Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 35 Acquiring Golden Elephant (Please add to your favorites, vote for this book, and recommend it!)

Bangkok.

Oriental Hotel.

"Boss." Achang knocked and entered Chen Bingwen's room, holding a stack of papers covered with Thai and messy Chinese annotations.
"In Bangkok and the surrounding areas, there are a total of seventeen coconut milk factories and cooperatives that are relatively large in scale and can provide stable supply."

Thanapon and I split up and spent the day visiting nine of them..."

He paused, then handed the documents to Chen Bingwen. "The situation is not optimistic."

Either they have already signed long-term exclusive sales contracts with large companies like Jinxiang and Taifeng, and their production capacity is fully occupied, leaving no extra drop to be squeezed out;
Either the scale is too small, the equipment is rudimentary, and the quality is inconsistent, which simply cannot meet our requirements;
Several other companies are asking for exorbitant prices.

"Thank you for your hard work, Achang." Chen Bingwen took the documents but didn't look at them immediately. "What about the rest?"

“Thanapong is still on the move, and we should be able to make contact with everyone by noon tomorrow at the latest. However,” Achang hesitated for a moment, “Boss, judging from the current situation, I’m afraid the chances are slim.”

Should we talk to Golden Elephant again? Or accept the terms for that Siamese Golden Coconut? Although the quality is a bit lower, at least…

Chen Bingwen waved his hand, interrupting him.

Instead of the disappointment Ah Chang had expected, a meaningful smile slowly spread across his face.

“Ah Chang, we’ve been focusing on the products and the suppliers, but we’ve forgotten the most fundamental thing!” Chen Bingwen’s voice was calm, yet it carried a penetrating insight that seemed to see through everything.

Achang was taken aback: "The fundamentals?"

Yes, absolutely!
What gives Golden Elephant the audacity to raise prices by 30% so recklessly? Why is Songpa's coconut milk considered a top-tier product?
What makes Taifeng so capable of signing a three-year exclusive contract with Songpa?

Chen Bingwen pointed to the sofa next to the coffee table, gesturing for Achang to sit down: "Achang, we're playing a game on a completely different level than them!"

They are competing on products, channels, and upstream resources, while we, having previously fallen into the trap of conventional thinking, are struggling in this quagmire along with them!

Now, it's time for a change of pace! It's time to take over our home turf!

Achang was completely dumbfounded: "Our...our home ground?"

Chen Bingwen didn't answer directly. Instead, he picked up the Bangkok Post he had been reading on the coffee table, turned to the economics section, and said emphatically, "The Thai stock market!"

"Huh?" Achang looked at Chen Bingwen blankly.

While Achang and Thanapon were out visiting clients, Chen Bingwen was also busy.

He collected almost all the recent English newspapers, including the Bangkok Post and The Nation, and even some financial news agency briefings, searching for any clues related to coconut milk.

Initially, he simply wanted to find out the industry dynamics or policy trends behind Golden Elephant's price increase and Taifeng's signing of Sompa.

However, when he saw a short commentary on the Stock Exchange of Thailand in an inconspicuous corner of the Bangkok Post's business section, he was completely stunned!
The amount of information revealed in that short review was simply unbelievable.

In 1978, there were only 27 companies listed on the Stock Exchange of Thailand.

The vast majority of companies have a market value between 1000 million and 1 million Thai baht.

Golden Elephant Food Industry Co., Ltd. was prominently listed. The article mentioned that the company's stock price had been depressed and trading volume had shrunk due to a rare typhoon in the main coconut producing areas of the south. Investors were extremely pessimistic about its profitability in the near future.

The share price fell to 1.2 baht per share this week, leaving a total market value of only about 1360 million baht (about 515 million Hong Kong dollars).

HK$5.15 million.

After calculating the market value of Jinxiang Company, Chen Bingwen felt that there might be other ways to go besides finding high-quality raw material bases.

The next day, at Nalong Accounting Firm in Bangkok.

Chen Bingwen sat on a hardwood chair, while the gray-haired old accountant Nalong pushed a stack of documents toward him.

Driven by $500, veteran accountant Naron acquired detailed information about Golden Elephant Food Industries from his peers in less than an hour.

“Mr. Chen, the situation is more interesting than what’s written in the newspapers.” Nalong’s English was heavily accented with Thai. “Golden Elephant Foods, a typical family business.”

The Somchai family effectively controls approximately 43% of the shares through cross-shareholding.

The remaining 57%, or more than 50%, is held by several thousand Thai retail investors, and another 7% is held by a few small local funds.

"What about the debt?" Chen Bingwen's voice was steady, his eyes fixed on the report.

"Not exactly healthy, but not fatal either."

Naron flipped through the documents and continued, "The bank's short-term loan is approximately HK$120 million, mainly used to maintain production recovery after the disaster and to pay suppliers."

"Their core assets," he paused, then smiled meaningfully, "are those two thousand acres of coconut and sugarcane plantations in the south that were ravaged by the typhoon. They're valuable on paper, but their residual value will probably be greatly reduced."

However, they have a complete coconut milk and syrup processing plant in the Rayong Industrial Estate; the equipment is reasonably well-maintained, and the land ownership is clear.

43% to 50%+ retail investors!
Two thousand acres of coconut and sugarcane plantations, plus coconut milk and syrup processing plants!
A near-crazy plan instantly took shape in Chen Bingwen's mind.

The golden elephant was no longer the opponent who could strangle him, but rather prey that had come to his doorstep!
A prey that has been severely underestimated by market panic!
This is more than just revenge!
The acquisition of Golden Elephant was by no means an impulsive decision.

Once we control Golden Elephant, the threat of a 30% price increase will vanish.

Golden Elephant's coconut plantations and processing plants in the south will become the core of Chen Ji Dessert's stable supply of raw materials. Not only will the current supply of mango pomelo sago and coconut milk sago be secure, but all future product lines that require coconut milk will also have a solid guarantee.

From now on, we will have control over the lifeline of the supply chain!

Having direct access to raw material sources and primary processing capabilities means eliminating all profit-making links from intermediaries.

Even considering Golden Elephant's operating costs, Chen Ji's future comprehensive cost of coconut milk will be far lower than the market purchase price, not only offsetting the 30% price increase, but also achieving a long-term structural cost advantage.

This provides Chenji with unprecedented strategic depth in terms of price competitiveness and profit margin in the high-end market.

Back at the hotel, Chen Bingwen immediately dialed an international long-distance number in Hong Kong and found Zhou Mingzhe, the manager of Wing Lung Bank.

His total assets are less than three million.

There are still some shortcomings in the acquisition of Golden Elephant Food Industries.

Therefore, leveraged buyouts are necessary to meet funding needs.

Leveraged buyouts, simply put, are "borrowing money to buy a company".

Chen Bingwen invested a small portion of his own funds as a base.

The majority of the funds needed for the acquisition were raised through bank loans.

The collateral for this huge debt mainly comes from the assets and future cash flow of Jinxiang Food Co., Ltd. itself!
In other words, Chen Bingwen used the value and earning power of "Golden Elephant" itself as collateral to borrow money from others to buy "Golden Elephant".

However, doing so is tantamount to exposing the target of the acquisition to the bank before the acquisition even takes place.

This has inadvertently increased many unknown risks.

Chen Bingwen plans to use Chenji Foods as collateral for a leveraged buyout.

"Hello Manager Zhou, this is Chen Bingwen." After a brief exchange of pleasantries, Chen Bingwen got straight to the point: "I'm in Thailand, and I need a bridge loan of four million Hong Kong dollars."

The collateral consists of 100% equity in Chen Ji Food Co., Ltd., all ownership rights to its two factory buildings in Cheung Sha Wan and Kwun Tong, and all profits of Chen Ji Food Co., Ltd. for the next year.

Dexin's accountants will simultaneously follow up and confirm the asset valuation and legal procedures.

There was a two-second silence on the other end of the phone, then Zhou Mingzhe's voice was heavy with disbelief: "Chen Sheng... Four million? What exactly do you want?"

"Acquire, acquire a Thai company."

Chen Bingwen gave a vague explanation of its purpose.

"Mortgaging 100% equity, two factory buildings, and even pre-paying a year's profits? This risk exposure is so huge that the Wing Lung Risk Control Committee would never approve it!"

Zhou Mingzhe's voice sounded somewhat distorted on the phone.

"Manager Zhou, the latest valuation by Dexin is 1.83 million for Chen Ji's net assets, and that's just the static value."

With monthly cash flow approaching one million, the company boasts a healthy and abundant cash flow, and its collateral adequately covers the risks.

"This money is to secure upstream raw material resources and build our own competitive advantage," Chen Bingwen patiently explained.

Zhou Mingzhe, the "moat" expert, noticed the key words Chen Bingwen mentioned and asked, "Could you specify which company?"

"The target is subject to a confidentiality agreement, and we cannot disclose its specific name at this stage."

He spoke calmly and meticulously, "but it is clear that the target is located in the core agricultural production area of ​​Thailand and has a stable and high-quality raw material base."

The valuation is significantly lower than the replacement cost, indicating a clear margin of safety.

The acquisition will create strong synergies with Chen Ji's existing business, reducing raw material costs by more than 15% and significantly increasing profit margins.

There was a long silence on the other end of the phone, broken only by the faint sound of breathing.

Chen Bingwen knew that Zhou Mingzhe was weighing his options.

"Once your people send over the valuation report, I'll review it and give you my reply," Zhou Mingzhe's voice finally rang out again.

"Ok."

Chen Bingwen readily agreed.

After hanging up the phone, Chen Bingwen did not hesitate for a moment and immediately dialed Fang Wenshan's number at Dexin.

"Accountant Fang, that's me, Chen Bingwen."

The situation is urgent. There are two things to do: First, immediately send the asset appraisal report of Chan Kee Foods and the complete property ownership certificates of the Cheung Sha Wan and Kwun Tong factories to Manager Zhou Mingzhe of Wing Lung Bank. I am preparing to apply for a bridge loan of HK$4 million from Wing Lung Bank.

Secondly, I need you to register an offshore holding company in the Cayman Islands as quickly as possible to serve as the ultimate shareholder for this acquisition in Thailand and a potential platform for future capital operations.

"Name it," Chen Bingwen thought for a moment, "Let's call it Sugar Heart Capital Co., Ltd."

"Understood!" Fang Wenshan on the other end of the phone said without any further ado. "I'll prepare the documents immediately and send them over within an hour."

I have requested expedited processing for the Cayman Islands company registration process, and the initial registration is expected to be completed within three days.

"Chen Sheng, are you going to play for something big?" He keenly sensed the predatory intent of capital.

“It’s not a game, Accountant Fang.” Chen Bingwen looked out the window at the Bangkok night view and said, word by word, “It’s about cutting off the hand that’s stuck in our necks, and turning what’s behind it into our own foundation!”

"Mr. Chen, is there anything else I can do for you?"

Upon receiving confirmation from Chen Bingwen, Fang Wenshan immediately became interested.

The commission from acquiring a company is far more lucrative than managing Chen's finances.

"Find me two professional traders. After the offshore company is registered, bring them to Bangkok. I'll be waiting for you there."

On the other end of the phone, Fang Wenshan's voice instantly rose a few decibels, excitedly saying, "Understood! Don't worry, Mr. Chen, I'll find someone right away! Someone professional, and someone who knows the rules! See you in Bangkok!"

He didn't ask for details. Like an old hound in the hunting grounds of capital, he could smell blood and know which knife to sharpen.

After hanging up the phone, Chen Bingwen took a deep breath.

The plan to acquire Golden Elephant is like a fully drawn bow, with the arrow on the string, allowing no room for deviation.

On the other hand, after receiving the valuation report for Chen Ji Food Company, Zhou Mingzhe of Wing Lung Bank, after review by the risk control department, transferred a loan of four million to the account designated by Chen Bingwen the next day.

Chen Ji Food Company's asset situation and monthly turnover of nearly one million are sufficient to offset the risks brought by the four million loan.

Three days later, Vincent Fang arrived at Bangkok's Don Mueang International Airport with two capable-looking middle-aged men.

Both men were dressed in neatly pressed white short-sleeved shirts and dark trousers, their leather shoes were polished to a shine, and their eyes were sharp.

"Mr. Chan!" Upon seeing Chan Ping-man, Vincent Fong quickly stepped forward and happily introduced him, "This is Tse Kin-ming, and this is Kwok Seng. They are both top-notch traders in Hong Kong, and their reputation and abilities are reliable."

Chen Bingwen's gaze passed over Fang Wenshan and lingered briefly on the faces of Xie Jianming and Guo Sen.

Xie Jianming adjusted his glasses and nodded slightly: "Boss Chen."

Guo Sen then gave a calm smile and said in a deep, powerful voice, "Chen Sheng."

Without any unnecessary pleasantries, Chen Bingwen got straight to the point: "Thank you for your hard work. Did you bring all the registration documents for 'Sugarheart Capital' in the Cayman Islands?"

“All brought!” Fang Wenshan immediately took out a hard-shell folder from his briefcase. “Sugar Heart Capital Co., Ltd., registration completed. The shareholders and directors are all designated offshore trust structures. On the surface, there is no apparent connection between you and Chen Ji.”

Chen Bingwen took the documents, his eyes quickly scanning the complex English legal clauses and structural diagrams.

The offshore company acts like a carefully woven fog, shrouding his true intentions and identity, keeping him out of the sight of Thai regulators and Golden Elephant Foods.

This is a disguise for capitalist hunters.

"Very good." He handed the documents back to Vincent Fang. "What about the funds?"

"The HK$4 million loan from Wing Lung has been transferred to our Sugar Heart Capital offshore account at Standard Chartered Bank in Bangkok, as per your request."

Fang Wenshan's voice carried a hint of solemnity, "Mr. Chen, this money represents our entire fortune and our lives."

Chen Bingwen smiled and said, "Don't worry, I have investigated Jinxiang's situation thoroughly, and I am at least 80% confident in this acquisition."

Risks? Of course there are.

The challenges include the difficulty of integration, the management inertia of Thai family businesses, and the investment in the recovery of damaged coconut plantations.

but!

In his view, it is worthwhile to take some risks in order to ensure a stable raw material supply chain for Chenji Dessert over the next ten years.

If this acquisition is successful, it will completely integrate Chen Ji Dessert from a downstream food producer and seller to an upstream supplier.

Transform into a food group with a core raw material supply chain!
This will greatly enhance its potential valuation in the capital market.

"Golden Elephant Foods, currently priced at 1.2 Thai Baht, has a total share capital of approximately 1133 million shares and a market capitalization of 1360 million Thai Baht, equivalent to approximately 515 million Hong Kong dollars."

The Somchai family holds 43% of the shares, with the remaining 57% held by thousands of retail investors and a few small funds.

The trader, Xie Jianming, adjusted his glasses and, while flipping through the report from Nalong Accounting Firm, said, "The market capitalization is small, liquidity is poor, and it's dominated by retail investors."

The advantage is that it is easy to collect chips, but the disadvantage is that sudden buying can easily alert the market maker, if the Songchai family is considered the market maker.

Mr. Chen, what is your target shareholding percentage?

"Controlling stake!" Chen Bingwen declared resolutely. "I want to acquire more than 43% of the shares from the Songchai family, with a minimum target of 50%+1%!"
Funding is not a problem. Four million Hong Kong dollars have been deposited into Sugar Heart Capital's account, which is equivalent to about 1056 million Thai baht. This is enough to absorb 80% of the circulating shares and still have some left over!

But the action must be quick, precise, and ruthless! A fatal blow must be delivered before the Songchai family can react!

Another trader, Guo Sen, frowned slightly: "Mr. Chen, the difficulty lies in concealment."

Trading is slow at the Bangkok Stock Exchange, with daily turnover averaging a few hundred million baht.

Large orders can instantly drive up stock prices, alarming the Songchai family and the stock exchange.

If they become alert and activate the poison pill plan or search for a white knight, we will be in a very passive position.

“So we need a strategy.” Chen Bingwen took out a stack of documents and handed them to Fang Wenshan.

"These are some things I wrote over the past two days."

In the next few days, the articles will be anonymously published in the Singapore Straits Times, the Hong Kong Economic Journal, and the Bangkok Post.

The core message is simple: they're predicting the downfall of the Thai coconut milk industry!

　I'll update first and then revise later. Thank you for your support!

　　Special thanks to Xiaokai_eB, Xiaohu_KK, Wunaiweishenghuo, Yunhaishuyoushitongzhou and other big shots for their generous donations!

　　
　
(End of this chapter)