How should Chengzi Technology be valued?
That is a question.
A well-written PPT can easily fool venture capitalists interested in internet investments into believing it's worth three to five hundred million, but it's clear that city investment companies don't fall for that.
It seems that most city investment companies rarely get involved in internet investments; compared to such inflated valuations, they value asset-heavy enterprises more.
But for Tan Jincheng to sell it cheaply, that's obviously impossible.
With Happy Farm and Kaixin Wang projects having doubled investments and supported by a professional team, their returns cannot be lower than in his previous life.
Therefore, during the audit of Chengzi Technology, Beicang Chengtou and Tan Jincheng had a significant disagreement.
"If you don't want it, I'll sell it to Xiao Ma then. He'll definitely like it anyway."
"In that case, let's take Chengzi Technology out. They'll regret it in the second half of the year."
Tan Jincheng didn't mind; it's understandable that government investment departments operate this way.
Furthermore, even though the richest man in Yongcheng has been dominated by him for years since the pig farming business prospered, as a physical manufacturing city, Yongcheng doesn't have many internet companies, nor are they particularly valued.
This is inherent to the city's characteristics.
Influencer cities prefer to attract influencers to start companies, while physical manufacturing cities prefer factories.
Factories springing up everywhere are what Yongcheng truly loves.
"Alright, I'll inform them later so they don't need to audit it,"
Zeng Jixiang replied.
Removing Chengzi Technology makes the share exchange easier.
The annual profits of other companies like Jinyi Industry are clear and transparent.
Hangxin New Energy was previously a subsidiary of Shanchi Technology, and its independence will not affect Beicang Chengtou's shareholding.
The week-long audit quickly concluded.
Tan Jincheng and Xie Hongjun once again sat in a meeting room, but this time it was Shanchi Technology's large conference room, and the attendees were not just Tan Jincheng and Xie Hongjun.
Tan Jincheng sat in the middle of the conference room.
To his left was the Beicang Chengtou team led by Xie Hongjun, and to his right were Zhao Xinyi and Zeng Jixiang, along with the financial and legal teams from various companies excluding Chengzi Technology.
Beicang Chengtou also sent lawyers to participate; it was clear that both parties aimed to directly discuss and reach a conclusion this time.
"Due to the significant valuation differences for Chengzi Technology, it will not be included in the group restructuring this time. I will arrange another company to join later."
The company to be arranged, naturally, was the pre-acquired motor and controller factory, which would also meet the basic conditions for group operations.
"Agreed, we'll follow President Tan's arrangement,"
Xie Hongjun nodded.
Tan Jincheng said Chengzi Technology's project was worth 300 million, which Xie Hongjun naturally couldn't accept.
How much would he have to spend to get shares if it was 300 million?
Moreover, internet companies were not the primary investment sector for Beicang Chengtou.
"Additionally, I have no objection to your company's expectation of Jinyi Industry's annual profit of 300 million yuan. However, Jinyi Industry's electric vehicle export business will be merged under Shanchi Technology later."
"No problem, and we highly welcome this,"
Xie Hongjun also nodded.
Shanchi Technology has a listing requirement.
Separating Hangxin New Energy's battery business and forming a complete production and sales cycle for electric vehicles will facilitate future capital increases, share expansion, and then listing.
Xie Hongjun welcomes this, as listing means they can cash out.
"Hangxin New Energy is currently incurring losses and also needs to build factories, so it's estimated to lose money for several more years. I'm not sure what Beicang Chengtou's stance on this is."
"It's fine. As long as it's President Tan's industry, we are willing to support it. Batteries have great development prospects in the future, so losing money for a few years is not a big issue,"
Xie Hongjun chuckled.
As long as the price can be negotiated, why would I fear your losses?
I fear losses even less than you do.
Since Tan Jincheng first invested in lithium batteries, he had already investigated.
Lithium battery technology could be applied to mobile phones, and currently, the electric vehicle industry, including manufacturers like Shanchi Technology, was attempting to replace lead-acid batteries with lithium batteries.
Overall, the prospects are good.
Not only can it enrich Shanchi Technology's battery business, but it can also generate revenue from other operations.
Furthermore, it's considered a high-tech industry, and opportunities to invest in high-tech industries are rare.
"Alright then. It's fine for Hangxin New Energy to become independent. As for the shares of other companies like Mingcheng Industry, Zhongtai Auto, and Shengshi Shanchi being transferred to Juliang Engine, does President Xie have any objections?"
These three companies were all invested in under Shanchi Technology's name; the shares were not yet.
Among them, Mingcheng Industry held 28%, Shengshi Shanchi held 20%, and Zhongtai Auto's Beicang factory held 10%.
Xie Hongjun knew how Zhongtai Auto's shares came about.
Although invested under Shanchi Technology's name, it wouldn't be an exaggeration to consider it Tan Jincheng's personal asset.
Turning 5 million into 40 million in a month was his skill.
While business is business, and the money Tan Jincheng earned by acquiring automobile production qualifications under Shanchi Technology's name should be shared with Beicang Chengtou, some things cannot be calculated that way; calculating them strictly would make things awkward.
Among the three invested companies, the most valuable is definitely the 20% stake in Shengshi Shanchi, the general distributor's shares, which can receive a large portion of Shanchi Technology's profits.
If Zhongtai Auto were transferred to Juliang Engine, Xie Hongjun might not have much to say, but transferring Shengshi Shanchi's shares would certainly come at a cost.
However, after financial auditing and industry analysis, Xie Hongjun had a new idea.
"How about using Jinyi Industry's shares to offset the shares of these three invested companies? Also, President Tan can remove your 100 apartments from Juliang Engine."
"Does President Xie mean to directly exchange 5% of Shanchi Technology's equity for 5% of the group's parent company's equity?"
With Chengzi Technology excluded and 100 apartments removed from Juliang Engine, the profits from Jinyi Industry alone would offset the equity of the three subsidiaries.
To be honest, Tan Jincheng would be getting the better deal.
Tan Jincheng didn't understand why Xie Hongjun would make such a decision.
"No, no, no, I have a new idea. I wonder if President Tan would like to hear it,"
Xie Hongjun said with a smile.
"Please, President Xie."
Sure enough, there was more to it; he knew that good things don't just fall from the sky.
After removing Chengzi Technology, the actual share exchange, based on existing revenues, would be difficult for Tan Jincheng to negotiate.
The lithium battery business was an investment in the future, but currently, it wasn't even generating revenue from expansion and wouldn't see any returns before smartphones became widely adopted.
Jinyi Industry's cash flow and profitability are indeed very strong, but Shengshi Shanchi's prospects are also good.
The more electric vehicles Shanchi Technology sells, the more it earns, and the same applies to Mingcheng Industry.
Shanchi Technology holds significant stakes in these two companies.
An exchange is possible, but not exchanging them doesn't necessarily mean earning less.
"Beicang Chengtou will still hold 5% of Shanchi Technology's shares. As for the parent company's shares, Beicang Chengtou will still invest with cash, just like last time. What do you think, President Tan?"
Shanchi Technology has plans to go public in the future, so he naturally wouldn't give up this 5% stake.
If he hadn't seen how low Shanchi Technology's debt ratio was, he would have tried to ask for more shares.
Speaking of which, President Tan is truly impressive.
A physical enterprise managing its payment terms so well, keeping its debt ratio so low, yet its development speed isn't slow.
Xie Hongjun had seen financially healthy companies before, but for a startup to maintain a good debt ratio while developing at the same time was quite rare.
Aside from Shanchi Technology, Tan Jincheng's other enterprises, whether profitable or not, all had excellent financial health.
What did this indicate?
It indicates that no matter what image Tan Jincheng projects to outsiders, he is a relatively steady person by nature.
Investing in enterprises is more about investing in the founders.
A adventurous spirit, talent, genius, and even creativity are all worth investing in.
But in Xie Hongjun's view, the most valuable investment is the ability to resist risks.
As long as Tan Jincheng's enterprises maintain their current operating model.
Calculated by his enterprise's debt ratio, even if there's a certain increase in the debt ratio due to this expansion, it's not enough to worry about cash flow issues.
Because this kid is not a very adventurous person.
Tan Jincheng was not surprised by Xie Hongjun's proposal.
After all, there had to be a reason for the recent goodwill gesture; no state-owned investment company would give benefits for free.
"Does President Xie really have such high hopes for the development of my enterprises?"
"Of course, I not only have high hopes for President Tan's enterprises but even more so for President Tan himself. It's a pity that our differences regarding Chengzi Technology are too great; otherwise, even if it's not my area of expertise, I would still invest."
"Haha, alright. Just based on your words, President Xie, I'll give you another opportunity to invest in Chengzi Technology in half a year."
It won't be this price in half a year; I just wonder if you'll still have the courage to invest.
"Haha, then I'll thank President Tan in advance,"
Xie Hongjun said, not taking offense.
"Then, President Xie, how much are you willing to pay for how much of the parent company's shares?"
In principle, if he's short on cash, Tan Jincheng isn't necessarily bound to hold onto 5% of the shares.
If they're willing to pay, it's fine to give up a bit more.
As the saying goes, it's not necessary to keep 100% of the shares in one's own name; cashing them out is what matters most.
Xie Hongjun also caught the unspoken meaning in Tan Jincheng's words, and his eyes immediately changed.
This was promising; it seemed President Tan was short on cash, which made things easier.
Xie Hongjun, immediately changing his strategy, chuckled,
"The parent company will still be 5% of the shares. But can Shanchi Technology give a little more? I'm very optimistic about Shanchi Technology."
Tan Jincheng pondered for a moment.
It wasn't exactly taking advantage of a crisis, but seizing an opportunity for a little extra benefit was common in business collaborations.
"Alright, no problem, but it still cannot exceed 5%."
"Sounds good, sounds good,"
Xie Hongjun laughed.
(End of Chapter)