August 12, 1:20 pm, Zhengzhou Xinzheng International Airport.
When Zhao Chen and Chen Xi walked out of the arrival gate, they immediately saw the pick-up sign held high.
"Henglong Group, Zhao Chen Chairman"
Behind the sign is the smiling face of Wu Fayi.
"Chairman Zhao! It's been a hard journey!"
Wu Fayi came up quickly, holding Zhao Chen's hand with both hands, "Welcome to Zhengzhou!"
Zhao Chen smiled:
"Director Wu is so polite, he even came to pick him up in person."
Wu Fayi waved his hand quickly:
"It should be, it should be. Chairman Zhao is here, and our Eagle will shine brightly."
He leads the way sideways:
"The car is waiting outside. Let's take you to the hotel to have a rest first, then have a light meal together, and then go to the headquarters in the afternoon?"
Zhao Chen thought for a while and asked:
"How long does it take to get from the airport to the hotel?"
"About ten minutes west."
"Where's the headquarters?"
Wu Fayi was stunned for a moment:
"The headquarters is in the Economic Development Zone, only half an hour from the airport."
Zhao Chen nodded:
"Then let's take you to the headquarters. Just let the driver take your luggage to the hotel."
Wu Fayi blinked:
"Chairman Zhao Why don't you take a rest? It's very tiring to fly all the way here..."
Zhao Chen smiled:
"No need. Let's talk about business first."
Wu Fayi quickly took out his mobile phone:
"Then let me confirm with Mr. Hou."
He walked to the side, dialed the phone, and whispered a few words.
After hanging up, the smile on his face deepened:
"Chairman Zhao, Mr. Hou said it's no problem. We'll go to the headquarters right away."
After getting on the bus, Wu Fayi kept introducing the city Zhengzhou to Zhao Chen. For half an hour, there was never a moment of silence.
At 2:10 in the afternoon, the commercial vehicle stopped at the entrance of Eagle Group headquarters.
As soon as he parked the car, Zhao Chen saw a row of people standing at the door.
"Chairman Zhao," Wu Fayi said with a smile, "This is our Eagle senior management team, specially here to welcome you."
Zhao Chen Get off.
Hou Dejian was the first to come forward, holding Zhao Chen's hand with both hands, and shook it vigorously:
"Chairman Zhao! I've admired you for a long time! I didn't expect you to be so young and have such a formidable future!"
Zhao Chen responded with a smile:
"Mr. Hou, thank you. Eagle is the real senior in the industry. I came here today to learn."
Hou Dejian laughed loudly:
"Chairman Zhao is so humble! Come on, let me introduce you."
He turned sideways and introduced the people behind him one by one:
"This is our vice president and secretary to the board of directors Wu Fayi. You already know her."
"This is our Ms. Finance Director Chen Guihong."
"This is our Operations Director Wang Gongxun."
"This is our general manager Strategic Development Department Zhang Zhigang."
Zhao Chen shook hands and nodded in greeting.
Chen Xi followed him, smiling and greeting everyone.
After the greetings, Hou Dejian waved his hand:
"Let's go Meeting Room and chat."
Eagle Group and Meeting Room are very large, with a long conference table that can seat more than twenty people.
Zhao Chen and Hou Dejian are sitting opposite each other, and next to him is only Chen Xi.
And behind Hou Jianfang sat a group of senior executives from Eagle Group.
Hou Dejian opens very firstly:
"Chairman Zhao, we are all real people, so we won't beat around the bush.
You flew here specially, you must be interested in us Eagle. Tell us, how do you Henglong want to cooperate?"
Zhao Chen nodded:
"Mr. Hou is very happy. Then I will be the first to say it."
He gestured to Chen Xi.
Chen Xi Open the folder in front of you:
"Mr. Hou, we at Henglong have done a comprehensive research on Eagle. We believe that Eagle has three core values."
"First, historical accumulation.
As the first listed pig company in China, we have accumulated more than 20 years of technology and experience, which is unmatched by new entrants."
"Second, model advantages.
'Eagle Model' is a benchmark in the industry, with strong stability and replicability."
"Third, brand value.
The brand 'Eagle Pasture Fragrance', with its full traceability system, has strong competitiveness in the high-end market."
Hou Dejian Listening, the smile on his face became deeper and deeper:
"Assistant Chen is right. Our accumulation over the years is indeed not comparable to that of ordinary companies."
Chen Guihong added next to it:
"And we are still laying out a strategy to smooth the cycle - finance, brand, and channels, a three-pronged approach.
When these layouts are implemented, Eagle will no longer be a simple breeding enterprise, but a comprehensive platform spanning agriculture, finance, and consumption."
Zhao Chen nodded:
"Mr. Yang is right. That's why we made a special trip here."
He paused:
"Mr. Hou, we at Henglong really want to cooperate with Eagle.
You also know that we, Henglong, are not short of money now, we can use part of the funds to hold shares for a long time, do not interfere in operations, and are only strategic shareholders."
Hou Dejian's eyes lit up:
"Chairman Zhao, I like this attitude."
He thought for a while and looked at Chen Guihong.
Chen Guihong Open the file in front of you:
"Chairman Zhao, Assistant Chen, since you are so sincere, we will also open up the skylight and speak frankly.
In terms of valuation, we discussed it internally and felt that a price-to-earnings ratio of 20 times was more reasonable."
Chen Xi's brows moved slightly.
20 times.
Calculated based on Eagle's estimated net profit of 460 million in 2017, the valuation is 9.2 billion.
The current market value of Eagle is only about 8 billion.
The premium is over 15%.
She said nothing and looked at Zhao Chen.
Zhao Chen leaned back on the chair, his expression unchanged:
"Mr. Yang, how did you calculate the number 20 times?"
Chen Guihong is already prepared:
"Chairman Zhao, that's what we're thinking about.
First, our sales volume is growing rapidly, with a compound growth rate of more than 30% in the next three years.
Second, the income from the financial sector will increase year by year.
Third, the brand value of 'Eagle Pasture Fragrance' is currently not reflected in the valuation at all.
Second, the policy dividends of the Xiong County project will be gradually released in the future."
She paused:
"Twenty times seems high, but it corresponds to future growth.
If you only look at it now, it is indeed high; but if you look at it three years from now, the price will be reasonable."
Zhao Chen was silent for a few seconds.
Then he smiled:
"Mr. Chen, I agree with what you said. But valuation does not only look at the future, but also at the present."
He leaned forward slightly:
"Your net profit in the first half of this year was 460 million, of which 520 million came from investment income. In other words, the main business of breeding is actually losing money."
Chen Guihong's smile froze for a moment.
Zhao Chen continued:
"The income from the financial sector can be contributed this year, but what about next year? What about the year after that? This is uncertain.
Can the dividends of the banks you have deployed be stable? Can the equity appreciation be realized?"
"The integration of Shaxian Snacks is still in its early stages. No one can say how much profit it will contribute in the next three years."
"For the Xiong County project, the framework agreement has been signed, but what is the implementation time? Can the policy be fulfilled?"
He finished speaking in one breath, then leaned back in his chair:
"Mr. Chen, Mr. Hou, it's not that I don't recognize your future. It's that these things from the future are not worth 20 times as much now."
Meeting Room was quiet for a few seconds.
Hou Dejian's smile faded a little, but there was a hint of seriousness in his eyes.
He took another look at the young man opposite him.
He is twenty years old, but every blow hits the vital point.
"Chairman Zhao," he said, "What do you think is appropriate?"
Zhao Chen said:
"15 times."
Chen Guihong took a breath:
"15 times? Chairman Zhao, this is too low!"
Zhao Chen shook his head:
"Mr. Yang, 15 times is not low. More than half of your profits this year were supported by investment.
If you only look at the main business of breeding, let alone 15 times, 10 times is barely enough. And we bought shares through Private Placement, so it is normal to enjoy discounts."
He paused:
"We at Henglong are willing to pay 15 times because we are betting that your future will be fulfilled.
If it cannot be realized in the future, this 15 times will be our loss."
Wu Fayi interjected from the side:
"Chairman Zhao, we really can't accept 15 times. How about we each take a step back and go to 18 times?"
Zhao Chen smiled:
"Director Wu, 18 times is fine, but I have conditions."
Hou Dejian looked at him:
"What conditions?"
Zhao Chen said:
"Performance bet. In the next three years, net profit will grow by no less than 20% per year. If not, the valuation will be reduced accordingly."
Hou Dejian and Chen Guihong looked at each other.
Performance betting.
This is to transfer future risks to them.
"Chairman Zhao," Hou Dejian said, "This condition is a bit harsh. The pig industry has big cyclical fluctuations, and no one can guarantee an annual growth of 20%."
Zhao Chen nodded:
"I understand. But if you don't want to bet, the valuation will have to return to 15 times."
He paused:
"Mr. Hou, we at Henglong really want to cooperate. But this sincerity must be matched by price."
Meeting Room was quiet for a few seconds again.
Hou Dejian suddenly laughed:
"Chairman Zhao, you are the most difficult young man I have ever seen."
Zhao Chen also laughed:
"Mr. Hou, you are the most skilled senior I have ever seen in raising prices."
The two looked at each other and smiled.
But no one gave in.
Chen Guihong looked at the time:
"Chairman Zhao, how about this? Let's talk about the valuation at the reception banquet in the evening? Let the driver take you to the hotel to have a rest first."
Zhao Chen nodded:
"Okay. See you tonight."