Chapter 219: Wandering Soul of Capital
"In my opinion, the most important part of their business model is the company's own 'goodwill value'."

However, after a short conversation, Xie Jingxing regained the initiative and gave the answer calmly.

Yu Nian pursed her plump red lips and added: "The goodwill value and their successful experience over the past few decades complement each other. You must clearly recognize their professionalism."

"I am very clear, and I have a clear understanding of my personal expertise. At this moment, no one in the world is better at capital operation than me!"

Xie Jingxing was extremely arrogant, but this was his only advantage. If he wanted to win the competition, he had to use it to the fullest.

Everyone can play with financial leverage, but the key is that it feels good to use the leverage, but it will be a painful experience to pay off the debt afterwards.

Boss Xu is a real estate idiot who is obsessed with using his head to resist a hundred times leverage, and the result is that he ends up crying behind bars.

As a professional capital player, Prologis certainly cannot follow suit. They have their own mature operating model of 'REITs' trust funds under the existing financial system in China.

First, they build the logistics park out of their own pockets and then transfer it to their property management department. Then, they launch an equity fund from the private equity market to introduce external funds and acquire the logistics park and property management revenue assets in a package. Finally, the private equity fund issues REITs products.

The difficulty that makes it difficult for domestic peers to imitate this approach lies in the middle link - private equity funds.

Prologis has a strong logistics park development team, and third-party corporate clients recognize this brand. They can build the park and rent it out at the same time, which is comparable to the pre-sale system of residential real estate.

Once the construction of the park is completed and six or seven floors have been leased out, it will be easy for the capital market to see the return prospects and activate a front-end private equity fund to acquire it.

After completing this step, Prologis recovered the large amount of cash flow from its initial investment and continued to develop the logistics park.

Private equity funds hold the industrial parks and property management assets for a period of time until the revenue return rate matures and all indicators meet the strict domestic "REITs" fund standards.

The long-term operating income rights of the assets were sold to the secondary market by issuing 'REITs' products to repay leveraged debts, and a large amount of cash was obtained to continue acquiring logistics parks built by Prologis.

In short, through two-tier capital operations, Prologis has realized the need to recover costs and make profits in advance, which would normally take ten or even twenty years. It has also passed on the cost pressure and risks of capital utilization to investors in private equity funds and "REITs" products.

Usually, a project takes about two years to complete, from acquiring land to developing a park to issuing 'REITs' products, where investors can sit back and wait for rent.

They have many highly sticky large customers such as Amazon, Vipshop, and RT-Mart, and the warehouse leases are signed as long-term contracts of more than ten years.

Private equity funds buy into the goodwill value of "Prologis products must be high-quality" and are willing to bear most of the risks, but their domestic counterparts are not like this.

Either the warehousing network is located in a remote corner and cannot be deployed nationwide, and customers only rent for a short period of time, or there is no development and management experience and it takes three to five years to build a park.

Everyone knows who to vote for by voting with their feet. The more this happens, the more the entire market will be trapped in the Matthew effect and unable to extricate itself. Prologis's virtuous cycle leverages the leverage to surge forward and the winner takes all, while its peers are struggling to catch up but will never be recognized by the capital market for leveraging financial leverage.

Therefore, Xie Jingxing believes that Prologis' biggest advantage is its goodwill value. They have managed to make a heavy asset industry look like a light asset operation. The most abnormal thing is that the private equity fund was initiated internally to introduce external investors.

Eventually, the 'REITs' product will be issued, and the logistics park assets will actually still be in their hands.

This is why Yu Nian said that successful experience and goodwill value complement each other. Assets always need someone to take care of them. If not Prologis, who else can they be given to? They can indeed help maximize the interests of investors at all levels.

"I can imitate their model and just need to make changes in the middle to play to my personal strengths."

The coffee lost its steam and turned cold. Xie Jingxing swallowed the slightly bitter taste and explained his solution to the back-end leverage repayment.

Yu Nian put his hands in his pockets and thought about the entire business model and asked, "Private equity fund?"

"That's right. Their logic is to use their good reputation and mature development experience to attract a large amount of external capital to pass on the costs."

Xie Jingxing pressed his eyebrows together: "I personally, or Yunhe Logistics, will bear this part of the pressure on our own, bypassing the private equity link and directly entering the back-end 'REITs' product issuance stage."

"How many years does a project cycle of Yunhe Logistics take?" Yu Nian asked the key point.

“I haven’t made a specific estimate. If the regulatory standards for existing REITs products remain unchanged, it will probably be around 5-8 years.”

Xie Jingxing paused for a moment and said, "If we can push financial regulators to relax the REITs market entry standards as soon as possible, we can expect five years."

"A project has a five-year cost period. How much money do you have to cover it?" Yu Nian scratched his hair in frustration.

Xie Jingxing's intention was very simple. He used the Yunnan Chuncheng Warehousing Center project, which he developed last year with a 50-fold leverage, as a model and relied entirely on his own funds to cover the five-year cost cycle.

Until the logistics and warehousing center reaches profitability targets, it will enter the REITs issuance phase to recover funds and repay leveraged debts.

He made up the gap between himself and Prologis with the amount of funds. If the latter developed a project with a cost of 2 million yuan over a two-year period, then he would develop two projects at the same time with a cost of 2 billion yuan over a five-year period.

——In short, violent breakthrough with powerful bricks.

Putting aside the issue of cash flow, such a strong, simple and wild approach is indeed feasible, but the problem is that it cannot be put aside!

“That’s a good question, and I’ll answer it from two perspectives.”

Xie Jingxing nodded in praise, and slowly explained: "First, maximize the release of leverage, 50 times is not enough. The domestic real estate market is clearly on the rise, and a hundred times leverage will not cause any problems within three to five years."

"Second, I also have my personal goodwill. From June last year to now, I have earned at least $40 billion in net profit through financial investments."

He asked seriously, "It is undoubtedly a powerful hematopoietic ability, right?"

"Honestly speaking, if you can maintain this quality of blood-making ability in the next five years and the real estate market does not collapse, I think it is feasible for Yunhe Logistics to enter the logistics real estate industry."

Yu Nian made a downward gesture and continued regretfully, "I personally believe in your ability and market judgment, but we all know that venture capital cannot get rid of subjective judgment. You have to convince other investors."

"Liu Qing helped me to make an appointment with the leaders of China Investment Corporation and China Communications Construction Corporation. I need you to help me to make an appointment with the leaders of your group, preferably including China Resources and CITIC." Xie Jingxing was already prepared to get out of the whole plan.

CIC and CITIC are ministerial-level state-owned enterprises that can provide direct financial support and front-end financial leverage resources; China Merchants Group has port logistics, and China Resources is in real estate warehousing and logistics; China Communications Construction has deep local resources corresponding to industrial park development and construction.

The relationships among these enterprises are not harmonious, so it is necessary to increase the selectivity by backing up as much as possible, and try to get as many as possible. It depends on human effort to finally get a few.

Yu Nian thought for a moment and said: "We will focus on launching a new type of fresh food retail supermarket project with Yunhe Logistics."

"No problem. In fact, in my opinion, the logistics real estate business is more like an attempt by Yunhe after it has introduced state-owned shareholders. It is not my pursuit of being big and comprehensive."

After much persuasion and finally convincing his sister-in-law, Xie Jingxing changed his attitude and began to appease her.

Yu Nian rolled his eyes at him and said, "In any case, even if you succeed in introducing state-owned capital, you can't expect to get much support in a short period of time."

"Of course, my self-awareness has always been pretty good." Xie Jingxing looked well-behaved and sensible. Given the current size of Yunhe Logistics, it would be a bit stupid to go to a giant like CIC and say that I want to overthrow Prologis' monopoly on the logistics real estate market.

It would be better to use the emerging fresh food retail supermarkets as a starting point, get them on board first, and then talk about other things after achieving certain results. This would be more practical, and we should proceed step by step without being arrogant or impatient.

Yu Nian slowed down his tone: "Give me a rough estimate of the financing."

"Register and issue 10%-15% more shares, raise 50 billion-80 billion yuan, roughly in this range." Xie Jingxing blinked his eyes without blushing or feeling nervous.

Yu Nian was quite surprised and asked: "How many times PE did you use to calculate the valuation?"

"30 times, the market price!" Xie Jingxing blurted out.

Yu Nian was furious: "Don't try to trick me. Yunhe Logistics' core business is obviously comprehensive logistics services. Where does the 30PE come from?"

"That was half a year ago. Now we have opened up the closed loop of agriculture + Internet. The supply chain business and logistics real estate business are growing strongly. The PE ratio of 30 is very conscientious."

Xie Jingxing shouted shamelessly, half-seriously and half-jokingly, and Yu Nian was really embarrassed to argue with him for a moment.

Logistics and transportation is a very broad concept. Comprehensive logistics companies that provide professional warehousing, transportation and distribution to third-party corporate customers earn hard-earned money and are not very popular in the capital market.

Secondly, online logistics and transportation companies led by SF Express, STO Express, YTO Express and ZTO Express serve the general public and individual travelers. Thanks to the e-commerce boom in the Internet era, they are highly valued by the capital market.

But this is only in the past few years. In a few years, the growth rate of market share will slow down, and it will be essentially no different from integrated logistics.

Supply chain business logistics has already entered the field of bulk commodity trading. For example, Yunhe Logistics, through the Yunshan Group, helps customers purchase bulk agricultural products and even energy minerals from abroad and deliver them to their doorsteps.

This is not a business that ordinary companies can handle very well. The capital market tends to give valuations based on the specific targets, and valuations of 10 to 50 times are possible.

As for logistics real estate companies that provide stable rental income, their valuations are generally high, and they are generally favored by large, stable financial investment institutions such as pension funds.

If Xie Jingxing can't even get this little bit of valuation benefit, why bother connecting the entire agricultural + Internet ecological closed loop. Focus on investing in well-known Internet projects, stand in front of the stage and enjoy the public's pursuit, and make money easily.

Seeing him getting more and more complacent, Yu Nian suddenly thought of something and said, "I remember Yunhe Logistics received a round of financing from JD.com at the beginning of the year."

"...strategic cooperation, I exchanged my shares in JD.com." Xie Jingxing clenched his teeth unconsciously.

Yu Nian raised his lips and praised with interest, "Really? Jingdong's IPO performance has been booming, you must have made a lot of money, right?"

"It's a strategic cooperation. It doesn't matter how much we make. JD is one of the few companies that has its own warehousing and logistics system!" Xie Jingxing forced himself to make up for it.

"That's right. They raise funds through the company's listing to reduce the capital cost of self-built warehousing and logistics. It's the same as your approach."

Yu Nian smiled like a flower, her big eyes sparkling with admiration, and she turned into a little fangirl and gave a thumbs up: "Boss Xie's strategic vision is really long-term, it's really admirable!"

"Haha, I will make money back from Liu Qiangdong sooner or later. I am very optimistic about him."

Xie Jingxing tried to keep up his dignity, the blood in his chest was boiling, he picked up the empty coffee cup and poured it into his mouth, he almost choked to death and kept coughing.

At the beginning of the year, due to various interest swaps, JD.com's strategic investment in Yunhe Logistics was valued at only 240 billion. After all the calculations, it cannot be said that he lost everything, but he can only say that his basket was bleeding.

Yunhe Logistics, which has run a closed loop of agricultural ecology, is naturally versatile and has the potential to cover all logistics fields except network transportation.

You should know that the overall scale of the domestic logistics market is at the level of 10 trillion yuan. Considering the expected long-term return on investment, JD.com may become the biggest loss case in his career.

Xie Jingxing was so angry that he secretly cursed Zhang Xuhao as a bitch. If this guy hadn't been so determined to die, he wouldn't have taken over Xin Da'e in its entirety. If he hadn't taken over Xin Da'e in its entirety, there wouldn't have been any subsequent chain reactions.

"I believe you."

Yu Nian observed his awkward coughing with a frown on his face, and blurted out a word out of the blue.

Xie Jingxing was stunned: "What?"

"I believe you are just going with the flow, so what was your original plan?"

Yu Nian did not wait for a response and speculated: "You are not prepared to invest and become the actual controller. It was originally planned that Zhang Xuhao's team would stand in front of the stage to actually control Ele.me, and Yunshan Group would own the two links of agricultural production and transportation."

"Taking advantage of the decentralized equity structure of Internet start-ups, Yunshan Group connects the closed loop of agriculture + Internet ecology by holding shares in Ele.me. In this way, Yunshan Group can circumvent monopoly supervision and does not need to introduce a large number of state-owned shareholders."

She exhaled faintly and said affirmatively: "You really agree with Tencent's open symbiotic investment strategy."

"What else? No one can monopolize everything. Even powerful companies like Rockefeller and Morgan were dismembered and split. But capital can connect everything. They are still like wandering souls hovering over the United States, everywhere." Xie Jingxing raised his finger and circled it.

Yu Nian did not comment: "Since the introduction of state-owned shareholders is a foregone conclusion, it is not a bad idea to try the logistics real estate field. I will try my best to help."

"How should I thank you?" Xie Jingxing nodded his head in thanks.

Yu Nian fell silent, and after a moment he asked solemnly: "What exactly do you want to do?"

"I did not understand."

"I mean, what is your ideal, your self-worth, the source of your motivation that keeps you moving forward without slacking off? Don't give me such clichéd excuses as sleeping with celebrities and making a lot of money. It seems that there is nothing in this world that you can't satisfy."

"...Is this important?" Xie Jingxing frowned.

"Very important! In my limited understanding of life, you are extremely talented. I am absolutely sure of that."

Yu Nian's chest rose and fell, and he looked at him with a complicated expression that was hard to describe: "But people say there is only a fine line between genius and madness. I can't tell whether you want to lead the world or destroy the world."

"This topic is too grand. I haven't thought about it. At least at the moment I just feel that it cannot be wasted... your so-called outstanding talent, maybe I will think about it seriously in the future." Xie Jingxing scratched the back of his head blankly.

"Then wait until you have thought it through before asking me how to repay me." Yu Nian waited patiently.

A bystander sees things more clearly. This should have been the problem that Xie Jingxing and Yu Nian had to face when they returned to their hometown in Jiangsu and Zhejiang a few months later.

Sometimes mediocrity isn't necessarily a bad thing.

(End of this chapter)