2003: Starting with Foreign Trade

Chapter 290 Investing in a business is investing in its founders

How should Orange Technology be valued? That is the question.

A well-crafted PowerPoint presentation can easily convince venture capitalists investing in the internet sector that someone is worth 300 to 500 million yuan, but clearly, local government financing vehicles (LGFVs) don't buy into that.

It seems that the main body of each local government financing vehicle (LGFV) rarely involves investments in the internet sector. Compared to this bubble-like valuation, they value companies with substantial assets more.

However, it's obviously impossible for Tan Jincheng to sell at a low price. With such a doubled investment and the support of a professional team, the returns from Happy Farm and Happy Net projects cannot be lower than in the previous life.

Therefore, during the audit of Orange Technology, Beicang City Investment and Tan Jincheng had a major disagreement.

If you don't want it, I'll sell it to Xiao Ma; he'll definitely like it anyway.

"In that case, let's bring out Orange Technology. They'll regret it in the second half of the year."

Tan Jincheng didn't mind; that's just how the government's investment department operates, it's understandable.

Furthermore, despite the fact that he has held the title of Ningbo's richest man for many years since the boom in pig farming, as a city primarily focused on manufacturing, Ningbo doesn't actually have many internet companies, nor are they particularly valued.

This is inherent to the city's characteristics. Trendy cities like to attract internet celebrities to open companies, while manufacturing cities prefer factories. The factories that rise from the ground are what Ningbo loves.

“Okay, I’ll inform them later and tell them they don’t need to do an audit,” Zeng Jixiang replied.

Removing Orange Technology would make the share swap process much easier. The annual profit of companies like Jinyi Industrial is clear and transparent. Hang New Energy was previously a subsidiary of Flash Technology, and separating it would not affect Beicang City Investment's shareholding.

The week-long audit quickly came to an end, and Tan Jincheng and Xie Hongjun sat in the conference room once again. However, this time it was the large conference room of Flash Technology, and there were more than just Tan Jincheng and Xie Hongjun in attendance.

Tan Jincheng sat in the middle of the conference room. To his left was the Beicang City Investment team led by Xie Hongjun, and to his right were Zhao Xinyi and Zeng Jixiang. In addition, there were the finance and legal teams of various companies except Orange Technology.

Meanwhile, Beicang City Investment also sent lawyers to participate; clearly, both sides were aiming to reach a direct conclusion this time.

"Due to significant differences in valuation between the two parties, Orange Technology will not participate in the group-building process this time. I will arrange for another company to be included later."

The arrangement is naturally to acquire the motor and controller factories, which will also meet the basic conditions for group operation.

"Agreed, I'll follow Mr. Tan's arrangements," Xie Hongjun nodded.

Tan Jincheng said that Orange Technology's project was worth 300 million yuan, which Xie Hongjun naturally couldn't accept. How much money would I have to spend to get shares if it was 300 million yuan? Besides, internet companies are not the main industry that Beicang City Investment invests in.

"In addition, I have no objection to your company's expectation of 300 million yuan in annual profit for Jinyi Industrial. However, Jinyi Industrial's electric vehicle export business will be incorporated into Flash Technology later."

"That's no problem, and we would love to have it." Xie Hongjun nodded in agreement.

FlashTech has a need to go public. By spinning off Hangxin New Energy's battery business, the electric vehicle business can form a production and sales cycle, which will facilitate subsequent capital increases and share expansions before listing. Xie Hongjun welcomes this, as going public means they can cash out.

"Hangxin New Energy is currently operating at a loss, and with the construction of another factory, it is estimated that it will continue to operate at a loss for several more years. I don't know what Beicang City Investment thinks about this."

"It's alright. As long as it's Mr. Tan's business, we're willing to support it. The future prospects for batteries are great, so losing money for a few years isn't a big problem," Xie Hongjun said with a smile.

As long as we can agree on a price, why would I be afraid of you losing money? I'm even less afraid of losing money than you are.

When Tan Jincheng first invested in lithium batteries, he had already done his research. He found that lithium battery technology could be used in mobile phones, and that manufacturers in the electric vehicle industry, including Flash Technology, were trying to replace lead-acid batteries with lithium batteries.

Overall, the prospects are good. It can not only enrich Flash Technology's battery business, but also generate revenue from other businesses. In addition, it is a high-tech industry, and there are not many opportunities to invest in high-tech industries.

"That's fine. There's no problem with separating Hangxin Energy. As for other companies like Mingcheng Industry, Zhongtai Auto, and Shengshi Shanchi, their shares will be transferred to ByteDance Engine. Does President Xie have any objections?"

These three companies all invested in the name of Flash Technology, but the shareholding is not yet clear. Among them, Mingcheng Industrial holds 28%, Shengshi Flash holds 20%, and Zhongtai Automobile Beicang Factory holds 10%.

Xie Hongjun knew exactly how Zhongtai Automotive Co., Ltd. came about. Although it was invested in the name of Shanchi Technology, it was not an exaggeration to consider it as Tan Jincheng's personal assets. Turning 500 million into 4000 million in a month was his skill.

Although business is business, and Tan Jincheng should share the profits from purchasing automobile production qualifications under the name of Shanchi Technology with Beicang City Investment, some things cannot be calculated that way, otherwise it would be too formal.

Of the three invested companies, the most valuable is undoubtedly the 20% stake in Shengshi Shanchi, the general distributor's shares, which allows them to receive a large portion of Shanchi Technology's profits.

Xie Hongjun might not have any objection to the transfer of Zhongtai Auto to ByteDance, but the transfer of Shengshi Shanchi's shares will definitely come at a price.

However, after financial auditing and analysis of various industries, Xie Hongjun had a new idea. "How about using Jinyi Industrial's shares to offset the shares of these three holding companies? In addition, President Tan can also remove your 100 houses from ByteDance's advertising platform."

"Does Mr. Xie mean to directly exchange 5% of FlashTech's shares for 5% of the group's shares?"

Orange Technology is not included, and 100 houses were taken out of ByteDance's advertising platform. The revenue from Jinyi Industrial alone offset the equity of three subsidiaries. To be honest, Tan Jincheng benefited.

Tan Jincheng didn't understand why Xie Hongjun would make this 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 go ahead, Mr. Xie." Sure enough, there was a follow-up; I knew there was no such thing as a free lunch.

After removing Orange Technology, the actual share swap is difficult for Tan Jincheng to negotiate based on the current returns. The lithium battery business is about buying into the future, but it's not even considered pioneering yet, and there won't be any returns until smartphones are widely adopted.

Jin Yi Industrial's cash flow and profitability are indeed very strong, but Shengshi Shanchi's prospects are not bad either. The more electric vehicles Shanchi Technology sells, the more it earns, and the same goes for Mingcheng Industrial.

These two companies hold a significant number of shares in Flash Technology. While it's possible to switch, not switching doesn't necessarily mean you'll earn less.

"Beicang City Investment will still hold 5% of Flash Technology's shares. As for the shares in the parent company, Beicang City Investment will continue to invest money as before. I wonder what President Tan thinks?"

FlashTech has plans to go public in the future, so he naturally wouldn't give up these 5% of shares. If it weren't for FlashTech's low debt ratio, he would have wanted to take the opportunity to get more shares.

It has to be said that Mr. Tan is really amazing. He can manage the payment terms of a physical enterprise so well and keep the debt ratio so low, but the speed of enterprise development is not slow.

Xie Hongjun has seen companies with good financial conditions before, but it is quite rare for a startup to maintain a healthy debt ratio while developing.

Besides FlashTech, Tan Jincheng's other companies, whether profitable or not, all have very good financial conditions. What does this indicate?
This shows that no matter what image Tan Jincheng presents to outsiders, he is a relatively calm and composed person in terms of personality.

When investing in companies, the focus is often on the founders.

Having an adventurous spirit, talent, and even creativity are all worth investing in, but in Xie Hongjun's view, the most worthwhile investment should be the ability to withstand risks. As long as Tan Cheng's companies maintain their current business models, they are all worth investing in.

Based on his company's debt ratio, even if the expansion increases the debt ratio, it is not enough to worry about the cash flow.

Because this kid isn't a very adventurous person.

Tan Jincheng was not surprised by Xie Hongjun's suggestion. After all, there must have been a reason for the previous overture. Who would give you benefits for no reason when you are a state-owned investment company?

"Mr. Xie, do you have such high hopes for the development of my company?"

"Of course, it's not just that I'm optimistic about the companies under Mr. Tan's umbrella, but also about Mr. Tan himself. It's a pity that we have too many differences regarding Orange Technology. Otherwise, even though it's not an industry I'm good at, I could still invest in it."

"Haha, alright, just based on your words, Mr. Xie, I'll give you another chance to invest in Orange Technology in six months."

The price won't be the same in six months, I just don't know if you'll still have the courage to invest.

"Haha, then I'll thank you in advance, Mr. Tan." Xie Hongjun didn't seem to mind.

"Then, Mr. Xie, how much money are you willing to pay for what percentage of the company's shares?"

In principle, even if he is short of money, Tan Jincheng doesn't necessarily have to hold onto 5% of the shares. If you are willing to pay, it's okay to give up more. As I said before, it's not necessary to keep 100% of the shares in your own name. The most important thing is to use them to make cash.

Xie Hongjun also understood the implication in Tan Jincheng's words, and his eyes immediately changed. There was hope! It seemed that President Tan was short of money. That would be easy.

Xie Hongjun, who immediately changed his strategy, laughed and said, "The head office still has 5% of the shares, but could you give Flash Technology a little more? I am very optimistic about Flash Technology."

Tan Jincheng pondered for a while. He couldn't say it was taking advantage of someone's misfortune, but it was common for companies to try to get something out of each other's hands when they had the chance.

"Yes, no problem, but it still can't exceed 5%."

"No problem, no problem," Xie Hongjun laughed heartily.

I've been busy with my vacation these past few days, so updates haven't been on time. Sorry.

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(End of this chapter)