Investor That Can See The Future

Chapter 360

After work, I headed to Hannam-dong with Eli and Yuri. Because I have an evening appointment with Chairman Ryu Cheol-gyun and Vice Chairman Shin Byung-doo.

Eli said looking forward to it.

“Thanks to Yuri, I have such a great opportunity,” she said. They are both difficult to meet.”

Yuri shook her head.

“The father and the uncle meet the CEO and the older sister. You’ve been begging me for a while to make room for you.”

Although it is not well known due to the nature of private equity funds, Chairman Ryu Cheol-gyun is a legend in the Korean investment world.

Perhaps, without me and Taek-gyu, wouldn’t my name remain as the most famous Korean investor?

However, the fact that he is Korean is a bit subtle. This is because Chairman Cheol-gyun Ryu obtained US citizenship while studying abroad (of course he did not go to the military). He was born in Korea, married a Korean, and lives in Korea, but technically, he is a Korean-American.

This aspect is similar to RCK Bros. It is a self-proclaimed Korean-native private equity fund, its headquarters is located in Korea, and it invests a lot in Korea, but most of the investment is made up of foreign capital.

Well, it is difficult and meaningless to determine the nationality of capital. Even in Seosung Electronics, half of the stock is held by foreigners.

Arrived by car is a small restaurant with only a few tables. The two who arrived first were very happy to see us.

Ellie lowered her head and said.

“Thank you for inviting me to dinner tonight.”

Chairman Ryu Cheol-gyun waved his hands.

“no. We thank you for coming out like this. Ads are always good.”

Vice Chairman Shin Byung-doo shook hands and said.

“I don’t know if Yuri is doing well.”

“Don’t worry, one person is doing enough.”

At my words, he looked relieved.

We said goodbye and then sat down. Since we had booked the whole store, we were the only customers, so there was no need to notice other people.

The menu is beef stew, turkey, french fries and wine.

Chairman Ryu Cheol-gyun said with a smile.

“When he was studying in the United States, he slapped every meal with a sandwich. “I bought a baguette my height and a loaf of ham at Walmart and made three sandwiches in the morning, ate one right away, packed two and went to school.”

After studying like that, he went through Golden Gate and Kanline Group to establish RCK Bros.

We ate and drank wine and talked.

The menu itself feels like home-style American food, but the wines are top-notch. By the way, both are famous as wine lovers.

Vice Chairman Shin Byung-doo said while drinking wine.

“When I was young, I didn’t know why I was drinking wine, but after tasting it a few times with this friend, I fell in love with it. Other alcohols can taste just like a month or two, but wines have been drinking for over 10 years and I still don’t know. That’s why it seems that the end of alcohol is called wine.”

Yuri licked her lips slightly.

“Chit, drinking every day is a problem. When I tell them to stop drinking, they claim that wine is good for preventing heart disease. And that’s when you drink in moderation.”

The conversation naturally shifted to investment.

Chairman Ryu Cheol-gyun stuck out his tongue and said.

“This time I saw him hand in hand with Rosa Tom and invested in TWR and hit his knee. I wondered why I hadn’t thought of it sooner.”

“I don’t know yet whether I will succeed or not.”

“Isn’t the investment because there is a great chance of success even if you say that? Even if it fails, I think it was a successful investment as Karos and Faceit entered Russia with the favor of President Vysotsky. I have no idea where to invest again next time. Do you have any investment ideas in mind?”

“I do not know.”

Actually, I don’t know either.

In general, it is common to invest in a specific industry or company after thoroughly analyzing it with interest.

However, since I invest when I see foreknowledge from time to time, it will seem like I am making an investment decision improvised with inconsistency in the selection of the target. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

On the other hand, RCK Bros. pursues a typical private equity method that considers thorough company analysis, market analysis, and even exit.

Yuri said as if giving a pincup.

“Can you tell me something like that?”

Chairman Ryu Cheol-gyun scratched his head.

“Ouch. I tried to get information out of this while drunk, but I failed.”

We burst out laughing.

I looked at the two of them and thought. Will Taek-gyu and I be like that in 20 years or so?

I drank both bottles of wine and opened another bottle. Unlike Vice Chairman Shin Byung-doo, who was smart, Chairman Ryu Cheol-gyun’s face turned a little red.

“I have felt it for a long time, but recently, industrial change is accelerating. There will probably be big changes in the Korean business world, which was like stagnant water in a few years.”

Chairman Shin Byung-doo continued.

“Come to think of it, the recent GH group situation is not very good.

“The GH group?”

Ellie explained.

“Jessica said it once before. Still, all PF related to GH E&C has been stopped, and some have begun to recover their investment.”

Hearing this, I think I’ve heard similar stories.

The GH group’s reordering ranks around 15th. The group’s market cap is around 30 trillion won.

It may be like in Korea, but from our point of view, it is a level that we do not need to worry about. However, the business areas do not overlap.

But I have a personal connection with this one. It’s not a big deal, the lover I dated when I was a college student married the grandson of the GH group chairman. Now she has a baby and is living well.

In any case, the reason that the situation became difficult is that each affiliate failed to do business in a row.

GH Oil is the largest affiliate of the GH group. GH Oil is Korea’s second-largest oil refining company after SSK Innovation.

In the oil refining industry, profits are proportional to the selling price. Therefore, the higher the oil price, the higher the profit. However, a few years ago, the low oil price continued, and profits continued to decline.

There was a temporary rebound due to damage to Big One and North Sea oilfield facilities, but it was not enough to break the flow of low oil prices.

In addition, as the sales volume of electric vehicles increases, the profits of refiners are bound to decrease, and countermeasures have to be taken accordingly.

SSK Innovation invested the money it earned from the oil refining business into batteries. On the other hand, GH Oil established a subsidiary called GH Green and actively invested in polysilicon and solar modules.

Until then, the solar field seemed more promising than the battery. The world seemed to be paying attention to renewable energy, and along with wind power, solar power came into the spotlight.

However, the related technology did not develop as quickly as expected, and the unit cost of power generation was higher than that of other developments, so the reality was that the entire industry was dependent on government subsidies.

The biggest problem is the offensive by Chinese companies. As with all industries, China is the world’s largest market for renewable energy. The Chinese government and local governments focused on subsidizing their own enterprises.

Chinese solar companies backed by the government’s support poured out low-cost modules and panels, and GH Green’s products lost price competitiveness.

The same thing happened in the battery market, but the global demand for batteries increased significantly due to the expansion of electric vehicles.

Crucially, Professor Homin Kim succeeded in developing the next-generation battery OTK battery, and Korean companies were able to outsmart Chinese companies with their technological prowess.

The stock price soared after SSK Innovation entered into a partnership with OTK Company to produce OTK batteries, but despite the oil price rebound, the stock price of GH Oil has been declining day by day.

To sum up, the battery business invested by SSK Innovation is doing well, while the solar power business invested by GH Oil is doomed.

“Soon, we will sell our subsidiaries and get out of the solar business. It will be difficult to cover the deficit any longer. It seems that they have already had quite specific discussions with the Chinese consortium. It’s better to do it better to avoid a bigger loss. When the official announcement is made, the stock price of GH Oil will rebound significantly.”

This information is not easily accessible to the general public. After all, you have a lot of connections in the financial world, and the information is quick as you have a strong backbone.

“GH oil is going to waste the money invested, but the bigger problem is construction.”

Korean chaebols especially like construction companies.

For a leading conglomerate in Korea, it is difficult to find a group without a construction company as an affiliate, and they want to acquire a group without a construction company.

Not to mention Suseong Group and SSK Group, the Eunsung Motor Group, which spun off from the Eunsung Group, took over Eunsung Construction, the parent company of the Eunsung Group.

So, why do chaebols love construction companies so much?

Although there are some characteristics of the Korean economy that has grown through civil works through political and economic cooperation, the biggest reason is that there is no industry as easy to make slush funds as construction companies. In construction, there are many daily workers in subcontracting and subcontracting, so it is easy to extort money from wages or incidental expenses or to manipulate account books. So, for a long time, the president has been loved as a source of slush funds.

However, apart from rising house and land prices, the recent construction industry itself is on a downward trend.

“Nevertheless, GH E&C carried out aggressive management with the goal of being number one in Korea. By acquiring small and medium-sized local construction companies, he grew in size and entered various infrastructure projects as well as redevelopment and reconstruction projects. I also received many benefits during the Park Si-hyung administration. At that time, there were many public projects to revitalize the construction industry.”

Any government will do everything possible to boost the growth rate. Of these, the simplest method is to stimulate the construction economy.

Once large-scale reconstruction or civil engineering work is done, the number of employed persons increases and the growth rate soars in an instant. Therefore, whether conservative or progressive, we have no choice but to cling to real estate.

“But after the change of government, the number of public projects ordered by the government has greatly decreased.”(Read more @ wuxiax.com)

It’s not that this government has refrained from artificially stimulating the construction industry, but that there is nothing to do because the previous administration has already carried out all the public projects.

The public works also took a hit, but the local real estate sector continued to stagnate for several years. Not long ago, more than half of the apartment complexes sold by GH E&C in the provinces were unsold.

Vice Chairman Shin Byung-doo said as if pathetic.

“It’s like I’ve grown in size without reading the changes of the times at all. In the hopes of expanding overseas business, a large-scale public project was conducted in the Philippines, but the local SPC that was supposed to pay the money went bankrupt. If the Philippine government is not held accountable, the transaction could be suspended due to capital encroachment.”

When we support construction to save construction, the situation of other affiliates is not very good. So what should I do?

“The GH group will also have to make a decision soon.”

I thought for a moment and then said.

“Are you going to revive construction by selling a net affiliate or sell construction?”

When a company becomes insolvent and management becomes difficult, they consider selling it. However, a dilemma arises in this case.

A company that is insolvent is that no one wants to buy it. So if you want to sell it, you have to sell it at a bargain price. That is why, on the other hand, there are cases of selling unprofitable affiliates.

I remembered such a case.

“Yongjin Group sold Yongjin Keyway,”

Yongjin Keyway is a company that manufactures and rents water purifiers and household appliances. It accounted for more than half of Yongjin Group’s net profit, and the financial structure and cash flow were good.

It was Yongjin Construction that had a problem at the time, but there was no one to buy it when it was put on the market. Therefore, Yongjin Group had no choice but to sell Yongjin Keyway.

Ellie clapped her hands.

“Oh right. It was.”

Chairman Ryu Cheol-gyun and Vice Chairman Shin Byung-do looked at each other and smiled.

At that time, RCK Bros. invested 1.2 trillion won to acquire Yongjin Keyway from Yongjin Group. And after 6 years, it was sold again to Yongjin Group, leaving a profit of over 1 trillion won.

From fundraising to deal sourcing, M&A, and exit. It was an investment like the standard of a private equity fund that could only appear in textbooks.

said Yuri.

“The Kumho Group had taken over Daehoo E&C forcibly in the past, and the entire group was in a workout.”

Vice Chairman Shin Byung-doo nodded.

“Even though there were precedents from Yongjin Group and Kumho Group, we didn’t learn anything. Selling construction would push GH Group’s financial rankings out of the top 20. Given the current business structure, it is unclear whether the company will re-establish itself in the future.

Chairman Ryu Cheol-gyun said while drinking wine.

“It is right that companies that keep up with changes grow bigger, and those that don’t are expelled. If you think about it, the Korean business world has been occupied by people without skills for too long.”