What if Tencent Holdings and Kweichow Moutai were cut in half? Great businesses are not for sale!

The article only records the thoughts of “Value Firm”, and does not constitute investment advice. The author does not have a group, does not charge for stock recommendation, and does not manage financial affairs on behalf of clients.

“This is the 1105th original article by Value Firm”

​The more companies you see and experience, the more the director believes in one sentence, that is: great companies are not for sale.

Because the development of enterprises, like the development of people, is often non-linear, driven by some “black swan” events that were unexpectedly killed in advance. Of course, this black swan refers not only to negative black swans, but also to positive black swans.

Let’s not talk about enterprises here, stop and think about yourself first, your experience from childhood to adulthood, every time you choose to go to school, university, city, major, whether to continue your studies after graduation or directly work, where to work and engage in What kind of career, what kind of company, what kind of person to start a family with… Looking back carefully, how many things did we go according to the plan we realized? Is it full of mischief? Every day seems to be ordinary, it seems to be the same every day, but something may suddenly happen, and then the trajectory of our life deviates from the previous preset.

The director still remembers that when he was in junior high school, he once communicated with a few well-connected teachers about his future plans. The director was very sure, saying that he would go to Renmin University of China, take the civil servant exam, and enter politics. The person I admired most was Wu Zetian. When I was a child, I liked to read fantasy novels with unreliable protagonists hanging up the sky and some historical stories about emperors and generals.

However, when I entered high school, I chose to participate in the chemistry competition due to my surprisingly good chemistry grades. Because the test results brought me a positive cycle, it didn’t take long for my political dream to be put aside. The idea of ​​the director at that time Yes, to win the Nobel Prize in Chemistry, to be a great scientist.

It is out of love for chemistry that the director of the university chose the major of clinical pharmacy, and even went to the laboratory to do experiments with a doctoral supervisor as soon as he entered the school. However, not long after, the dream of a scientist was thrown aside by the director.

Because I found out that doing experiments is really different from theory, I can quickly deduce how to synthesize a substance step by step on paper, but it takes many days to carry out experimental reactions when the substances are reacted. It is not possible to obtain 100% of the things calculated by yourself. There will be a lot of impurities that need to be purified. The more steps, the less actual substances will be obtained at the end, and the direct reaction may fail in the end.

This kind of theoretical derivation takes a few minutes, and the actual operation takes several weeks. In fact, the theory is repeated rounds and rounds of tedious verification, which makes the director extremely tired, so he quit the laboratory not long after, and the director at this time is extremely Confused, I don’t know what to do, what to do in the future, what is right for me?

It’s also a mistake. At this time, the school has an elective course called Employment and Guidance. The teacher used to work in a securities company, and then came to the school to teach after financial freedom. Is Securities and Finance…

Because the teacher’s lectures are good, the stories are vivid and interesting, and the knowledge of the capital market is directly equated with money, which greatly increases the director’s interest, so he runs behind the teacher’s ass every day, and then reads Buffett and Lynch, and follows the teacher. A series of transactions, including securities, postal cards and even bitcoin… Obviously, this experience has paved the way for what the director is doing now, but it is only a foreshadowing.

There are still a series of misunderstandings in the back, which will not be described here due to the limited space. In short, they are all unthinkable if they were killed in advance, including going to an Internet financial company, entering a hospital, and partnering with a friend to open a “value firm”…

To tell the truth, go back in time to the time when “The Value Office” was founded more than three years ago. The director could not have imagined that he would now be working on “The Value Office” full-time with his friends. If you ask the director at that time, maybe I am still planning when I can become the director of the pharmacy department, and whether there will be a chance to become the president later (covering my face).

History is made of black swans

The black swan here refers to all unexpected and unpredictable events that will have a major impact on the future. If we look at a person, a company, a piece of history, and restore it to the perspective of the time, you will be surprised to find that , 99% of the time in history, it was calm, and then suddenly a black swan changed it.

For example, going back to the life experience of the director, when I was in junior high school, I didn’t even think that I was doing chemistry in high school and wanted to do scientific research in the future; when I was in high school, I probably didn’t think that my university was doing finance, and I wanted to be Buffett in the future; I might die in college. I never thought that I would go to work in an Internet financial company, and I would go back to the hospital in the future; I might die when I was in the hospital, and I would never think that I would start a business with a friend and start a “Value Firm” later… If you ask the director to predict what you will look like in five years, I will There may be many possibilities, but the more likely situation is that the predictions are all wrong, and you will do things that you can’t even think of when you die.

This is true for individuals, and even more so for businesses.

For example, we are most familiar with Tencent. Now we take Tencent’s games, advertising, financial technology and corporate services for granted. Recently, Tencent has encountered bottlenecks in its games and advertising businesses. Many investors regard Tencent as a public company. The business enterprise thinks that he has lost his growth potential.

However, if we have a little understanding of Tencent’s history, it is not difficult to find that the two monetization methods that we currently take for granted, games and advertising, were not so reasonable before the birth of the business.

Tencent did not find a way to monetize at first, there were a lot of QQ users, but how to monetize and how to make money was a mystery. There was even an embarrassing situation where the more users, the more losses, because the more users, the more you need to buy more. server. When Tencent was desperate, several founders had to go around looking for friends to borrow money with a shy face. Ma Huateng asked the friends who borrowed more money whether they could use Tencent’s stock to repay the debt. They all politely refused. , One even said generously: “You really have no money, you can not pay it back, but I don’t want your shares.”

It didn’t take long for Tencent to find a way to make a profit, but it was far from the advertising and game businesses we are seeing now. At that time, Tencent made money from China Mobile’s “Monternet” project, which is SMS. value-added income.

After relying on China Mobile for a period of time, Tencent found the profit method of selling virtual goods, that is, we are more familiar with charging Q coins to buy QQ shows, dressing up space, etc. On this basis, Tencent has come up with a series of QQ members, which are all kinds of diamonds, are called value-added services within Tencent.

With China Mobile’s SMS revenue and QQ show revenue, Ma Huateng thought about entering the game. When he first proposed this idea, he was unanimously opposed by Tencent, on the grounds that none of the founders were people who played online games.

Although it finally entered the game field by representing South Korea’s “Triumph”, the final result was very embarrassing, and it was ridiculed by game giants such as Shanda, and Tencent’s entire game division was cleaned up.

After a few years, Tencent started with “chess and card and small casual games” that better match its own ability circle, and practiced while playing, and eventually grew into today’s game giant.

Going back more than 10 years, no one may have imagined that games have become one of the pillars of Tencent’s revenue today, and the other two pillars have become advertising and financial/enterprise services. marginalized…

So, just as people couldn’t imagine that Tencent’s revenue now comes from advertising, games and enterprise services more than 10 years ago, how can we judge so easily now that the company’s current growth has come to an end? Maybe in another 10 years, Tencent’s revenue structure will change greatly. Don’t think it’s impossible. Before new things appear, who doesn’t know they need it.

Let’s look at another example. The director tracked down the Bull Group some time ago. This seemingly outdated traditional enterprise, if it hadn’t launched a new energy charging gun/charging pile, and formed a strategic alliance with the State Grid Vehicle Network, Who would have thought that he would be linked to the tall three words of new energy? Moreover, as soon as Bull’s charging gun/charging pile was launched, it achieved a revenue of 44 million in the first half of the year. The online market share of the two types of products was as high as 30% and 20%+ respectively. If this trend continues, it may not be long before Bulls. We must rely on the new energy business to eat.

Even if the new business field of new energy is excluded, in the old business field, Bull has also achieved good growth. At that time, the director said in the article that if it was not created by the company, who would have thought that the plug-in row would still look like this. ? Such a rail plug, even if the price is several times that of a traditional plug, still sells out. It is the emergence of such new products that the company’s electrical connection business has a revenue of more than 6 billion a year, but it can maintain double-digit growth.

Let’s take another example. The director still remembers that from the end of 2018 to the middle of 2019, there was a huge increase in Xiangpiaopiao because of the launch of Meco juice tea, which promoted the growth of Xiangpiaopiao’s performance again.

Before the launch of Meco juice tea, I am afraid that many brokerages would not have thought that Xiang Piao Piao, a milk tea powder seller, could launch such a consumer upgrade product, and most importantly, consumers still like it very much.

There are too many such things, we can also look at several leading pharmaceutical companies. For example, CSPC, if we go back to 2018, its clear revenue structure was very common at that time, about 20% of raw materials, about 30% of generic drugs, and one or two big single products. The director thought that the securities companies at that time were most concerned about the company’s NBP growth space, Ou Laining growth space, Xuanning growth space, just look at the pipeline, and then that’s it, I would never think of just four years. Time Inc.’s revenue structure will change drastically.

By the first half of this year, the oncology drug business, which had not received much attention at the time, had surpassed the nervous system drugs belonging to NBP and Oulaining, and became the largest source of income.

Back in the day, no one could have imagined that the company’s oncology product line could expand so quickly.

Great businesses are not for sale

There are many examples such as the above-mentioned Tencent, Xiangpiaopiao, Bull Group, and CSPC. Before a company launches a new product or a new business model, no one can predict it. Therefore, it is no exaggeration to say that based on the The ignorance and unpredictability of innovation makes it difficult to predict what a company will look like in three or five years.

Seeing this, many students may be confused. Since the future is unpredictable, why should we invest?

There is no conflict between the unpredictable future and investment. Although we cannot predict what new technologies, new products, and new business models will appear in the future to change our lives, many underlying logics and underlying elements of business are difficult to change. , based on the understanding of these constant things, betting on a group of companies with underlying logic has a high probability of winning in the long run.

Let’s go back to the example of CSPC. If you have a thorough research on the innovative drug industry, you should know that the underlying logic of innovative drugs is that the front-end innovation is decentralized, but the back-end marketing capabilities and clinical resources have economies of scale. Therefore, in Europe and the United States next door, although there are new innovative pharmaceutical companies leading the trend, there are only a few big pharmaceutical companies with sales ability, purchasing ability, and clinical resource promotion ability, and even many can rely on heavyweights. Varieties of Biotech, which has established a pioneer in some fields, still need to rely on the big Pharma to lead the way when it is just starting.

If you understand the underlying logic of this, then betting on a big Pharma with rich pipelines, strong marketing capabilities and more money, the long-term winning rate is relatively high, although you don’t know when he will be able to release explosive drugs to promote performance growth, but in the long run In other words, they have a very high probability of outperforming the industry’s solid growth pace.

Another example is traditional consumer goods giants such as Nongfu Spring, Yili, Bull, and Haitian. They also have channel resources, large-scale production capacity, and a lot of money. As long as the management does not lie down or die, in the long run, the probability of maintaining steady growth Also very high.

Although they don’t know what new products will explode the market in the consumer industry they are in, as long as new products appear, whether they develop it themselves or copy others, they can drive their performance growth.

For another example, in the face of some B-side enterprises, foundries and central kitchens, they are very particular about economies of scale. The bigger the bigger the bigger the bigger, the bigger is Evergrande, and they are also very particular about customer resources. B-end customers are often more affectionate than C-end customers. Then, if you are at the top of some B-end fields, such as clothing, medicine, shoes, and catering, although you don’t know what innovation customers will have in the future to drive the total amount of orders, as long as customers don’t run away and respond quickly, once customers have New good ideas, or new innovative disruptor customers, will place orders for these B-end companies. As long as the industry continues to move forward in the future, they will continue to move forward as a whole.

Let’s go back to Tencent. Although we don’t know what the new growth curve of Tencent will be in the future, he has WeChat as a traffic portal, and there will always be new ways to realize it in the future. As long as the Internet is still developing and the economy is still growing in the long run, it has Tencent, the traffic portal, will still be one of the most profitable companies for a long time to come.

In other words, for companies with some “underlying logic” or “deep moat”, even if they encounter problems of one kind or another for a while and cause their performance to decline or their growth to stagnate, as long as the industry is still improving in the future, we can deal with them Be more tolerant, because no one knows what new good things will appear in the future, but the probability that they will live to that time and make good use of it is very high.