In August 2018, China confirmed the first case of African Swine Fever epidemic.
Subsequently, the epidemic spread rapidly, resulting in a sharp decline in the number of Live Pigs.
In 2019, pork prices increased by more than 40% year-on-year, reaching a record high.
The entire Pig Cycle lasted for nearly three years, and it was only gradually restored in 2021.
And now, it is June 2017.
There is still more than a year's window.
This realization made Zhao Chen's heart move.
Pork prices will remain high in the next few years, which is a trend verified by memory.
Henglong Real Estate's main business growth has peaked, and we really need to find new profit growth points.
But how to do it?
He subconsciously thought along the lines of business inertia:
Invest in breeding farms, build slaughtering and processing lines, layout Cold-Chain Logistics... to create a whole industry chain.
"Zhao Chen?"
Shen Zhiyi noticed that he was distracted and touched his hand lightly, "What's wrong?"
Zhao Chen came back to his senses, looked at her concerned eyes, and smiled, "It's nothing, I thought of something."
He looked at the three girls who were still discussing the price of pork and decided to listen to the opinions of these finance majors:
"Xiaowen, you just said that the price of pork has increased, did you listen to your mother?"
"Yes!" Zhou Xiaowen nodded,
"My family is in rural Xichuan, and many of my relatives raise pigs.
My mother said that pig feed has become much more expensive recently, and corn and soybean meal are also rising. Many small farmers cannot survive."
"Can't hold on..."
Zhao Chen murmured and repeated, following the train of thought just now,
"This means a reshuffle in the industry. If we step in at this time, integrate resources, and establish a modern breeding system..."
"Chairman Zhao, you don't want to raise pigs, do you?" Zhou Xiaowen joked.
Chen Shuhua raised his head when he heard this, pushed up his glasses, and said calmly:
"If Zhao Chen really has this idea, he needs to be careful.
Live Pigs breeding is an asset-heavy business, with large investment in fixed assets and a long return cycle, and it deviates from the light-asset capital operation model you are currently focusing on."
She paused and continued her analysis:
"More importantly, the management of the breeding industry is highly complex and disease risks are uncontrollable.
Even if you are optimistic about the rising trend of pork prices, you don't necessarily need to go out personally."
Zhao Chen's heart moved. "Then what is your suggestion?"
"Financial instruments." Chen Shuhua said simply,
"If you are optimistic about the rise in pork prices, you can first invest in the related stocks of Listed Company--
For example, large-scale breeding companies, feed companies, meat product processing companies... or..."
She thought for a moment:
"If there are futures varieties, you can place multiple orders through the futures market.
Use financial leverage to participate in the market, rather than using physical assets to gamble."
These words were like a basin of cold water, making Zhao Chen wake up instantly.
That's right.
How come you have fallen into a fixed mindset?
Since his rebirth, his success in Bitcoin and the stock market has been through accurately judging trends and then using financial tools to amplify profits.
This is his area of expertise.
Raising pigs and building a factory? That requires completely different capabilities and teams. Moreover, the asset-heavy model will occupy a lot of funds and slow down his capital turnover rate.
"Shuhua is right." Zhao Chen nodded, with a flash of approval in his eyes.
"It's really not cost-effective to invest in entities in the first place. Financial markets are much more efficient."
Zhou Xiaowen was confused when he heard. "What futures? What long orders?"
Li Jing explained in a low voice:
"That is... you don't have to actually raise pigs, but you can make money from the increase in pork prices by buying stocks or other financial products."
"Can it still be like this?" Zhou Xiaowen's eyes widened,
"Does that mean we don't have to plant soybeans to make money from the increase in soybean prices?"
"Theoretically yes." Chen Shuhua said, "That's what the futures market does. But the risks are also high, and leveraged trading may lose all your money."
Zhao Chen stopped listening to the subsequent discussion.
He took out his mobile phone and did a quick search. Sure enough, there is currently no Live Pigs futures product in China--
This variety will not be available on Dalian Commodity Exchange until 2021.
In other words, participation can only be done through the stock market at this stage.
But this is enough.
Muyuan Shares, Wens Shares, New Hope... the stocks of these leading breeding companies have huge room for growth in the next two years.
If coupled with the appropriate leverage...
"Zhao Chen," Chen Shuhua looked at him thoughtfully and reminded softly,
"But I have to remind you that the financial transparency of Listed Company in the agricultural sector is usually not as good as that in the technology and consumer sectors.
Moreover, stock prices are greatly affected by policies and require in-depth study."
"Understood." Zhao Chen put away the phone,
"This is just a preliminary idea. Whether it should be done and how it should be done still requires detailed study."
Having said that, he already had a direction in his mind.
At the next dinner party, the conversation gradually turned to other aspects.
Zhou Xiaowen started talking about various gossips in school again, Li Jing talked about plans to go home during the summer vacation, and Chen Shuhua occasionally added some sharp comments.
Shen Zhiyi listened quietly, occasionally picking up food and pouring tea for Zhao Chen.
She looked at this man on Dining Table, who was lost in thought because of an unintentional comment about "pork price increase", and suddenly became enlightened because of Chen Shuhua's professional analysis, and complex emotions arose in her heart.
Proud - this is the man she has chosen, keen and good at learning.
There is comfort - he is willing to listen to the opinions of others, even students younger than him.