2003: Starting with Foreign Trade

Chapter 642 An Analyst's Amazement
At midnight on April 27, Shuguang Auto's announcement was released.

The company has reached a strategic cooperation agreement with Weilai Automobile to provide a range of components, including axles, to Weilai Automobile's new model, Yuechi A1.

In addition, the company plans to transfer the trademarks of its subsidiary Huanghai Automobile and the Changzhou Huanghai Automobile Industrial Park to its second-largest shareholder, ByteDance, through a combination of share transfer and cash transfer.

The company's stock is scheduled to resume trading on April 30th, this Thursday.

Releasing announcements at midnight has always been a common practice for many companies. Tan Jincheng doesn't know whether shareholders were asleep or not, but he certainly wasn't.

Gu Qingqing was still awake: "You saw the announcement, right?"

"I saw it. Actually, I received the news this afternoon, and their announcement for the afternoon was already prepared."

Tan Jincheng replied, slightly tipsy, that he had signed the contract with Ying Jianren and Xie Hongjun that afternoon, and that the cooperation had been pleasant. As the host, Ying Jianren had no choice but to treat them to a meal.

They were old friends, and everyone knew that Tan Jincheng couldn't hold his liquor. The main drinkers were him and Xie Hongjun. Tan Jincheng had a few drinks and felt okay.

Gu Qingqing noticed something unusual in Tan Jincheng's voice: "Have you been drinking?"

"I had a few drinks, but I'm fine. I'm not drunk, and they didn't dare to force me to drink more."

The weather in Yongkang at the end of April was more comfortable than in Ningbo. In Ningbo, it was still a bit cool at night. Lying on the sofa in the hotel, Tan Jincheng looked at the night view outside the window, while a cup of tea to help him sober up was brewed on the coffee table.

"Behave yourself tonight, and don't do anything reckless."

"Hey, you look down on your husband. There's no one in this small place like Yongkang who's as good as me."

"Oh? Then who would you be interested in? Little Liu?"

"I'm looking at girls from Yiwu."

"Pah, go to sleep early, I have to go to school tomorrow."

She said that, but she felt sweet inside. They had known each other for six years, and Tan Jincheng was still trustworthy in matters of love and sex. Although he couldn't avoid various social engagements, he controlled himself quite well in these areas.

It's not that her husband isn't lustful, but rather that he has bigger ambitions. He never gets involved with women who might cause trouble, especially those in the entertainment industry.

In fact, there are many temptations for Tan Jincheng. When the young boss goes to a certain place, even the local government will use some tricks to try to arrange things for him. There are quite a few beautiful women, and even some minor celebrities.

The minor stars of the early 2000s didn't have the same prestige or status as they do now, and being arranged for others was a common occurrence.

He was tempted, but then he thought that if he were to fall for it, he might run into a situation like Dong Ge's, and he didn't have Dong Ge's background and connections to handle things.

It's alright in China, but it's more troublesome abroad, which is one of the reasons why Tan Jincheng doesn't travel abroad much.

If you want to do great things, you have to control your desires, otherwise you will bring a lot of trouble upon yourself.

He wouldn't do such a thing on Ying Jianren's turf. The two of them were already quite familiar with each other, and both knew that Tan Jincheng wasn't into that kind of thing. Besides, Xie Hongjun was still there.

As the leadership of Beicang District, they have done a very good job of protecting Tan Jincheng, which can be described as comprehensive. The district's star entrepreneur absolutely cannot afford to have problems with such a small matter.

This point is basically a consensus among the district's leadership.

With Xie Hongjun here, he certainly won't let Tan Jincheng run into such trouble. The same goes for the banquet tonight. It's absolutely impossible that Ying Jianren wouldn't have any thoughts about someone taking away his controlling stake in the company.

As a fellow entrepreneur, Tan Jincheng understands this feeling, even when benefits are offered.

The night owl shareholders and institutions holding shares in Shuguang Auto had mixed feelings when they saw the announcement. They were happy that Shuguang Auto had gained another customer, which meant that its performance in the second quarter and even the whole year would be much better.

The worry is that this comes at the cost of selling Huanghai Automobile. Regardless of whether the China Securities Regulatory Commission approves it, the method of exchanging performance for the sale of a subsidiary seems somewhat imperfect.

However, once the announcement was released, everyone understood the intention behind ByteDance's takeover bid, or rather, the way the management of Shuguang Auto responded.

Perhaps from the very beginning, ByteDance's engine was aimed directly at Huanghai Auto, or perhaps Shuguang Auto used the sale of Huanghai Auto to ensure that ByteDance would no longer compete for control of the company.

However, from the perspective of the institutions, the first possibility is more likely.

Weilai established a joint venture factory with Mitsubishi in Changzhou and made contact with the CZ municipal government. The acquisition of Huanghai Automobile Changzhou Industrial Park is quite beneficial to Weilai Automobile's industrial layout.

"Wow, the size of Weilai Motors is incredible, and its development speed is really impressive."

Weilai Automobile, which was only registered on February 14, 2008, has already acquired four major industrial bases in Beicang, Xiangcheng, Chuzhou, and Changzhou, which is about to be acquired, in just one year.

In terms of industrial investment, among the four vehicle production bases, the Chuzhou industrial base has an annual production capacity of 5 pickup trucks, while the renovated Xiangcheng industrial base has the capacity to produce 5 SUVs.

The vehicle production base located on Meishan Island is even more impressive. According to data released by Weilai Automobile, by 2012, the production capacity of the vehicle production base on Meishan Island could reach 25 vehicles.

The reaction to this data is that either Wei Lai is bragging or he's gone mad. Do they really have that much money to invest?
Furthermore, is it necessary for a new car company to have such a large production capacity? By the end of 2008, among the car companies with annual sales exceeding 10 vehicles, only BYD ranked fifth with annual sales of 13.68 vehicles thanks to the F3.

Regardless of whether it's true or not, let's assume it's true for now. By 2012, even without considering their new investments, Weilai Automobile will have an annual production capacity of 30 SUVs.

This is already sufficient to match the scale of a mid-sized car company today.

After acquiring Huanghai Automobile, Weilai Automobile will also have a production line with an annual capacity of 6000 large and medium-sized buses.

By the way, they also own the global sales rights to the Sering brand and several Sering sports cars. These cars are priced at two million yuan. If they sell 100 of them a year, they can generate over 100 million yuan in sales.

For Weilai Auto's production capacity design, this may be a small amount, but it's still a source of income.

Analysts don't just analyze listed companies; they also study unlisted companies. Weilai Auto has always been a hot topic and is closely linked to the capital market, so it's impossible for analysts not to notice it.

Based on a 15% profit margin, and assuming the ex-factory price of the Yangzi pickup truck is 5 yuan, and the minimum average price of large and medium-sized buses is 50 yuan, the theoretical output value of these two models is currently 25 billion yuan and 30 billion yuan respectively.

The price of the SUV designed by Wei has not yet been announced, but it is said to be comparable to the Honda CR-V and Volkswagen Tiguan. Considering that domestic brands may be cheaper, let's calculate the price range as 8 to 15 yuan.

Taking the lowest value, calculated at an ex-factory price of 7.5 yuan, and based on the publicly available data of a production capacity of 25 vehicles in 2012, Weilai Automobile's theoretical output value would reach 187.5 billion yuan by 2012!

This calculation method is a bit too simplistic, but analysts don't have access to more data, so they can only calculate it themselves in this unprofessional way.

Based on these calculations, the total theoretical output value of Weilai Automobile after 2012 will reach 242.5 billion yuan.

Even if we subtract half again, the output value would still be 12 billion yuan, and the annual net profit would be between 120 billion and 18 billion yuan.

"Wow, this young man is a real shrewd businessman."

Wang Chu, an analyst in the automotive industry at a certain securities firm, conducted a simple analysis of Weilai Motors based on the public information about Shuguang Motors. After doing this analysis, he was utterly astonished.

Founded in 2008, if everything goes according to plan, Weilai Auto's valuation could reach at least 300 billion yuan by 2012.

Looking at the shareholders of Weilai Automobile, in addition to its own controlling shareholder, there are two urban investment companies and the domestic office of a well-known overseas investment institution.

Apart from Chuzhou City Investment being slightly weaker, the other two major shareholders have close cooperative relationships with Tan Jincheng, and Shanchi's success is inseparable from the help of Beicang City Investment.

Sequoia Capital also has a very good working relationship with Tan Jincheng, and the two parties have successfully operated a listed company together.

Even Chuzhou City Investment Group, given its current treatment as a city investment company, is not to be underestimated.

It's such a pity. If only we could have gone public. We had the background, the plans, and the expectations. If we could have gone public in 2009, that would have been amazing.

However, Wang Chu obviously knew that this was impossible. Tan Jincheng, who had extensive experience in capital operations, was not so foolish as to attempt to go public when the company was still very weak.

Besides, even if the operation succeeds, he won't get a share.

Theoretically speaking, if Weilai Auto develops smoothly, it would be best to list on the A-share market in 2011 or 2012, when the industrial layout will be completed and the prospects will be clear.

If they happen to catch a super bull market like the one in 2007, it's not impossible for them to reach a market capitalization of 50 billion or even 100 billion.

I heard that the other party is also going to develop new energy vehicles. Whether new energy vehicles can be accepted by the market is irrelevant. But as a listed company, having such a concept is enough to make a good speculative move.

Take a look at BYD in Hong Kong. Since its share price hit a low of HK$6 last year, it has risen to HK$20 this year, a 3.3-fold increase, thanks to both increased sales and speculation in the new energy concept.

"Work overtime to generate buzz."

After the analysis, Wang Chu was filled with excitement. If an analyst wants to go out, the first thing he needs to do is generate buzz. It doesn't matter how professional the analysis is; what matters is becoming famous!

Once you become famous, you'll have opportunities.

At 10:4 AM on April 27th, a document titled "Analysis of the Emerging Automotive Brand Weilai Automotive with a Future Valuation of Nearly 300 Billion Yuan Based on Shuguang Automotive's Announcement!" was released.

This research report on non-listed companies is also the first research report issued by Weilai Auto since its establishment, and it quickly aroused controversy in the market as soon as it was released.

Many people think Wang Chu has gone mad, and they also think that a certain securities firm has gone mad.

Take BYD, the undisputed leader among domestic brands, for example. Its market value in the Hong Kong-listed company is only around HK$150 billion, which is just over RMB130 billion.

300 billion? How could he even dream of that!
Meanwhile, many analysts believe that there must be some reason why professional analysts from leading securities firms would praise an unlisted company so highly.

It might be because of its association with Shuguang Automotive.

(End of this chapter)