2003: Starting with Foreign Trade

Chapter 169 Changes in Equity
Yangcheng.

After hanging up the phone, Zhang Xupeng felt a little sad, but at the same time, he was also a little excited.

Tan Jincheng's instruction to prepare himself mentally was something he could roughly guess: it was the conversation when he initially wanted to reduce his shareholding, and the subsequent transfer of shares by Xiao Tan during the profit distribution.

If I'm not mistaken, Xiao Tan is really going to transfer her shares this time.

Twenty years of friendship, more than a year at sea, and a full year of doing business together have changed both Tan Jincheng and Zhang Xupeng. Since his trip to Zhili, Huzhou with Xiao Tan, Zhang Xupeng has been fully committed to developing the children's clothing market.

Zhang Xupeng's goal was to make children's clothing the second largest business segment of Jinpeng Trading, and he succeeded, proving his ability to manage a trading company.

No man in business is used to being subservient to others, and Zhang Xupeng is no exception. Besides making money, he works so hard to prove that he is not just Xiao Tan's appendage.

After the Spring Canton Fair, Tan Jincheng devoted himself to Shanchi Automotive Industry, and had neither the time nor the energy to take care of Jinpeng Trading. After Shanchi went into mass production, he had no interest in it at all.

Xiao Tan never cared how much Jinpeng Trading made. This sudden audit, besides indicating a financial problem, probably also meant they were considering transferring shares. If that was the case, she probably couldn't stop them this time.

Furthermore, if his guess is correct, Zhang Xupeng doesn't plan to stop her anymore. Owning his own company completely, just like Xiao Tan, is also his dream.

The sadness stems from the fact that their careers are about to truly diverge, but the excitement also lies in this.

Zhang Xupeng was extremely grateful to Tan Jincheng. Without Tan's guidance, he would definitely be running a restaurant now, and he would be lucky to have a few hundred thousand yuan in assets.

Unlike now, people can buy houses and cars whenever they want. During the National Day holiday, they even generously took their employees on a trip to Dongguan. In the first half of the year, Xiao Tan felt bad about spending money on a trip there.

But given that Jinpeng Trading has developed to this point, and since Xiao Tan has no intention of managing it anymore, Zhang Xupeng naturally doesn't want to have a larger shareholder above him, which is only natural.

"Taking away 5000 million yuan shouldn't affect Jinpeng's operations, right?" Tan Jincheng muttered.

With over 6000 million yuan in cash lying in the company account earning interest, it's no wonder the bank staff kept hinting at something when we went there before; now it all makes sense.

Tan Jincheng hadn't paid attention to Jinpeng Trading for almost half a year, and was surprised to find that it had already made so much money. He was a little embarrassed; making US dollars was indeed different from making RMB.

Jinpeng Trading's current operating model has a very healthy cash flow: customers place orders - prepayment (USD) - place orders with OEM manufacturers - prepayment (RMB). Due to exchange rate differences, there is a considerable profit margin in this process.

Based on the export figures up to September, with an export value of 1.44 million, leaving over 10 million in cash, nearly 1000% of the total cash flow is easily achievable, not to mention the numerous orders expected at this autumn Canton Fair.

After putting down the financial statements and pondering for a moment, Tan Jincheng dialed Zhang Xupeng's number again.

"What's wrong?" came Zhang Xupeng's slightly deep voice from the other end of the line.

Completely different from the cheerful atmosphere of the previous phone call, Zhang Xupeng had clearly guessed what Tan Jincheng was going to say.

After a moment of silence, Tan Jincheng said, "You've done very well in the past six months. I'm going to fulfill my promise ahead of schedule and transfer a portion of my shares to you in exchange for 5000 million yuan in cash. What do you think?"

Jinpeng Trading's average monthly net profit this year is about 700 million yuan, and its annual profit is more than 8000 million yuan. Tan Jincheng can get more than 4000 million yuan in pre-tax profit from dividends alone.

Transferring most of his shares for 5000 million yuan might seem like a huge loss, but that's not actually how it works.

After the dividends were distributed last year and in the first quarter of this year, there was not much left in the Jinpeng Trading account belonging to Tan Jincheng. The financial reporting cycle of more than 6000 million yuan started from April and ended at the end of September, which was exactly half a year.

The company has made an average profit of 1000 million yuan per month over the past six months. In addition to benefiting from the orders signed at the Spring Canton Fair, Zhang Xupeng has also developed a number of new customers. Furthermore, the newly developed children's clothing business has contributed to the surge in the company's profits.

It's true that Tan Jincheng laid the foundation for the company, but he hasn't managed it for the past six months. The fact that Zhang Xupeng managed to increase the company's monthly profit from seven figures to eight figures is all thanks to his personal efforts.

If he continues to lie back and wait for his share of the profits, it would be a disregard for his hard work. If the profits are distributed over a year or two, the brothers might turn against each other. No one wants to share the large sum of money they have worked so hard to earn with others.

If hard work and dedication don't yield the rewards they deserve, they might resort to manipulating the financial data.

On the other hand, shares and dividends are two different things. Dividends are for when money is made. If money is lost, then the shares are worthless. Moreover, Tan Jincheng is short of money now, so it is reasonable to transfer shares at a low price when he is short of money.

The reason why Tan Jincheng can see the true financial report now is because the two major shareholders trust each other, and Tan Jincheng can see the true financial report. There have been many cases where major shareholders have been cheated out of their money and have not been able to exit the company.

As for the valuation of trading companies? To put it bluntly, these are just shell companies. They rent offices, and the factories belong to other companies. They might earn 1 million this year, but they might not earn a penny next year. How can you value them?
“5000 million is fine, but is that enough for you? And how many shares do you plan to transfer?” Zhang Xupeng said in a deep voice. This time he did not refuse. The hypocritical politeness between brothers did not exist between him.

Tan Jincheng lay lazily in his executive chair and said, "That's about it. You need to understand that the company must always have sufficient cash flow. If you have time, learn some accounting knowledge. Also, after the shares are transferred to you, you'll be the legal representative. At that time, you should also hire a full-time accountant for the company." With such a large cash flow, although the income and expenditure of a trading company are relatively simple, part-time accountants are no longer suitable. A full-time accounting team is necessary, and Jin Yi Industrial should be arranged as soon as possible.

"As for how many shares to transfer, how about I retain 20%?"

Zhang Xupeng pondered for a moment and said, "You're right that we need working capital in the account, but 5000 million is still too little; 37% of the shares are worth more than that much money. This year's dividends alone are 4000 million. Let's transfer 27%, and you keep 30%."

"As for the other loan, let's just forget about the bridge loan to Flash and the small amounts we had privately. I'll give you a sum of money later at the end of the year, depending on the company's profits. I can't say how much it will be for now."

Tan Jincheng thought about it and realized that it was only 10% of the shares, which wouldn't be worth much in a few years. It wouldn't mean much to either Zhang Xupeng or himself.

Since that's the case, then it doesn't matter. Let's keep as much as possible. After all, it's the first company I've ever started, so it does have sentimental value.

With too few shares, Jinpeng Trading seems to have lost some of its meaning without the "Jin" in its name.

As for the millions of dollars for bridging loans, and some miscellaneous small amounts of money, let's just forget about it. Strictly speaking, we also have a share in that, and it also helps to alleviate some of Flash's financial pressure, which is not bad.

Should we pay another sum of money next year? Forget it, there's no need.

“I agree to the first two, but as for the additional money, forget it. 5000 million is a lot. If I take so much and you have to pay more, you will have almost no money left this year.”

"Haha, don't underestimate me. I can make the company's monthly profit reach eight figures. With the breakthrough at this Canton Fair, the company's earning power is not as bad as you think. It's settled then."

Actually, Xiao Tan, you could receive about 5000 million yuan in dividends this year. Although I don't know why you're in such a hurry for money, I appreciate it when you transfer your shares to me at a low price at this time.

Besides, I'll only take a little less this year; the majority of what I earn later will be mine. You said it yourself, foreign trade is doing well right now, and even if I earn for another two or three years, I'll still be getting more than I'm getting now, so you don't need to refuse."

After a pause, Zhang Xupeng continued, "We brothers don't need to stand on ceremony. To be honest, this isn't a small amount of money; it's often tens of millions. It would be a lie to say I'm not tempted. I would feel bad if I gave it to you for free, but I'm more afraid that we'll turn against each other because of money."

Wealth is a powerful motivator. Most people think that once they have money, they can relax and do nothing. But more often than not, you can't control your inner desires. Once you have money, you'll only think about making more money and having higher aspirations.

If Zhang Xupeng refuses Tan Jincheng's share transfer this time because he can't bring himself to do it, he really has no control over what will happen in the future. He bought a Passat at the end of last year and only wants to own one himself.

But this year, even with an Audi A6, he's no longer excited. And the man who once thought about making money and settling down has been spurred on by the booming development of Tan Jincheng's career to want to earn more money.

After thinking about Zhang Xupeng's words for a while, Tan Jincheng also smiled and said, "Okay, what you said makes some sense. If I don't accept yours now, I can't guarantee that I won't regret it someday, right?"

Another point is that after the name change, the registered capital of FlashDrive has increased again. Having more money on hand is more conducive to capital injection, since the increase in registered capital must ultimately be injected in the form of actual cash.

"That's right. While we're still on good terms, let's eliminate all the potential problems we can think of so that we can get along better in the future. Also, I can go all out now. Don't think I'll give up. Our bet is still up."

“Okay, I’ll have a lawyer draft an equity transfer agreement. Once it’s done in a few days, I’ll go to Guangzhou, we’ll sign the contract, and then I’ll transfer the company’s legal representative to your name.”

"Hmm? You must be very busy, right? There's no need to rush. It's fine once the Canton Fair is over."

"It's urgent! The bank loan of 3000 million yuan is for a specific purpose and can't be touched. Flash Motors doesn't have much money in its accounts either, which is why I'm thinking of getting shares."

"Why are you in such a hurry for money? The bank helped you get a 3000 million loan and it's not enough? If you didn't have a girlfriend, I would have thought you were going to use this money to hire a female celebrity."

Holy crap, you're a true brother, you can guess the purpose of this money even from a casual joke.

"Haha, you're quite capable, you even guessed that; what you said isn't wrong, it's just that they're hired to do work, nothing else."

"Holy crap? What's going on? Explain yourself! I'm getting more and more confused."

"I want to sign Liu Yifei as our spokesperson."

"????"

I had drafted the chapters on equity transfer a bit hastily before, but I've revised them after being reminded by fellow readers.



(End of this chapter)