Chapter 1 The Clamor Begins

At Su Yehao's instruction, several senior executives contacted Gome and Suning directly in his name.

Faced with an estimated two to three billion in financing, both companies were shocked and immediately held meetings to discuss countermeasures, assessing the feasibility of cooperating with Su Yehao.

It was like a thunderclap out of the blue.

The news made their major shareholders start to hesitate. While they wanted the money, they couldn't help but worry about letting a wolf into the house, ultimately losing control of the company.

The mainland economy was accelerating its integration with the world.

Since the collapse of the Southeast Asian market and the end of the U.S. interest rate hikes, hot money began to flow out.

The mainland gradually became a new gold rush, and many companies directly faced the impact of multinational corporations.

Multinational brands were fighting like gods, and many fragile local enterprises simply didn't have the strength to fight back.

A typical example was Zhonghua toothpaste, as well as the currently popular Totole chicken essence, and so on. Those multinational companies easily took down brands and markets alike with insignificant amounts of money.

This shows that it is quite necessary to implement state-owned enterprises in many key industries, which can play the role of building a moat.

Jinling.

The conference room at Suning headquarters. As the door opened, a strong smell of smoke accompanied by the cold air conditioning hit their faces.

It was past 11:00 a.m., and the outside temperature was already as high as 37 or 38 degrees Celsius. The "autumn tiger" of this year wasn't over yet, and the flowers and plants in the roadside flower beds were wilting.

A vice president rushed back from Guangling. Seeing that everyone had already left, he hurriedly asked:

"I rushed back as soon as I arrived there, and the car tires were almost smoking. I didn't have time to do anything. I heard that the young richest man from Hong Kong is planning to invest two to three billion in the company. Did you come to a conclusion?"

Mr. Zhang, the founder of Suning, shook his head and said, "I feel that we still need to have contact first and understand the other party's ideas before making a decision. A bunch of old smokers made my eyes hurt. Come sit in my office first, I'll return a call to them later."

Vice President Sun reminded him:

"If we don't make contact as soon as possible, this money may be taken away by others, and we will definitely be very passive. Such a large sum of money is enough to open a chain store in all first- and second-tier cities, not to mention that Meidi Group is also his, so the supply price may be lowered."

"We discussed it, and I know what you mentioned, so I want to return a call as soon as possible."

Mr. Zhang rubbed his temples, feeling that this matter was more troublesome than a problem with a supplier. Cooperating with a large enterprise, one might accidentally be seeking skin from a tiger and fall into a passive situation.

However, the large sum of money provided by Su Yehao was too tempting, so much so that he became self-aware, knowing that Suning's scale couldn't handle it all.

It should be known that even with a surge in performance this year, Suning's revenue for the first three quarters was only more than 700 million RMB.

This was just revenue, and the gross profit margin was about 14%. After deducting expenses, there wasn't much money left.

After returning to his office and sitting down lazily, Mr. Zhang suddenly asked a question, curiously saying, "The young richest man asked us to evaluate it. How much do you think our company is worth?"

Vice President Sun was stunned and replied, "Shall I have someone calculate it later?"

"Okay, have someone finish the statistics as soon as possible and give me an answer..."

What Su Yehao wanted was obviously a valuation.

However, no one at Suning seemed to understand these things, so they honestly started to calculate the net assets.

That is, subtracting liabilities from funds, plus the value of stores, logistics value, etc., without considering profit growth rates and brand value.

It took more than two hours, and many accountants didn't even eat, tossing and turning after the statistics were completed, only to find that the company's total assets were only about 200 million RMB.

Mr. Zhang didn't doubt it after seeing the number, and his expression suddenly collapsed, thinking how could it be so little money.

The accountant who came to report told him in a firm tone that it was indeed only worth this much, and the value of some stores had been estimated as high as possible, and vehicle depreciation fees and the like had not been calculated, otherwise the number would be even lower.

Slightly flustered, he reported the value of 200 million RMB to the people at the 5s Asset Management branch.

In 2000, a billionaire in the mainland was definitely worth a lot, but it depended on who they were compared to. Facing Su Yehao, who had assets of over 100 billion, it was indeed difficult to find confidence.

Learning that Suning's valuation was only 200 million, Su Yehao was confused by the number.

He had already seen news on the report, writing that Suning's revenue in the first half of the year was more than 500 million RMB.

Even if only 5% of the net profit was calculated, the annual income should be 40 to 50 million RMB, so how could they only give a valuation of 200 million RMB?

After a little thought, he guessed that they had confused the company's valuation with net assets.

This made Su Yehao laugh and cry. He really had the urge to take out 300 million RMB immediately and try to sign the acquisition agreement as soon as possible.

However.

Whether it was personal business or 5s Asset Management, there were many investment-related businesses. In order to make a small profit and screw people to death, it would be a bit penny-wise and pound-foolish.

When others came back to their senses, they would inevitably use this kind of thing as a stain and repeatedly mention it on Su Yehao's head, affecting his reputation in the outside world. In this way, it would be counterproductive.

Moreover, this time he planned to carry out financing through 5s Asset Management, so of course there was no need to let the investors profit, but instead put the blame on his own head.

So Su Yehao personally returned a call, only asking Mr. Zhang and the others to go to a securities company or a university's finance department to find a few talents who understood valuation to recalculate, directly saying that the company's valuation was not calculated like this, and the price was reported too low.

This made many senior executives at Suning who were waiting for news unable to help but blush with shame.

The two companies were talking about financing, but the funding party pointed out that the price was reported too low. If the matter spread, it would be a laughing stock.

Look at those Silicon Valley internet companies. When they earned ten million US dollars in the first half of the year, they dared to offer a price of two billion US dollars, and there were even more ruthless ones. Even if they lost hundreds of millions of US dollars, they dared to talk about market share and shout out high prices.

Compared to the two, the more he thought about it, the funnier it became.

It was also because of this incident that Su Yehao had the idea of establishing a corporate rating agency and developing into consulting and investment banking businesses.

In the business world, there weren't many good people like him. It was hard to guarantee that those foreign companies wouldn't reach a tacit agreement and follow the traditional business practice of only giving a certain premium to the company's net assets, and then directly acquiring financing.

Brand value, market share, and profit growth rate can actually be included in the valuation calculation formula for statistics, such as the market share method, the perpetual operation method, the dividend yield valuation, and so on.

Although many companies in the mainland don't make money, due to the special business environment in the early years, their market share is surprisingly high. In fact, as long as they invest funds and seriously rectify, they can easily transform and regain their vitality.

There was still no news from Gome Appliances.

At more than 3:00 p.m., while Su Yehao was visiting the Jinmao Tower, Suning gave another new valuation, asking for 700 million RMB.

Su Yehao didn't hesitate much and started to bargain in turn.

He proposed that 5s invest 500 million RMB, and the two parties jointly establish a new company. At that time, 5s Asset Management would hold 49% of the shares, and additionally assist Suning in obtaining a low-interest loan of 1 billion RMB, and give up participating in the company's decision-making power, only having the right to supervise and advise.

The premise of giving up decision-making power was that Suning was in a profitable state, and the annual performance growth rate exceeded 10% year-on-year.

That is to say, as long as the company's performance growth rate remained above 10%, 5s Asset Management would not exercise its decision-making power, which was equivalent to giving Suning freedom while also setting a safety lock.

Faced with the conditions set by Su Yehao, Suning's Mr. Zhang hesitated... hell he did!

In the morning, he felt that the company was only worth 200 million, but now the other party was financing 500 million to the company, only wanting 49% of the shares, and also assisting the company in obtaining a loan of 1 billion RMB. It was such a surprise!

In fact, with Suning's performance, the valuation of 700 million RMB was a bit high, but not too high.

Its estimated gross profit this year was more than 100 million, with a net profit of about 40%. If it were listed on the stock market and calculated according to the average price-earnings ratio, it would indeed be worth 700 to 800 million RMB...