Tech Giants: Starting from Bankrupt Companies

39: Chapter 39: At the Pinnacle of a Hundred Billion, Boiling BloodOctober 1, 2016, National Day.

While most people were still immersed in the leisure of the holiday, the eyes of China’s capital market were already firmly locked on a soon-to-be-released financial report—Spark Technology’s report for the third quarter and first three quarters of 2016.

At exactly nine o’clock in the morning, Spark Technology simultaneously released this financial report, scrutinized, anticipated, and even cursed by countless people, on the official platform of the Shanghai Stock Exchange and the company’s official website.

There was no lengthy foreword, no vague rhetoric, only lines of cold, hard data that were breathtakingly solid:

* **Cumulative Operating Revenue for the first three quarters: 60.018 billion rmb.**

* Of which, **Spark Power Battery business: Revenue of 40.255 billion, accounting for 67.1%.**

* Consumer Electronics business (drones, cameras): Revenue of 19.763 billion, accounting for 32.9%. (Achieved solely by consuming inventory and deeply cultivating the domestic market after nearly two months of substantial production suspension and the collapse of overseas markets!)

* **Net Profit attributable to shareholders of the listed company for the first three quarters: 27.041 billion rmb!**

* **Net Cash Flow from operating activities: 15 billion.**

* **Asset-Liability Ratio: 35.7% (at a healthy to low level).**

The final line was listed separately in bold font:

**”Accordingly, the company has completed ahead of schedule the ’Valuation Adjustment Mechanism’ (VAM) clause stipulated in the ’Investment Agreement’ signed with Huawei Investment and Shencheng Metro Group in August 2016, which required a ’2016 annual net profit of no less than 20 billion rmb’.”**

Silence.

For the first few minutes after the report was released, there was an eerie silence on the internet. It was as if everyone, including the most optimistic analysts and the craziest retail investors, needed time to digest this set of numbers that completely exceeded expectations.

Then, like the first dark surge before a tsunami, various analysis posts and screenshots began to appear sporadically in various financial communities and forums, and then, the tsunami arrived!

At the headquarters of CICC Securities, Chief Electronics Industry Analyst Zhang Feng’s team issued an urgent in-depth interpretation report of over fifty pages within half an hour of the report’s release. The title of the report was strikingly: ”Rebirth from the Ashes, Leading Value Emerges.”

In the subsequent emergency conference call, Zhang Feng’s voice transmitted through the airwaves, unable to hide his excitement:

”Investors, Spark Technology’s financial report has completely overturned the market’s inherent perception of it! We must examine this company from a completely new perspective!”

”It has successfully transformed and upgraded from a ’consumer electronics brand company’ into a **’high-end manufacturing and core components platform company’**! Look at its revenue structure! Power batteries account for more than two-thirds; this is not just a guarantee of a cash cow, but also an embodiment of its technical barriers and discourse power in the industrial chain! And the consumer electronics business still contributed nearly 20 billion in revenue under such heavy pressure, proving its strong brand resilience and user stickiness!”

”More importantly,” Zhang Feng raised his voice, ”it completed the VAM agreement, which was considered almost impossible, three months ahead of schedule and by a margin exceeding the target by 35%! What does this show? It shows that its management’s execution and control over the business have reached a terrifying level! It shows that its fundamentals are solid enough to withstand the worst external shocks!”

”Based on the success of its platform transformation, the deepening of its technical moat, and the huge imaginative space in the fields of chips, military industry, and high-end machine tools in the future, we believe that the valuation model previously given to it by the market has completely failed! We are upgrading its rating to ’Strong Buy’ and giving it a 12-month target price of 600 rmb! Corresponding to a market value of 600 billion! This is not blind optimism, but a reasonable premium based on its future leading position in multiple trillion-level tracks!”

One stone stirred up a thousand waves! CICC’s report was like a starting gun. Leading brokerages such as Guotai Junan, CSC Financial, and China Merchants Securities followed suit, with bullish research reports flying out like snowflakes. ”Platform company,” ”Value revaluation,” and ”Strong Buy” became high-frequency words. Institutional consensus was rapidly forming: Spark Technology was no longer the same as before!

The official website of ”Finance Headlines” posted a front-page in-depth report at noon, with the title in bold red font—”Flying Against the Wind! Spark Technology’s Net Profit in the First Three Quarters Reaches 27 Billion, Completing the Sky-High VAM Ahead of Schedule.”

The article read:

”...When everyone thought that the sanctions from the other side of the Pacific and the sky-high fine from Brussels were enough to sink this young giant ship, Spark Technology gave the loudest response with a quarterly report that can only be described as ’terrifying.’ This is not just a victory of numbers, but a victory of strategy, a victory of will!”

”It tells us that a true technology company’s vitality is rooted in core technology (batteries, soon-to-be-reborn self-developed chips), high-end manufacturing capabilities (Xingchen Heavy Industry), and deep insight into market demand. When one door is forcibly closed, Spark Technology, with its diversified business layout and deep technical reserves, has forcefully carved out a broader world under its own feet.”

”A net profit of 27 billion and the early completion of the VAM is not only an account to investors, but also a shot in the arm for everyone following China’s technology industry. Spark Technology has already developed the prototype and confidence to compete on the same stage as world-class giants!”

Online, the Spark Technology section of major stock forums was boiling over.

”Holy sh*t!!! 27 billion!!! God Su is awesome! (Voice cracking)”

”Tears in my eyes! I’ve been holding since 75 rmb, and I couldn’t bear to cut my losses so many times in between! Faith really can make money!”

”Hahahaha! Brother upstairs, who bought at the bottom for 75 rmb, you’re taking off now! Wealth freedom is right before your eyes!”

”I used to scold Su Chen for messing around with machine tools and chips, but now my face is swollen from being slapped! This vision, I’m convinced!”

”Buy, buy, buy! No nonsense! Target price 600! Just follow God Su and charge!”

”Spark’s trend is going to replicate or even surpass the legend of the Fruit Company back then! A heavy weapon of the nation, well-deserved!”

Offline, in major securities business departments, Spark Technology’s stock code became the absolute protagonist. On the trading hall screens, the K-line representing the stock price, from the first day of opening after the holiday on October 8, was like a rocket breaking free from gravity, soaring into the sky!

Buying orders surged like a tide, with countless buy orders at the ”limit up price” piling up at the opening, swallowing the sell orders completely. Consecutive limit-up boards! It was sealed at the opening, giving no one a chance to get on board!

88 rmb, 96.8 rmb, 106.48 rmb, 117.12 rmb, 128.84 rmb... The stock price broke through one integer mark after another in an arrogant and unreasonable manner.

Market sentiment was completely ignited, and Spark Technology’s stock became a phenomenal investment target, carrying countless people’s aspirations for the future of Chinese technology and their dreams of wealth.

**November 20, 2016, 3:00 PM.**

A-shares closed. Spark Technology’s stock price finally settled at a record high of **258.88 rmb**!

Compared to the low of 75 rmb, the increase exceeded 245%!

The company’s total market value also soared to **258.88 billion rmb**, officially breaking the 250 billion mark, firmly sitting at the top of A-share tech stocks and becoming the most dazzling star in the market!

At Spark Technology’s headquarters, employees in the Investor Relations Department couldn’t help but burst into a round of cheers as they watched the final figures on the screen. Shen Nanpeng stood in front of his office window, watching the heavy traffic below, and let out a long sigh of relief. The huge rock that had been weighing on his heart for the past six months was finally smashed by this brilliant report card.

On the top floor, in Su Chen’s office.

Lin Wan placed a cup of brewed green tea in front of him and said softly, ”The market value has exceeded 250 billion.”

Su Chen’s gaze moved away from the string of numbers on the screen representing wealth and power. There was not much ecstasy on his face, only a deep calm. He picked up the teacup, took a sip, and said to the core management team beside him:

”This is just a new starting point. It proves that the path we took in the past was not wrong.”

His gaze swept over everyone, becoming sharper and more profound:

”chips are about to enter mass production, new drones and cameras are about to be released, Xingchen Heavy Industry’s orders are scheduled until next year, and the defense company in Saudi Arabia is also expanding... Our road is still long and very steep. The cheers outside are loud, but what we need to listen to is the drumbeat in our hearts, the bugle call for the next technical difficulty we need to overcome.”

His words, like cool spring water, calmed the management’s excitement slightly, replacing it with a heavier sense of responsibility and mission.

As the news spread to every corner of the industrial park, all employees, whether in offices, laboratories, or production lines, spontaneously stopped their work for a moment. There was no noise; everyone’s face was filled with heartfelt pride. They knew that in this heavy market value, there were the nights they stayed up, the sweat they shed, and the faith in the company and technology that never went out even in the darkest moments.

The peak of a hundred billion, boiling blood!

Spark Technology, with an irrefutable capital victory, announced its nirvana and rebirth. It not only survived but also stood at a height that opponents had to look up to. The blood of capital had never been so surging; it galloped and roared, storing up infinite power for the next, even more magnificent journey. Next, carrying the self-developed ’Flint Heart’ and the market’s infinite expectations, this newly equipped aircraft carrier of Spark Technology will officially sail into the deep-water zone of global competition to meet even more intense storms and waves.