What's wrong with me being a rich man?

Chapter 509 Success
Li Song is not optimistic about LeEco's car manufacturing venture.

This point initially came from Xu Xin and Yu Xing's exchange regarding LeEco's decision, but he went around in circles and conducted a new study when screening domestic listed companies.

LeEco has been touting its ecosystem, but based on his observations and discussions with Xu Xin, the synergy between those ecosystems isn't that high. While LeEco's main business is profitable, it only generated over 2 million RMB last year, and this year, revenue is increasing but profits are not. The financial reports already released indicate that net profit is bound to face a significant decline.

In addition, Li Song investigated and found that LeEco's subsidiary, "LeEco Zhixin," was selling televisions to its listed parent company at below-cost prices, which could potentially have inflated the listed company's net profit.

This is a typical example of counter-trend trading.

Xu Xin also expressed pessimism about the future of LeEco's ecosystem, which relies excessively on hardware subsidies and related-party transactions. There are many issues worth considering regarding LeEco's listed and unlisted systems alone.

So, where will LeEco get the money to build cars?
Since LeEco announced its car manufacturing plans, it has not conducted any public financing. This is because if it did, it would likely raise another important issue: where would the money go?

Jia Yueting has pledged his shares 12 times this year, but the money he gets from the pledges is not free. With LeEco's stock price currently high, if the stock price falls, his room for maneuver in terms of funds will likely shrink significantly.

Li Song felt that, given the current situation, LeEco and Jia Yueting were almost blindly rushing forward.

Equity pledging, related-party transactions, ecosystem expansion, and the inevitable need for heavy investment in car manufacturing...

Xu Xin's latest comment on this is: "The purpose of Jia Yueting's pledged funds is unclear and unclear. We don't know how he will repay them in the future. Look at President Yu's car manufacturing. After selling WeChat, he directly invested the money. Once the money was invested, we could see the factory construction and team building. Although he is sometimes a bit autocratic, everything is clear."

Li Song shared the same sentiment. The situation in Lingang has always been clear. Although problems have been encountered, they are all issues in the process of car manufacturing. In contrast, LeEco has been constantly touting its ecosystem since announcing its car manufacturing plans, but has actually done very little.

Capital Today has made significant investments in Silicon Carbon Group, and a simple comparison of the progress of the two projects over the same period is enough to immediately reveal the differences.

Li Song had intended to call President Yu to arrange a meeting, but he was immediately rejected as soon as he expressed his intention.

“I’ve been too busy lately, and I haven’t had time to follow other people’s car manufacturing.” When Yu Xing heard that the short seller had found the right direction, he didn’t intend to help him analyze it step by step. “President Li, if you really can’t make it in the dating industry, you can just follow President Xu and do investment.”

Li Song felt helpless, but he knew that the silicon carbon group had reached a critical moment. He ended the call dejectedly and then pondered on his own which angle to start from.

……

On October 21, Silicon Carbon Group welcomed an investment consortium comprised of four European institutions.

Thanks to Xiong Xiaoge's efforts in connecting the two sides, the silicon carbon team that had previously traveled to Europe with them has fully explained the progress and goals of the Lingang project. Meanwhile, domestic institutions such as IDG, Today Capital, Red Falcon Capital, and local state-owned assets have raised $4.2 million.

In addition, there were visits and discussions with institutions such as Matrix Partners China and Yung-Hsuan Investment.

The European consortium is faced with a project that is nearing completion.

This project is just one step away from completion, but that's precisely why it might either become profitable or quickly become unprofitable. Coupled with its relatively high valuation, this has made domestic institutions hesitant.

Since Silicon Carbon Group decided to launch its Series C financing, Lingang has received more than 20 investment institutions. Some hesitated and were unwilling to invest at this stage, while others hesitated and only wanted to wait for a more certain signal. However, Silicon Carbon Group could no longer wait.

Yu Xing attached great importance to this European consortium, not only personally attending to them but also bringing along his core executives to receive them.

Like him, the European consortium that came this time also showed great interest in the new energy companies introduced, and even specially invited a former senior executive of a well-known car company to serve as an industry consultant for this visit.

and so……

The two sides recognized each other immediately upon meeting. "Hey, Thomas, what are you doing here?" Paxson, a former executive who had worked at Volvo and Volkswagen for many years, quickly noticed the foreign face next to Yu Xing. It was Thomas, his former colleague and the head of Volvo's safety department.

“Paxson, haha, why can’t I be here?” Thomas knew the significance of this appearance and laughed. “Not only am I here, but I’m also about to start a new business.”

Thomas and Paxson had a lively conversation as soon as they met.

This familiarity quickly brought the European consortium and the silicon carbon group closer, with well-known figures in the industry successfully playing a role in endorsing their credibility.

Yu Xing led the group on a tour of the silicon carbon group's factory in slightly broken English, and the integrated die casting, personally introduced by Thomas, undoubtedly made the Europeans' faces turn serious, amazed, and puzzled.

The amazement stems from the use of this new technology, the solemnity from the fact that the user of this new technology is Huaxia Company, and the doubt lies in its specific effects.

Yu Xing led the group on a tour of the entire factory according to the established procedure before starting the test drive.

He drove himself, with Thomas sitting in the passenger seat, occasionally introducing suppliers and electrification. Soon, the car was filled with whispered discussions.

After Jonas, who was leading the test drive, inquired about the price of this rare six-seater model.

Yu Xing gave a starting price: "4.5 euros."

Jonas shook his head slightly.

Yu Xing's expression hardened.

Jonas turned to the person behind him and said, "It's cheap. It deserves a higher price."

Yu Xing smiled and said, "In fact, just like the United States subsidizes Tesla, its price here after subsidies is about 3.7 euros, but we can reduce costs through economies of scale and then obtain more profits."

Marcus, who was sitting in the second row, couldn't help but say, "Those idiots at Volkswagen should really see this car. It's like two generations of the same model, except for the inferior engine."

Before anyone else could speak, he launched into his own explanation: "However, the engine of this type of car only serves to generate electricity, so for the Chinese market, there is undoubtedly a huge transitional gap between gasoline cars and electric cars."

Jonas, who was driving, laughed and said, "Marcus, if you say that, it will make it very difficult for us to negotiate with President Yu."

“Things of value should be priced accordingly,” Marcus said. “This is the basis of our long-term cooperation. Silicon Carbon Group is very honest. Such a new company is far more honest than idiots like Volkswagen and BMW. They deserve to be shorted by the peak.”

These investors from Europe all suffered significant losses in the attack on the mountain peak. They couldn't help but get carried away when the topic of the previous short selling came up, criticizing BBA and complaining about the mountain peak.

Yu Xing simply maintained a polite smile.

When they changed drivers again, Marcus took the opportunity to say to Yu Xing, "Mr. Yu, I don't think our investment decision is a difficult matter, but I have a strong expectation: do you think there is a possibility for Silicon Carbon Group to go overseas?"

Yu Xing replied without hesitation, "It's quite difficult. We're currently focused on the Chinese market, and the market here alone is enough to support our rapid development."

He then added, "But more difficult things often mean greater benefits."

Marcus patted Yu Xing on the shoulder: "I approve of that, just like I approve of your car."

(End of this chapter)