Starting out as a drug dealer in 1988

A few minutes later, Song Weixuan and Doug finally finished reading the report on the store chain.

Their emotions were mixed: excitement and worry. As shareholders, they were naturally overjoyed to see the store chain achieve such amazing results in just one year.

However, this brilliant performance also made them worried - it became another trump card on Zhao Wenhao's negotiation table, and Hengyuan Electronics' valuation would undoubtedly increase as a result.

This is definitely not a good thing for their upcoming negotiations.

"Gentlemen, how about we talk about your latest valuation of Hengyuan Electronics?"

Zhao Wenhao smiled and looked at the two people in front of him leisurely.

He holds the initiative, and many investment companies are lining up to meet with him.

Therefore, he has enough patience.

Doug and Song Weixuan became more and more anxious. They realized that time was running out and they could not delay any longer.

They originally wanted to use the right of first refusal and previous cooperative relationship to lower the price, but seeing the current situation, they knew that their wish could not be realized so easily.

However, Song Weixuan still held out a glimmer of hope.

So, he stood up and pretended to be calm and said, "Mr. Zhao, although Hengyuan Electronics has developed rapidly in the past two years, the company's debt is also not light.

For example, we have an 8 million yuan loan from Meifeng Bank. The first 3 million yuan repayment is due at the end of the year. After you repay the loan, you will be short of funds!"

At the beginning, the biggest reason why Hengyuan Electronics agreed to Meifeng Group's acquisition of 5% of the shares was not only so that Song Weixuan could help Hengyuan Electronics build a store chain, but also because Meifeng Group agreed to lend 8 million yuan.

The main purpose of this 8 million yuan is to establish a chain of stores and invest in new production lines.

Over the past year or so, the store chain has achieved remarkable success, with hundreds of stores springing up like mushrooms after rain.

One of the important reasons is sufficient funds.

Song Weixuan brought up this matter at this time, obviously trying to take credit for it from Zhao Wenhao.

After all, it was he who pushed this project forward in the first place, leading to today's results.

At the same time, he also reminded Zhao Wenhao that if the store chain wanted to continue to develop rapidly, capital investment was essential.

Meifeng Bank has unique advantages in this regard.

For example, it can help coordinate the postponement of the first repayment date, or even provide Hengyuan Electronics with another loan to help the company accelerate its development.

The purpose of doing this is simply to avoid being asked for exorbitant prices by Zhao Wenhao in the subsequent negotiations.

"What does Mr. Song mean?" Zhao Wenhao smiled slightly and asked in a puzzled manner.

Song Weixuan knew in his heart that Zhao Wenhao was actually very clear about his intentions, but he did not intend to expose it.

Instead, he went on to say it clearly: "I can try to help you delay the repayment of the first batch for one year, and I can convince the board of directors for the two subsequent repayments.

Even more, if Hengyuan Electronics still needs funds during this period, I can make the decision and lend you another HK$2 million at a low interest rate for three years."

"What are the conditions? What kind of commitment do you need me to make?" Zhao Wenhao asked without hesitation.

"Our Meifeng Group needs to acquire 10% of the shares," Song Weixuan said solemnly. "Of course, we can't let you suffer any loss. We can calculate the valuation of Hengyuan Electronics based on 100 billion."

There are many ways to assess the value of a company.

If the company is publicly traded, the most common way to find out is to simply check the current stock price.

However, if it is a non-listed company, we usually choose a listed company in the same industry as a reference, and roughly estimate its price-to-earnings ratio (PE), and then multiply this PE by the net profit of the year to obtain a relatively reasonable valuation range.

Of course, there are other calculation methods, but the P/E ratio method is more suitable for companies with good growth potential and stable profitability.

For Song Weixuan, Doug and others, their valuation of Hengyuan Electronics is also based on similar principles.

They first selected a listed company of the same type as a reference, and then calculated the valuation of Hengyuan Electronics based on the price-to-earnings ratio.

However, it should be noted that due to the large-scale investment made by Hengyuan Electronics in 1995 and the first four months of 1996, the net profit was relatively low.

If Zhao Wenhao only uses the traditional price-to-earnings ratio calculation method, he will obviously be at a disadvantage.

Therefore, Zhao Wenhao believes that when determining the price-to-earnings ratio, it is necessary to appropriately raise the standards to ensure that one will not suffer losses due to underestimated profits.

Song Weixuan calculated silently in his mind, using a 20x P/E ratio and combining it with last year's 4.8 million yuan net profit. He then slightly increased the value and arrived at a valuation of 100 billion yuan.

However, Zhao Wenhao holds a different opinion. He firmly believes that Hengyuan Electronics' price-to-earnings ratio should be calculated at least at 25 times to be in line with the actual situation.

So, when Song Weixuan proposed a valuation of 100 billion, Zhao Wenhao's face instantly turned gloomy.

"100 billion? That doesn't seem appropriate." Zhao Wenhao said as he picked up a cigarette from the table, lit it for himself skillfully, and then slowly exhaled a smoke ring.

"I still remember the Malaysian company Ausima, which was listed on Hong Kong Island and also engaged in the home appliance industry, and its current market capitalization has reached 150 billion.

However, whether in terms of brand awareness, product quality, or market share, there is still a certain gap between them and Hengyuan Electronics."

"But their company is already a listed company, so there's naturally room for a premium."

Song Weixuan understood what Zhao Wenhao meant and immediately explained.

Unfortunately, this explanation seems pale and powerless.

Zhao Wenhao sneered and continued, "Mr. Song, Mr. Doug, if you calculate like this, I'm sorry I can't help you. To be honest, your offer is far from what I had in mind.

Let's stop here for today. I'm pretty busy today and have a meeting to attend later."

Doug was stunned. He didn't expect Zhao Wenhao to turn against him so suddenly. He showed no intention of turning around and wanted to leave immediately.

This made him feel extremely angry as it was his first time dealing with Zhao Wenhao.

But Song Weixuan didn't care at all.

He had dealt with Zhao Wenhao quite a bit, so he naturally understood his character.

What Zhao Wenhao said was nothing more than expressing his anger, and this anger was more of a performance.

His purpose was simply that he felt Song Weixuan's bid was too low and he wanted a better price.

These can all be negotiated. Song Weixuan certainly understands the principle of asking for a high price and paying back on the spot.

But no, now it depends on who can seize the initiative.

In fact, the reason why Zhao Wenhao could speak so confidently is because the initiative is now in his hands.