What's wrong with me being a rich man?

Chapter 116 Level (5k)

Yu Xing stood behind Lu Haiying, concentrating on watching the user comments being read out on the screen.

Sino-Forest, as the name suggests, is a company mainly engaged in forestry.

Seeing that his senior brother had not spoken, Lu Haiying turned around and looked at him, then smiled and said, "Senior brother, does this fit our topic? Can you understand it?"

Yu Xing smiled slightly and shook his head, "I don't understand, it's interesting."

Lv Haiying said "hmm" and scrolled down the webpage. The "Jiahan Forestry" which fits the description very well did not receive much discussion. There were only some sporadic comments such as "I also want to be such an agent".

Yu Xing retracted his gaze and did not immediately look up the relevant information of the suspected target. He said, "Don't waste your time in the car. I see you two are taking it easy."

Zhong Zhiling responded with a smile: "Sitting here leisurely now, Brother Xing, it's very strange that I feel so happy. Hey, Bai Xiaosheng's time doesn't seem to be too long, but why do I feel like I've been busy for a long time."

He took the cigarette thrown by his senior brother, but did not light it. He said thoughtfully, "From last summer to now, if you count it this way, the time is long. It seems that I have been on the road all the time. Today..."

Today, I was sitting in the company that had already closed for the holiday, looking at the word "Fu" pasted on the window and thinking about going home to see my parents soon. Somehow, I was enjoying this moment particularly.

"Okay, I haven't made a lot of money yet." Yu Xing said with a smile, "I have to run faster after the New Year. The faster I run, the more money I will get."

Zhong Zhiling nodded slowly, lit a cigarette, and looked forward to a busy year ahead.

At three o'clock in the afternoon, the second-in-command and the third-in-command went home, and the employees on duty left work early, leaving Yu Xing alone in the company.

very quiet.

It was really enjoyable.

Yu Xing rubbed his face, lit a cigarette, put one foot on the table, and began a simple search for information about the suspected target.

He actually didn't believe that it would be so easy to find a suitable target to short sell.

However, regardless of the company's listing position or its extremely unreasonable business model, it is worth Yu Xing's analysis.

——Sino-Forest, a Canadian listed company.

——Headquartered in Canada and Hong Kong, it was established in 1995. The following year, its founder Chen Deyuan bought a shell company and went public on the Canadian secondary market. It then moved to the main board and issued new shares to raise US$500 million.

——The company’s main business is “standing timber”, that is, forest rights, which are trees growing in forest land.

——According to its claims, it adopts a forest purchasing model, buying the ownership of standing timber through purchasing agents, and transferring it to customers after a period of operation and management. The customers then cut down the trees and produce timber.

——In addition, Sino-Forest also has a “forest management model”, which is to plant, manage, harvest, produce and sell on purchased or leased forest land.

——Today, the forest purchasing model accounts for about 75% of revenue.

Yu Xing also found the content of the company's presentation by Sino-Forest founder Chen Deyuan.

——I am planting fast-growing and high-yield forests. Eucalyptus trees can mature into mature timber in five years and can quickly generate economic benefits.

——If you don't cut down the forest, it will grow every year. The annual growth rate is about 12% to 13%, and the asset will not depreciate. Factories and machines will depreciate, but the forest will only grow.

——When a tree is cut down, it becomes wood, which is the raw material. Global production cannot be without raw materials. There must be goods to sell and there must be orders.

——The most important thing is not to cut down trees if there are no orders. If we don’t cut down trees, the assets will increase. If they want to buy from me, I will cut down trees. Once the trees are cut down and become wood, I will sell them. Then there will be no problem of inventory backlog.

——The Chinese market is developing rapidly and there is a huge demand for wood. This market must be there. My forest has a five-year cycle. The first five years are a bit hard. In the sixth year, I start to cut down the trees planted in the first year, and in the seventh year, I cut down the trees planted in the second year. But if I finish cutting down the trees this year, I will plant again next year. It is sustainable.

Yu Xing smoked a cigarette and looked at the words on the screen, as if he could see a Hong Kong businessman giving a passionate speech to foreigners on the stage.

According to this logic, this model also seems to be a closed loop.

Yu Xing lit another cigarette and searched for relevant information about eucalyptus. It is indeed fast-growing, but its disadvantage is that it absorbs water.

He stared at the introduction information of eucalyptus, wondering if this shortcoming made it difficult for it to have long-term sustainability as Chen Deyuan said, but then he checked the domestic planting situation of this tree, most of which was in Guangxi.

Well, the rainfall in Guangxi should be quite sufficient.

Yu Xing searched for relevant rainfall and confirmed that his impression was correct. Trees that require water were planted in areas where there is no water shortage. As for whether there are other related impacts, at least there is hope for the sustainability of this project.

Then, it may still be a problem with its business model.

What kind of "purchasing agent" can do all the dirty work and then hand over the profits to Sino-Forest?
If Sino-Forest has the resources and connections to control its customer base, then perhaps this model can still exist.

However, according to Sino-Forest’s own introduction, even downstream customers are connected through “purchasing agents”, which is totally unreasonable.

Why would a company that can both manage operations and interact with customers be willing to give up profits?

This goes against human nature!
What’s more, the “purchasing agent” is not just one company. This group of people have been willing to give up their profits for years, allowing Sino-Forest to maintain a high gross profit on the books. How can this be justified?
Yu Xing let out a sigh and fell into deep thought. He felt that the problems at Sino-Forest were very serious.

However, validating the problem requires more data.

He crushed the cigarette into the ashtray, stretched, and planned to talk to Xiaoying about this issue when they met tomorrow morning.

Baader-Meinhof phenomenon, Baader-Meinhof phenomenon. Now not only are the short sellers rushing in front of our eyes, but it seems that even the fraudulent companies are desperately trying to do so.

Yu Xing drank the cold tea in one gulp, then stood up and walked out of the office.

I want to wait until next year for a cesarean section.

This year's work is over.

……

At 1:23 am on January , a passenger plane from Hong Kong landed in Jinling.

Liu Wanying felt the chill from her hometown as soon as she got off the plane.

It’s so cold!

She frowned, took her luggage, went to the bathroom to put on another piece of clothing, and then quickly found Yu Xing who had really come to pick her up at the airport.

"Hi, my LP, welcome to Jinling!" Yu Xing gave a warm welcome as soon as they met.

It has to be said that before Liu Wanying met Yu Xing, she felt something inexplicable or even uneasy in her heart.

The two of them do communicate a lot these days, but it's all through phone calls, text messages, and emails.

In reality, they had met only a handful of times, but their interests and careers were indeed intertwined.

The short seller Fenzhong succeeded and made money, so what's next?
When Liu Wanying heard that Yu Xing could really speak out what was said on the phone without reservation, despite the embarrassment she felt at the moment, she suddenly felt relieved.

She smiled, stretched out her right hand, and when the other party also stretched out his hand, she turned her palm into a fist and hit him on the shoulder.

"Hey, what are you doing?" Yu Xing was caught off guard and reached out to grab Xiaoying's hand but failed.

"Don't be crazy." Liu Wanying said unhappily, "Let's go, Jinling is a little colder than I thought."

Yu Xing reached out to help pull the suitcase over and asked with a smile, "Is it much warmer over in Hong Kong?"

"The temperature in Hong Kong is nearly 20 degrees." Liu Wanying glanced at Yu Xing, who was a male college student last year, an entrepreneur last time, and a mountain climber this time, "You're not really going to take a taxi to pick me up, are you?"

Yu Xing nodded and said, "Yeah."

A moment later, Liu Wanying and Yu Xing sat in a taxi together and confirmed that this was really a superman.

"Xiaoying, here's a New Year's gift for you." Yu Xing gave a slightly mysterious smile in the car.

Liu Wanying guessed out of boredom: "Necklace?"

"A new case." Yu Xing blinked.

Liu Wanying tilted her head, trying to see from the man's eyes whether it was what she imagined.

Then, she was surprised to find that the other person's eyes were serious.

The first thing that is surprising is the speed.

Liu Wanying was surprised and asked, "How come there is a new case so soon?"

"So, the power of the people is strong." Yu Xing said with a smile, "On a vertically segmented career website, when nearly 100,000 users are professionals, what they know or have heard about various industries must exceed your imagination, even if you used to work at Bain."

He brought up the topic that is still hanging on the website.

It sounds like this is a very common topic on a workplace social networking site and not at all out of place.

However, the same information can play different roles in different people's hands. Yu Xing did not mention the name of the target company in the taxi, but only handed a few pages of preliminary information from his bag to his partner.

Liu Wanying took it and studied it silently.

The key parts of the information have been marked with red lines.

Listed in Canada...

Sino-Forest...

Liu Wanying frowned after just a short look. This was undoubtedly consistent with the screening experience of the two people's previous preliminary communication. The separation of the listing exchange and the main business market was prone to passive or active information asymmetry.

When the taxi was about to arrive at the destination, Liu Wanying commented: "The purchasing agent is very kind."

Yu Xing laughed: "Yeah, I also think that they are too kind. Unfortunately, from yesterday to this morning, I searched for relevant information repeatedly, but I couldn't find this group of kind purchasing agents."

Liu Wanying hummed and looked out the window: "What are you doing here?"

"How can I come here empty-handed? I have to buy tea or something." Yu Xing said.

The two got off the car and walked around the supermarket, exchanging new targets among the tea, candies, drinks and biscuits.

“Its model works, but its gross profit margin doesn’t.”

"Yes, this box of tea is OK, right? It's bright red and suitable for the occasion."

"In fact, we can quickly verify the so-called purchasing agent by calling Sino-Forest directly and becoming its agent to see how it responds."

"Buy some of these cookies for my little sister. She likes them. My little sister doesn't have any teeth yet, so I won't buy them for her this time. I'll buy them when she's older."

Liu Wanying stopped and said helplessly: "Did you listen to me?"

"Yes, I nodded in response to you. Based on the information I saw, I am almost 99% sure that there is a problem." Yu Xing smiled, "So, there is no need to rush if there is a problem. We all need to recover from the financial crisis."

Liu Wanying's eyes lit up: "Are you waiting for the stock price to rise again?"

"Yes, the bigger the bubble is, the more exciting it is to pop it, the more profit we will make, and we will have more time to prepare." Yu Xing nodded.

Liu Wanying took two steps and suddenly asked suspiciously, "Are you afraid that I won't invest money in Bai Xiaosheng?"

Yu Xing laughed: "A little bit."

Liu Wanying thought about it and said objectively: "Bai Xiaosheng's B round should not take too long, and Hongshun's investment will be a good deal."

"You have strong confidence in Bai Xiaosheng." Yu Xing was scanning the shelves.

"I have great confidence in you." Liu Wanying said seriously, "But I have a question now. Have you ever thought about the extent to which you can climb the mountain?"

Yu Xing turned around and asked: "Why are you asking me this? What kind of answer do you want to hear?"

"When I was on the plane, I was thinking, if you have the ability to build a workplace social networking website, if you can really perfect a profitable business model, once it goes public, it may be more valuable than Guoshanfeng." Liu Wanying said, "It's like this 100 million invested in Guoshanfeng. If the B round is successful, it will at least increase in value by 3 times. How long will it take?"

Yu Xing was silent.

He frowned slightly and pushed his things to pay the bill.

Liu Wanying walked beside him, waiting for the man's response to this question.

"I haven't thought about it too much." Yu Xing tied the bag to the handle of the suitcase and gave such a very honest answer. Then he said, "Xiaoying, I saw the logic of Sino-Forest yesterday. I am a little confused. Since the distribution model it claims is so contrary to human nature, why haven't there been any problems in so many links over the years?"

He wondered, "I noticed that Paulson, the big short seller on Wall Street who just profited from the financial crisis, is also buying Sino-Forest shares. Isn't that strange?"

When Yu Xing first heard Lv Haiying reading out the website user's speech yesterday, he thought that some short seller had sneaked in. However, after searching and researching, he found that it was not the user who was good at analysis and summary, but Sino-Forest itself that made the public statement.

Even the company itself doesn’t think there is anything wrong with this model.

It's strange.

"When I was doing M&A consulting at Bain, I sometimes encountered ridiculous company assets." Liu Wanying gave the answer easily, "It was the kind that when we went to the site to take a look and audit, we really couldn't match them. Then we traced the source and analyzed and found that everyone just looked at the paper data."

"A submitted the data, signed it, and gave it to B. B looked at the document and found no problem, so he passed it to C. C also looked at the document and found that all the data was given and there was no problem below, so he also had no problem."

“The more asymmetric the information is, the easier it is to rely on various documents and reports.”

Liu Wanying was talking about both the current Sino-Forest incident and a phenomenon that has always existed.

She added: "Once the market value is high, it seems that you become authoritative. When the company is big, you are surrounded by celebrities."

"Yeah." Yu Xing nodded. "I didn't expect to go so far with Guo Shanfeng, but I think it's good to be able to dig out the real things and get money. If you have doubts about this kind of thing, you can focus on Red Falcon Capital. It will definitely invest in many good companies in the coming years."

"Now you are the one who advises me?" Liu Wanying said disdainfully.

"I'm not trying to persuade you. I just feel that this field in China is not mature enough," Yu Xing said. "If you short more companies on Wall Street, you can definitely become a star short seller."

Liu Wanying laughed and said, "Who is going to be the star? Is it you or me?"

Yu Xing shrugged: "It's all right, I don't mind yours or mine."

He added: "Companies that commit fraud need to be strictly supervised. This should be an ecological chain. We should first be a hurdle they need to face in committing fraud. What if they can show their united front value?"

Liu Wanying shook her head: "Short sellers cannot demonstrate the value of united front work."

The two walked and talked, and soon the topic turned to Sino-Forest's business model and business performance.

On the 28th day of the twelfth lunar month, the temperature in Jinling was minus five degrees Celsius, and even though the heating was on at home it was still a bit stuffy.

Yan Lirong held her little daughter, who was not even a month old, in her arms and gently placed her sleeping daughter on the bed in the room. Then she went to the living room and was about to open the window to get some fresh air when she saw two people walking outside.

She excitedly shouted towards the kitchen: "Lao Liu, Lao Liu, Liu Jingrong, come quickly!"

Liu Jingrong didn't understand what was going on, so he hurried out, only to see his wife leaning against the window looking out with a silly smile on her face.

He walked to the side and looked at the scenery outside with a gloomy expression.

Sister Liu Wanying and former disciple Yu Xing walked side by side, both of them with eager smiles on their faces. The white breath they exhaled while talking floated in the air, reflecting their slightly flushed cheeks, which seemed particularly...heartbreaking!
"Hey, hey, here they come, here they come, the young couple is here!" Yan Lirong couldn't hide her happiness.

Liu Jingrong scolded, "What nonsense are you talking about? Don't do that!"

Dong-dong-dong, knock on the door.

Yan Lirong went to open the door.

"Hey, Master's Wife, Happy New Year!" Yu Xing brought in the suitcase and gifts, and said with a smile, "Where's my little Master's Sister? I can't wait to see her."

"Change your shoes. Here, change your shoes." Yan Lirong took the gift and said with a smile, "She just fell asleep. Yu Xing, I always feel that you call me old. So, let's talk about our own things. You call me Sister Rong."

Liu Jingrong couldn't help it and warned: "Ouch!!"

Yu Xing was surprised and wanted to try this name, but he didn't say it out loud under the teacher's warning gaze.

Liu Wanying rolled her eyes and walked straight to the sofa.

Yan Lirong said dissatisfiedly: "Mr. Liu, you didn't mention me when I told you to change shoes, right? Can't you see the slippers I prepared for you?"

Liu Wanying spread her hands.

Yan Lirong scolded: "Look at how lazy you are. If someone didn't know you, they would think you were going back home."

Liu Jingrong said dissatisfiedly: "Ah!!!"

Liu Wanying's face suddenly turned red: "Sister Rong, you..."

Liu Zhishan, who was playing with toys in the room, heard the voice and followed her father's call out of the room, saying, "Hey, hey! It's my aunt and my aunt..."

At this moment, she received four different looks at the name she was about to say.

There are warnings, humiliation, encouragement and hints.

Liu Zhishan thought for two seconds: "It's Yu Xing who I met with my aunt! Happy New Year!!"

Yu Xing laughed loudly, Yan Lirong smiled with her lips pursed, and Liu Wanying sighed helplessly.

Liu Jingrong looked at this scene and gnashed his teeth. "Mr. Yu, don't think that just because you have won the favor of everyone in the family, you can... do whatever you want! Don't even think about getting past me!"
(End of this chapter)