July 9, Monday, Shan City.
Henglong Group convened Temporary Board Meeting again.
This is the fourth Temporary Board Meeting this year - the first is the ratification authorization of Bubble Mary Existing Share Acquisition, the second is the establishment of Henglong Capital, and the third is the capital injection of 500 million into Henglong Capital.
This time, the issue is still capital injection, but the amount has doubled.
Liu Mingyu sent the meeting notice three days in advance, and attached two materials.
The first is the "Shunxin Agriculture Investment Income Summary Report" drafted by Chen Xi, and the second is the "Feasibility Proposal on Investment in Bidiya Co., Ltd.".
When the directors received the email, their reaction was surprisingly unanimous - they opened the first copy and looked at the numbers;
Then open the second copy and look at the bid;
Then he sent a message back to Liu Mingyu: "Shunxin Agriculture really made 648 million?"
Liu Mingyu's reply was uniform and concise, "Really. Chen Xi will report in detail at the meeting."
Nine o'clock in the morning, Henglong Group Main Meeting Room.
Board of Directors members are all here.
Shen Jue is sitting opposite Zhao Chen, and three Independent Director Wu Hongyuan, Sun Zhengping, and Xu Yong are sitting on both sides.
Su Wantang and Chen Wei attended.
Chen Xi is sitting on the right side of Zhao Chen, with a thick stack of information spread out in front of him--
Every transaction record of Shunxin Agriculture, the original documents of the brokerage research report, and the financial analysis report of BYD.
Zhao Chen leaned on the back of the chair, holding a tea cup in his hand, his expression as calm as a pool of water.
Liu Mingyu looked around and cleared his throat.
"Henglong Group The fourth Temporary Board Meeting in 2018 starts now.
The first item on the agenda, please General Manager of Henglong Capital Chen Xi report on Shunxin Agriculture's investment income."
Chen Xi stood up, walked to Projection Screen, and opened the laptop.
The first slide is the stock price chart of Shunxin Agriculture--
From 18 yuan at the end of March to 41 yuan at the end of June, a red line pointed steeply upward, like a flagpole stuck on the chart.
"Dear directors, this investment in Shunxin Agriculture started to build a position in late March and completed the liquidation in early July. It took less than four months."
The voice of Chen Xi is more stable than the last time Board of Directors, and the data is reported one after another.
"The initial position was 28.4 million shares, with a cost of 18.2 yuan, and a total cost of 516.88 million yuan.
All clearances have been completed, with a cumulative total transaction volume of 1.165 billion yuan and an average clearance price of 41.02.
The gross profit is approximately 648 million yuan. Transaction fees and interest costs are not high and have almost no impact on profits after deduction."
Sun Zhengping pushed up his glasses.
"Wait a minute. The stock price rose from 18 to 41, an increase of 128%. How come your net profit margin exceeds 300%?"
Chen Xi Switch to the second slide, which is a disassembly diagram of capital utilization efficiency.
"Mr. Sun, because Henglong Capital used 2.5 times leverage and has only about 200 million in its own funds.
Although the total investment is 518 million, the income is calculated based on our actual investment.
Calculated in this way, the return on own funds exceeds 300%."
Meeting Room was quiet for a moment.
Wu Hongyuan leaned back in his chair, looked at the numbers on the screen, and said nothing.
Xu Yong flipped through the report in his hand, his eyes lingering on the line "Net profit 648 million yuan" for a long time.
Shen Jue looked at Chen Xi, her expression didn't change much, but she tapped her fingers on the table twice - a small movement she made only when she was satisfied.
Chen Xi continued:
"This income has all been returned to Henglong Group's account. For Shunxin Agriculture's investment, Henglong Group actually used its own funds of 200 million yuan, and the total recovery of Principal and Interest is approximately 848 million yuan."
Liu Mingyu added next to it:
"In other words, Henglong Group made nearly 650 million yuan in less than four months on the stock Shunxin Agriculture.
This figure exceeds the non-net profit of Henglong Real Estate's main business last year."
Sun Zhengping put down the report and looked at Chen Xi.
"Chen Xi, this is a great investment. I have no more questions."
Wu Hongyuan also nodded. "The data is clear, the logic is complete, and the procedures are compliant. I agree."
Shen Jue didn't speak, but she picked up the teacup and raised it slightly in the direction of Chen Xi.
It was a silent recognition.
Chen Xi returned to her seat. The clothes on her back were soaked with sweat, but her expression remained calm.
Liu Mingyu Open the agenda book.
"The second item on the agenda is a proposal on the feasibility of investing in Bidiya Co., Ltd. Please General Manager of Henglong Capital Chen Xi explain."
Chen Xi stood up again and walked to Projection Screen.
The third slide appears on the screen--
The logo of Bidiya, below is a line of small characters: A-share code ******, H share code *****.
"Dear directors, Henglong Capital applies to the group for a capital injection of 1 billion yuan to invest in BYD Co., Ltd.
The investment method is Secondary Market buying, the target position does not exceed 4% of the total equity, and the buying price range is less than 40 yuan."
Sun Zhengping was the first to speak, and his tone was much more serious than before.
"Chen Xi, you don't know what the market thinks of Bidiya now.
New Energy Subsidy Phase-Down, first-quarter profit fell 83%, and expectations for the semi-annual report continue to be pessimistic. Institutions are shipping, and retail investors are panicking.
You are proposing to invest 1 billion yuan at this time, what is your basis?"
The atmosphere in Meeting Room has changed.
The sense of relaxation brought by Shunxin Agriculture just now disappeared, replaced by a sharp scrutiny.
Chen Xi took a deep breath and switched to the fourth slide.
On the screen is a table. On the left is the market's pessimistic expectations for BYD, and on the right is the rebuttal basis she listed.
"Sun Dong, I understand the pessimism of the market.
The subsidy reduction has indeed had an impact on BYD's short-term performance. Net Profit Attributable to Parent's first quarter report was only 102 million yuan, a year-on-year decrease of 83%.
The semi-annual report preview also shows that net profit in the first half of the year is expected to be between 300 and 500 million yuan, a year-on-year decrease of 71% to 83%.
The market has already digested these figures."
She paused and switched to the fifth slide, which was a summary table of brokerage ratings.
"But I would like to ask all directors to pay attention to one detail - when everyone was bearish, there was one institution that never sold a share from the beginning to the end."
Meeting Room was quiet. Everyone was waiting for her to continue.
Chen Xi points to the data on the screen.
"Buffett. Berkshire Hathaway holds 225 million shares of Bidiya, accounting for 8.2% of the shares. It is the fourth Major Shareholder of Bidiya.
This investment was made in 2008 with a cost of 232 million US Dollar. Ten years later, Buffett has never reduced its holdings.
In February 2018, among the top fifteen stocks announced by Berkshire, Bidiya was the only China company invested by Buffett.
Buffett himself also said in an interview that Wang Chuanshou is one of the four CEOs he admires most."
Sun Zhengping flipped through the report in his hand and found the page where Buffett held shares. His eyes stayed there for a few seconds.
Chen Xi continued, "The cost for Buffett to buy Bidiya is about 8 Hong Kong Dollar. Now the stock price of Bidiya H shares is around 50 Hong Kong Dollar, which has increased six times.
He doesn't sell, not because he doesn't care about valuation, but because he cares about a longer period. Subsidy reduction is short-term, but the trend of New Energy cars is long-term.
After the impact of the subsidy reduction is digested, Bidiya's profitability will return to normal levels."
Wu Hongyuan asked, "What are the opinions of the securities companies? Apart from Buffett, are there any other institutions that are optimistic about it?"
Chen Xi was already prepared, she switched to the sixth slide.