; on 11 August 2025 Zen Chung Hei, a third-generation family member, was appointed to the board. That is the clearest succession signal the Company has ever given: the family intends to keep the chairmanship in the family.

What's notable. The engineering bench at Build King is unusually deep — dozens of registered professional engineers, 50-year quarrying veterans, multiple Hong Kong Construction Association council seats. That is real operating capability in a tender-driven business. The weakness sits above it: the succession plan just became explicit (family only), and the "independent" directors who are meant to check family power have been in their seats for longer than most CEOs spend in any single role.

2. What They Get Paid

Pay is modest in absolute terms and there is no equity-linked component — but the optics are bad. William Zen's disclosed base salary rises to HK$12.9M (about $1.66M) effective 1 April 2025, and the four INEDs each received pay rises too — all against a HK$3.09 billion FY2024 attributable loss (FY2023: HK$1.59 billion loss).

Is pay sensible? Absolute quantum is reasonable for a HK mid-cap. There are no options, no performance shares, no LTIPs. But the behaviour is not: the Chairman gets a raise while the Group posts its worst loss ever and no dividend is paid for a second consecutive year. That is not pay-for-performance — it is pay regardless of performance. Audit-fee mix also deserves a second look: in FY2023 non-audit fees (HK$6.29M) exceeded audit fees (HK$4.36M) by 44%; the ratio normalised to 55% in FY2024, but with Deloitte's tenure running into decades, the check against the auditor has softened.

3. Are They Aligned?

This is where the case divides: beautifully aligned on ownership, awkwardly aligned everywhere else.

Ownership

The Zen brothers own 63.25% under an SFO section 317(1)(b) concert-party. Combined with Chow Tai Fook's 11.49%, three-quarters of the register sits with just three parties. The 21 March 2025 HK$570M bank facility explicitly requires the Zens to retain at least 40% of beneficial shareholding and a majority of the executive directorships — so the family cannot dilute itself below that floor even if it wanted to.

Insider buying and selling

Disclosure-of-Interests filings show no material director trades in 2024 or 2025; the family has held, not traded, for decades. A positive alignment signal.

Dilution, buybacks, capital allocation

The dilution record is clean and the absence of buybacks is sensible during a loss cycle. But two problems live inside this table. First, the Chief Executive personally holds roughly US$64.7M face value in Road King debt — the same associate whose distressed refinancing dominates the balance sheet. Second, and quieter, two of the four INEDs also hold Road King senior notes personally. One of them (Wong Man Chung) is the CPA whose committees oversee the HK$1,510M Road King impairment taken in FY2024. The amounts are small, but the principle is material: the Audit Committee's independence on the single largest accounting question at the Group is compromised by personal bondholding.

Related-party behaviour — the structural concern

The Group's largest customer sits inside the CTF Services / New World / Chow Tai Fook family of companies — which is simultaneously its 11.49% shareholder. Customer concentration is severe: the top customer is ~47% of revenue and the top five are ~80%. In October 2024 Build King (50%-owned by Wai Kee) entered a HK$2,092.5M joint-venture sub-contract with a CTF subsidiary; the same month both CTF-nominated NEDs resigned from the board without replacement.

How to read this. All the disclosed procedures (Chapter 14A independent-shareholder approvals, Deloitte assurance letters) were followed. What the disclosures cannot solve is the structural question: Wai Kee's largest customer and its second-largest shareholder share an ultimate parent, and the two NEDs who might have formally represented that shareholder on the board left within weeks of the largest connected JV being announced. If CTF Services were ever to unwind its 11.49% stake, the 47% customer exposure would re-price as a commercial concentration risk — not just a related-party one.

Skin-in-the-game score

Score: 6 / 10. Ownership alone argues 9. Pay without equity-linkage is neutral. Marked down for: (i) 63%+11% concentration leaving minorities without a pressure valve; (ii) pay rising during a record-loss year; (iii) CEO personally holding Road King debt; and (iv) two INEDs also holding Road King debt while supervising its impairment.

4. Board Quality

The board meets every procedural requirement — 8 meetings in FY2024, 100% attendance, a CPA-chaired Audit Committee, a Big-4 auditor. It also has three governance features that would not pass any serious independence test.

What stands out. Three of the four INEDs have served 21–33 years — this is not independence, it is long institutional service. The Nomination Committee (which selects new directors) is chaired by the executive Chairman himself, a red flag even in Hong Kong's permissive regime. The Audit Committee CPA personally holds US$1.93M of bonds from the Group's largest associate at the same time he is supervising the impairment of that associate's carrying value. And the only genuinely fresh independent voice — Tsang Wing Yee, appointed October 2023 — sits alone with 2 years of tenure against her colleagues' 21–33 years.

5. The Verdict

Grade: B–.

The Zens have built a deep operating business over 50 years and the family's net worth rises and falls with the share price more than any professional manager's ever would. The governance machinery complies with Hong Kong's Listing Rules on paper. What prevents a higher grade is the combination of three long-tenured "independent" directors whose independence is strained by tenure and by personal bondholdings in the Group's most impaired associate; a Nomination Committee chaired by the man it is supposed to evaluate; and a structural dependence on a single customer family that is also a shareholder — whose board representatives just left the room. Trust the people. Verify the checks.