What's wrong with me being a rich man?

Chapter 693 Swiftly (4k)

The silicon carbon group works very efficiently.

By July, Yu Xinggang had made a half-circle trip to first-tier stores in East China to inspect and visit the market's current views on Kyushu and feedback on the latest interest-free car purchase policy. The research institution from Malaysia provided a lot of information about Proton.

In Proton's home market of Malaysia alone, the corruption problem in its supply chain is extremely serious.

A complete set of body structure components and chassis stamping parts would cost around 8000 ringgit in the local industry, but the affiliated company offered around 11500 ringgit, a premium of over 40%.

Proton's current models are priced at only tens of thousands of ringgit. Other raw materials and parts, such as hot-rolled steel plates, interior parts, electronic components, and wiring harnesses, will inevitably have a higher premium.

Such a way of playing will naturally lead to getting bogged down in a quagmire.

However, Proton still has 1000 stores throughout Malaysia, which is more than half of the 2000 stores at its peak, but still provides a considerable foothold.

By cutting back on the supply chain and integrating with China's system, the bank in which the Guo family has a stake can provide low-interest loans for restarting operations. Although there are restrictions on foreign investment, such as the inability to hold controlling stakes, these can be circumvented through concerted action. In addition, China's mature vehicle models have proven their reliability...

After receiving feedback and discussing the information, it was concluded that Proton's business could be salvaged, but the political factors were difficult to predict.

Yu Xing had his own ideas, but he actually had MusVid cooperate in creating an index based on Brexit data, essentially an online poll from the mobile internet. The results showed that Najib, who was currently in power, was indeed at a great disadvantage, which was related to a series of corruption scandals that had recently been exposed, including the decline of Proton Group.

Proton was originally a publicly traded company, and although it was in a precarious situation, it has been declining rapidly since it was privatized.

When Yu Xing was having dinner at home over the weekend, he chatted about his thoughts on overseas operations over the past few days, calling it a "light asset" operation.

“Aren’t you just middlemen?” Liu Wanying said, expressing her observation. “Guo Kongcheng wanted to help Mahathir and his group find someone to take over, so he acted as a middleman and came to you. You then acted as a middleman and went to Great Wall, Geely, and BYD. In the end, only BYD, which now pays more attention to new energy, was willing to give up its technology for gasoline vehicles.”

"What is a middleman? We still need to invest money. The gasoline car technology that BYD doesn't value is still technology. It's enough to be used in Malaysia." Yu Xing laughed. "It's worthless in China, but it's valuable overseas."

When it comes to the development of the automotive industry, even a large country like China has faced considerable difficulties. To this day, it is still trying to break through in the mid-range car market, priced around 20 yuan. Small countries like Malaysia are even more reliant on foreign technology. Proton currently only has one low-priced, low-quality Saga sedan on sale, yet it has not gone bankrupt and still has some market share. This speaks volumes.

Wang Chuanfu spoke frankly about this matter, saying that BYD's main goal now is to focus on breakthroughs in its own new energy vehicles, rather than having the resources to consider overseas plans only after it has best-selling mid-to-high-end models, like carbon silicon BYD.

However, before Guo Kongcheng approached him, Yu Xing had not actually considered overseas operations. He only tried to mediate and cooperate when such an opportunity was offered to him. His primary goal was not to develop new energy overseas, but to explore a path of asset-light operations.

“Even if Mahathir comes to power, there’s no guarantee he won’t have to step down. He’s over ninety…” Liu Wanying said, referring to the most worrying issue at present.

To be able to form an independent alliance at over ninety years old shows that he is indeed too robust, but it doesn't seem like a sustainable career path.

“So, we need to be asset-light. If we acquire it, we should use Song’s vehicle platform, engine and technology patents as the main valuation.” Yu Xing paused and then said, “In addition, we should make a commitment to R&D investment over a certain period of time. If their situation changes, our investment will naturally be gone.”

Liu Wanying asked, "So, what's the budget?"

"Proton's current situation is that it must absolutely not take on any debt burden, and secondly, it must acquire Lotus's equity. On this basis, the value of Proton Group's 49% equity should not exceed $800 million, of which $600 million is the value of the technology."

Liu Wanying was both amused and exasperated: "You offered $8 million for the acquisition, but only actually paid $2 million? And you didn't even take on the debt burden? You're really greedy."

“Proton is the one in a real hurry right now. Even if it cuts off its debt burden, it won’t be easy to find a buyer, since that market is originally dominated by Japanese automakers.” Yu Xing said dismissively, “Look at the capable automakers around the world, who would want to mess around there? Even Japanese companies probably aren’t interested.”

Japanese automakers already have a stable market in Malaysia, and other automakers, unlike those in the carbon and silicon industry, do not consider the tariff advantages of ASEAN and are therefore considering the future overseas expansion of new energy vehicles.

Those with the ability are unwilling, and those who are willing lack the ability; only those in the middle are interested. And even among the middle-of-the-road car companies, most are unwilling to wade into the murky waters of debt.

After estimating for a while, Liu Wanying said, "Even if the actual amount paid is only $2 million, it may not be a good thing for the stock price of Silicon Carbon Group."

“I don’t think it will have too much of an impact. As for this money, I’ll ask the city again to see if they’re happy for us to take this action. If they are, they can give us a loan to support us,” Yu Xing said. “Anyway, the investment isn’t much, and the return will be quick.”

Because it's a rebadged version of a mature model, there isn't a long development cycle. As long as the equity transfer can be completed, it could be listed in six months. If the competitiveness in the domestic market can be replicated, the return on investment can be seen quickly.

This is the biggest reason why silicon carbide needs to find partners: low investment, fast feedback, and easy loss mitigation.

Liu Wanying listened to this comprehensive plan and felt that it was quite well thought out. Even if Mahathir encountered problems later, the silicon carbon side would most likely be able to get away unscathed.

After they finished eating, she handed her tablet to Yu Xing and said, "The problem with FGV is probably similar to that of Proton; both have big issues hidden in related-party transactions."

Guo Shanfeng received the report from Guo Kongcheng immediately.

In particular, after carefully reviewing the evidence in his file, Liu Wanying was basically able to conclude that FGV was a suitable target for a past peak, meaning that once the problem was exposed, the stock price would at least be halved.

FGV and Proton are essentially the same company, both being systematically hollowed out by high-premium related-party transactions. The difference is that the latter has been privatized, while the former remains listed.

As a Malaysian state-owned enterprise, FGV owns 85 hectares of ultra-low-cost indigenous plantations, with land lease costs only 30% of Wilmar International's. Theoretically, its production costs should be far lower than the industry benchmark, but in reality, they are 34% higher.

The biggest problem here is that the purchase of fertilizers, pesticides, planting services, etc., all come from related companies, and the purchase price is naturally a huge premium.

In addition, Guo Kongcheng's side verified the authenticity of some of FGV's export data through their own Wilmar International data, and believed that it may have fabricated at least 50% of its overseas export revenue.

Liu Wanying believes that FGV's subsequent research should follow this direction. The current issue is whether Guo Shanfeng should step in to short the stock. "It's better not to," Yu Xing's attitude is clear. "The acquisition of silicon carbon can't be limited to the commercial level. No matter how we negotiate, Song's rebranding can actually help Proton improve its competitiveness. More money or less is acceptable. But if Guo Shanfeng shows up again at this time, it's fine if Mahathir dominates, but if it's a compromise, Proton's subsequent operations will be too troublesome."

Judging from the situation in Malaysia, it is almost impossible for Mahathir to have everything go smoothly after taking office, so it is not a wise move for Guo Shanfeng to step forward and attack the FGV, which currently supports the current government.

Liu Wanying nodded slightly: "Real research? No, it has no influence. What about that anonymous firm ZR that shorted Wircard in Germany? Anyway, it's anonymous, so we can use it. Although Wircard is currently banned from shorting, it is still attracting the attention of short sellers. I guess it will be hard for it to hold on in the future."

Yu Xing's eyes lit up: "ZR? That's... a pretty good alias."

Matthew Earl, the person behind ZR, had previously called Lingang, but it was confirmed that he didn't have much power. The anonymous organization could be used by anyone anyway, and its short-selling method had already been planned: to take the research report and send it to various media outlets.

Whether Matthew Earl admits it or not, whoever used it is responsible.

The two have basically reached a consensus.

Regarding the discussion on the situation in Malaysia, Yu Xing concluded by mentioning a prospect that had not been communicated with any party.

“Mahathir and the Guo family clearly have business dealings, including with Anwar, who they have high hopes for as their successor. They are definitely bound by interests. If the Guo family can be bound by interests, then other interests can be bound by interests as well.”

"Malaysia currently has virtually no policies regarding cryptocurrencies, so we could send Liu over to take a look."

Yu Xing mentioned Liu Jiankai, the founder of "Kebit".

Malaysia currently has an ambiguous attitude towards cryptocurrencies, with no clear regulatory rules and only risk warnings. Meanwhile, a large number of unlicensed local exchanges are emerging. If they can get things done before Mahathir comes to power, there might be some surprising effects from subsequent policies.

Liu Wanying sighed: "President Liu is searching the world for a place to stay. Aren't you afraid that if he gets too involved, something bad will happen?"

Yu Xing shrugged: "If he were afraid, he wouldn't have insisted on keeping 'Kabite'. He would feel more secure if he had more vested interests involved."

After thinking about it carefully, Liu Wanying realized that this might actually be true.

From this perspective, the Malaysian market can indeed bring multifaceted benefits this time.

On July 4, Wang Chuanfu once again participated in the online meeting of the internal CC of silicon carbide, and listened to everyone's discussion and verification of CTB.

As it turned out, this was not a reckless idea, but a wonderful direction to take.

After the meeting ended, he was pulled into another online meeting room by General Manager Yu, where the discussion was about overseas joint ventures and the idea of ​​rebranding Malaysian models.

Wang Chuanfu wasn't too concerned about this matter, but after listening for a while, he had to admit that carbon silicon had indeed done a great job in vehicle design and customer service to get Kyushu to its current sales volume.

"Mr. Yu, Mr. Wang, we have collected feedback from car owners in Malaysia. The area is hot and humid with frequent heavy rains. Many Japanese models that sell very well have not actually undergone much localization. We need to specifically optimize engine cooling, improve air conditioning for rapid cooling, and provide chassis corrosion and waterproofing. If we could also do some anti-mold treatment inside the car, that would be even better."

"Oh right, there are many Muslims in Malaysia, which is something that can be optimized specifically. We can add prayer time reminders and Mecca orientation guidance to our car's infotainment system. It's actually a great local marketing point, and it's a design that Japanese and European and American models don't have."

"There is one issue that may have a significant impact: the market there has been educated by Japanese brands for decades, and their considerations regarding transmissions may be deeply ingrained. The Song uses a dual-clutch transmission (DCT), which is one of the three major components of a gasoline car, and they cannot possibly ignore it."

Upon hearing this, Wang Chuanfu immediately said, "The transmission problem is easy to solve. We can provide a lifetime warranty on the transmission, and also offer 5 years of free maintenance for the entire vehicle. This is a benefit that Japanese cars don't offer, right?"

“Yes, that would be much better. Japanese cars have a 3-year/10-kilometer warranty there, so this would alleviate many users’ concerns,” the person on the microphone immediately responded.

Wang Chuanfu smiled and said, "This is our advantage in the industry chain. If we don't have to meet the requirement of 40% local compliance, we can reduce the cost of CKD kits even more."

CKD (Completely Knocked Down) involves disassembling a car into parts, selling these parts as components, and then assembling them locally to form a complete vehicle for sale. This method avoids the high tariffs associated with whole vehicles.

Such online meetings end after a quick discussion of the feasibility of local rebranding.

Wang Chuanfu couldn't help but ask General Manager Yu, "The person you mentioned earlier who was the deputy director for local design, right? Their ideas are quite detailed. How come you've put so much effort into Malaysia? It's beyond my expectations."

Yu Xing was a little puzzled: "We didn't put in much effort, it was just a normal procedure. The owner of the car with the new badge is still the owner, what's so surprising about this?"

Wang Chuanfu: "Hmm..."

He had originally wanted to bring up the idea of ​​cost reduction, but he couldn't bring it up anymore. Well, fine, this time carbon silicon will be in charge of the entire operation. Anyway, it's just an oil car. We can get 50% of the revenue. What else is there to complain about?

Yu Xing was very satisfied with Mr. Wang's cooperative attitude. It didn't take too much effort, as the technology was provided by other companies, and he could get 50% of the profits. What else could he be dissatisfied with?

Regarding silicon carbon, they have basically figured out their own direction and have given a response to Kwok Kwok-shing, who has returned to Hong Kong, saying that they are willing to formally negotiate the acquisition of Proton.

Along with this reply, Guo Kongcheng also received a detailed Proton renovation plan.

Guo Kongcheng doesn't understand car companies, but judging from the speed and attitude of silicon carbide in doing things, he feels that the rapid development of new energy in mainland China is not without reason.

(End of this chapter)