Journey 1995:Non-Stop

Chapter 319 Heng Hui Chemical
For Yan Hui, 500 million is no longer a problem.

Auctioning land is not a simple matter. If all goes smoothly, Yan Hui will be lucky to get all the procedures done by September this year. After all, the initial product certification alone takes at least two months. After obtaining product certification and completing all the procedures, it will be at least May or June. Then, he will wait for the land to be listed for auction. Once the land is successfully auctioned and construction can begin, it will be at least the second half of the year.

"If it's 500 million, I should be able to come up with it in the early stages," Yan Hui said.

My brother-in-law and cousin have both discussed this topic with me, and they are both willing to invest over a million yuan. In fact, they have wanted to invest in Yan Hui for a long time, but Yan Hui has not needed it all these years.

"Hmm, it seems you don't need my help." President Han smiled slightly.

Mr. Han is actually a cautious person. He doesn't understand the chemical industry and won't offer any help.

If Yan Hui were to ask, President Han would definitely lend a hand, but Yan Hui wouldn't bring it up.

In Yan Hui's eyes, President Han was a benefactor. Although President Han would help him with any request, Yan Hui did not want to make such a waste of his time and energy.

In Yan Hui's plan, the chemical plant would be profitable, but it wouldn't start generating revenue until at least 2007. There are plenty of good projects out there; it's not right to always approach things with the mindset of "I can make you money."

"You've already helped me a lot. If you hadn't mentioned this plan, I really would have had to figure out how to get over ten million, and that would have put too much pressure on me!" Yan Hui breathed a sigh of relief.

Only he knows how different the difficulty is between securing 500 million and securing 1000 million.

“Okay, I’m familiar with the High-tech Zone too. Just give me a call if you need anything,” Mr. Han said with a smile.

"By the way, Mr. Han, now that the land auction is settled, I'm under a lot of pressure building my factory. I'm thinking of selling my processing plant. I wonder if you'd be interested in acquiring it?" Yan Hui said, revealing what he had already considered.

"Can Zhongwei handle the sales channels?" President Han frowned slightly.

Despite being the factory director, Dai Zhongwei's primary responsibility is not production, but sales!
“I have a fairly mature team on my side, and the person in charge is Wang Wei, who was one of the sales people who started with me. I can also leave this team to Factory Manager Dai,” Yan Hui explained.

"Alright, let me know when you need it." President Han nodded without saying anything more.

The land for this processing plant was very cheap at the time; the land and factory buildings only cost a little over 20 yuan. It could be said that Yan Hui got a great deal from General Manager Han. At that time, Yan Hui bought 50 yuan worth of equipment, which was subsequently increased to about 80 yuan.

For a processing plant, the value of the factory buildings and machinery is not significant; the core asset is the sales channel. This processing plant actually generates nearly a million in profit annually, resulting in a very high price-to-earnings ratio.

Yan Hui's timber processing plant has proven its earning power through its actions, so this processing plant could easily be sold for more than 200 million, or even 300 million.

Some people say that I can completely replicate a factory for 150 million yuan, and you don't have any technological barriers, so why do you dare to ask for 300 million yuan?
In reality, investors are not buying a pile of steel and cement, but rather the ability to generate continuous profits in the future.

Why was the first thing President Han asked about when he heard that Yan Hui wanted to sell the processing plant?
Clearly, President Han understood that an empty processing plant was practically meaningless. However, if the workforce and sales team remained, it was a stable money-printing machine. If everyone left, and the distribution channels disappeared, Dai Zhongwei alone couldn't possibly operate it. If Yan Hui were to sell it externally, he could consider selling it for 300 million, but if he sold it to President Han or Dai Zhongwei, Yan Hui only planned to sell it for around 120 million. This was partly because Dai Zhongwei already had shares, and partly to repay a favor.

After selling the processing plant to General Manager Han at a low price, Yan Hui will no longer need to share profits from his plywood business; in fact, the profits from plywood will increase.

For Yan Hui, having an extra million yuan in cash is crucial; besides, it also reduces the number of things he needs to worry about. He's incredibly busy right now, almost overwhelmed!
After leaving President Han's place, Yan Hui first went to Zhou Ping to recalculate the accounts, and then got busy again.

Over the next few months, Yan Hui completed a series of preparations for negotiating investments and land auctions, as well as the preliminary design and planning of the chemical plant.

按照目前的计划，颜辉的化工厂前期会投入大概500万用于购置设备，购买6-12套反应釜。前期的考量是6套反应釜，每天的产能大概是10-20万元人民币，年产能3000-6000万元。

The planned gross profit margin for single-component polyurethane is expected to exceed 40%, meaning that a net profit of 1000 million yuan per year can be achieved in the early stages.

This profitability is what all investors dream of, and it was also the core consideration that Yan Hui had when he considered building the chemical plant four years ago.

Leading the way guarantees high profits; that's the business answer.

The chemical plant was named "Heng Hui Chemical" and its main investors are Yan Hui, his brother-in-law, and his cousin.

Taking into account various factors such as the land, future factory buildings, equipment, patented technology, and market of the chemical plant, Yan Hui and several investors discussed and determined that the total estimated value of the first phase of the project was 2500 million yuan.

After some initial discussions, it was agreed that the brother-in-law would invest 150 million yuan and the second cousin would invest 200 million yuan, each holding 6% and 8% of the shares in the chemical plant. Chen Jian and his wife would hold 6% of the shares in terms of technology, and Yan Hui would hold 80% of the shares. This was the initial plan, and no actual calculations were made.

By June, with product certification and other procedures completed, Yan Hui began to formally engage in land auctions.

The most suitable piece of land costs 16 yuan per mu, and there are a total of 80 mu, with a land value of 1280 million yuan. Including taxes and fees, this piece of land is worth about 1400 million yuan.

To this end, Yan Hui continued to communicate with his brother-in-law and second cousin, and the company's valuation reached 30 million yuan. As a result, his brother-in-law invested an additional 3000 yuan, and his second cousin invested an additional 40 yuan, with investment amounts of 180 million yuan and 240 million yuan respectively, and their shareholding ratios remained unchanged.

Yan Hui sold his timber processing plant and used 2 million yuan in cash, totaling 6.2 million yuan, to complete the land auction in September 2005.

At this moment, the 50-year land use right belongs to Heng Hui Chemical Co., Ltd.

My brother-in-law, cousin, and others will no longer be involved in any subsequent investments in factory buildings and equipment. They will simply wait for the chemical plant to start production and share the profits, as per the agreement.

This land had already been mortgaged at the moment of the auction and could not be mortgaged again. Everything from now on depended on Yan Hui himself.

(End of this chapter)