Chapter 734: The Future of Guo's Business

……

When Burger King was acquired by Kuok, it was the third fast-food brand in the United States, with 16,000 stores. It's just that the vast majority of them are franchise stores. Since being taken over by Kwok, Burger King in North America has not opened many new stores, but the proportion of self-operated stores, which was originally less than 10%, has increased rapidly. With the continuous boom of real estate in the United States, Burger King's investment in real estate not only eliminates rent expenses but also increases cash flow. At the same time, it also allows its return on fixed assets to grow at a rate of 20% per year.

Since the acquisition of Burger King in 02, it has increased the scale of its own stores in the form of almost 100% debt. The intensity was so great that the media once ridiculed that Burger King had turned from a fast-food restaurant into a real estate company.

But now there are 7,584 Burger King stores around the world, with a real estate value of more than $24 billion, and it is still improving with the continuous development of the global real estate market. The high debt ratio, along with the excellent performance of Burger King's balance sheet, has become a classic case in Harvard's business class.

"Catherine, the Chinese market is not as good as the United States. With a history of 5,000 years, it has formed a unique food culture. Therefore, in addition to the sufficient number of stores, Burger King also needs to provide richer meals according to the tastes of Chinese people. For example, soy milk, steamed buns, etc., which are commonly eaten by Chinese people. Don't cling to traditional burgers, fries and fried chicken, or we'll have a hard time gaining a foothold in the Chinese fast food market. ”

“… In addition, the qualifications of franchise stores should be strictly reviewed. For any franchisee, it is necessary to go through our strict training before it can officially open for business. In addition, it is necessary to check the quality of food supply and service quality of franchisees from time to time, and not to lose the goodwill of Burger King for the franchise fee of tens of thousands of yuan a year. ”

"Don't worry, Bruce, I know that. ”

Guo Shouyun nodded.

"In the retail business, after five years of development, we now have 6,370 Belle stores across the United States. Among them, there are 2,329 self-owned stores, accounting for 36.56%. Although there are still 20 days left in 2004, the total revenue of Bailejia this year will exceed 13 billion US dollars, and the net profit will be 1.927 billion US dollars. ”

"Next year, we plan to exceed 8,000 Bellex stores and officially enter the entire North American market. In the next three years, the number of branches will exceed 13,000, making it the largest community supermarket chain in the Americas. ”

Looking at the ambitious Catherine, Guo Shouyun smiled and nodded.

"It's a big plan, but I hope that in the next three years, in addition to Burger King's Chinese business, including Paloca, we will be able to give up the investment in our own stores. ”

"Why, give up your own store?"

"Catherine, real estate prices in the U.S. are already too high. Compared with 2002, real estate prices in the central areas of large American cities such as San Francisco, Los Angeles and Houston have nearly doubled by 94.7% compared to the past. With such rapid growth, the potential of U.S. real estate has been completely overdrawn. Moreover, financial institutions across the United States are still lowering the loan approval standards, and even they no longer have standards, as long as they are American citizens, regardless of whether they have income or not, they can take out loans to buy houses, which is ridiculous. ”

Guo Shouyun shook his head and continued: "Although no one knows when the bigger real estate bubble in the United States will burst, there is no need for us to run in at this time to be a 'pick-up man'. Temporarily abandon the expansion of self-operated stores and reserve more cash flow, in order to buy the bottom after the crisis, when the real estate inflection point comes, and the price we pay will be much lower at that time. ”

"In addition, in November this year, the Fed's federal funds rate has been raised to 3.75%. Continuing to expand with high debt will put us under tremendous pressure to repay. Therefore a temporary hibernation is necessary for a better future. ”

After five years of experience in the business world, Catherine graduated from Harvard Business School with a master's degree in business administration. Guo Shouyun's words gave her a lot of inspiration, and some issues that she usually didn't pay much attention to also appeared in her mind again, giving her more hints.

"Then why do you want to separate the Huaxia market?"

"Lao Liu, let's talk about it. ”

The latter did not shirk, "because compared to the fully mature real estate market in the United States, Huaxia's real estate is an incremental market." With the large-scale urbanization movement generated by the rapid economic development of China, the new citizens who migrate to the city will need tens of millions of commercial houses. Until the end of China's rapid economic development, her real estate price index will not fall. Judging from the current global development situation, at least in the next three to five years, China's economy will not encounter setbacks. Therefore, there is no need for Kwok to stop the expansion of its self-operated stores in Huaxia. ”

Now Liu Zhixing has completed his Ph.D. in economics from Stanford University, and his dissertation "The Contribution and Efficiency of Finance in Economic Development" has been published in the top economics magazine in the United States, "American Economic Weekly". Just received dozens of invitations from top universities in the United States, as well as research institutes of Wall Street financial companies.

And Guo Shouyun is not to mention. Over the past five years, he has used his success in the financial sector to earn numerous reputations. Nicknames such as 'Son of God' and 'Financial Wizard', Catherine already heard a cocoon in her ears.

Both believe that the U.S. real estate industry is facing a crisis, and naturally has enough persuasive power.

"Real estate is the backbone of the U.S. economy, and turmoil will inevitably lead to a stock market recession and economic stagnation. If that's the case, do we want to slow down the pace of development in all our businesses, or even maintain the current scale, and first reduce the debt ratio through profitability? ”

After 911, the U.S. federal funds rate fell to about 1%, and interest rates on commercial loans fell to an unprecedented level in Chengdu. Seizing this opportunity, Kwok's Business Group is expanding its business almost with 100% debt.

In addition to the already mentioned Palox and Burger King. Now, in the past two years, the scale of Kuok's own land has reached 5.06 million acres, and there are 173 non-owned franchised farms with a land scale of 3.79 million acres, covering all 50 states in the United States.

Today, Kwok Commercial is the world's 12th largest private landowner, behind Jeremy Bayard's Ace Agriculture, which owns 3.28 million hectares of land in Australia and is engaged in dairy farming.

And the world's largest non-governmental landowner is the Roman Catholic Church, which owns an incredible 71.6 million hectares of land in countries such as Germany and India, which is larger than France.

Therefore, Guo's Farm still has a huge room for growth.

With the rapid expansion of agriculture and animal husbandry, the number of Guo's slaughterhouses has also been greatly improved, in the past two years, through the acquisition and new construction, the number of Guo's slaughterhouses has increased from 46 before 911 to 157 now, and the annual slaughtering capacity has increased from 720,000 in the past to 3.19 million now, covering all large livestock including cattle, sheep and pigs.

In addition, additional services such as segmentation and vacuum packaging have been added.

Of course, such a slaughter scale cannot be compared with the multinational giants such as Crown and Brazil, which can slaughter tens of millions of large livestock at every turn. But it meets the daily demand for fresh meat products in Belleuca's 6,370 stores.

In addition, today's Kuok's fresh processing is not just a slaughtering business for large livestock. After the acquisition of Sanderson Farms, Kuok's fresh processing business has the latter's 8th place in the world and 5th place in the United States, with an annual slaughter capacity of 476 million birds. It has also entered the production and management of fresh eggs, egg products, eggs and chicks.

In addition to slaughtering, Kwok's Fresh Processing has also acquired a number of oil refineries, flour mills and grain storage facilities, expanding a richer fresh processing industry chain.

In the field of logistics, in addition to the maritime business, which has not been involved. At present, Kuok Logistics has 3,733 large trucks, 27,000 medium-sized trucks, 132,700 small trucks, including refrigerated trucks, and 113 B747-400F and B757-200F cargo aircraft.

There are 379 warehouses in 50 states in the United States.

In just over two years, the scale of Kuok's Business Group has expanded nearly 3 times!

Assets have increased from $15.386 billion before 911 to $62.745 billion now. The group's total revenue has also increased from US$6.23 billion before 911 to US$26.173 billion now, and net profit has increased by 2.5 times, from US$1.62 billion before 911 to US$4.05 billion now.

Such a rapid expansion also comes at a price. Of the total assets of the Kwok Business Group of US$62.745 billion, 81.37% are liabilities. Fortunately, the real estate in the United States has been rolling upward in recent years, otherwise the debt ratio of Guo's Commercial would have been higher.

Of course, the debt is so high, but also thanks to the abundant cash flow of Kwok's Commercial, its assets are mostly farms, slaughterhouses, real estate, vehicles, warehouses and other heavy assets. With enough collateral, it is certainly easier to borrow enough money to expand the business chain.

In addition, the existence of Phoenix Bank also provided some support for Kuok's rapid expansion.

Faced with Catherine's question, Guo Shouyun nodded.

"It is no longer wise to continue to expand with debt at a time when the federal funds rate has risen sharply. Now the most important thing for Kwok to do is to consolidate the assets obtained after these years of rapid expansion, integrate internally, improve the enterprise management system, increase cash flow, and reduce the debt ratio. Hibernate and wait, when the U.S. economy is turbulent and the stock market inflection point appears, enter the market to buy the bottom. That's when the federal funds rate will fall again. In a crisis, the price of assets can also be cheap. Whether it is mergers and acquisitions, or industry expansion, it is a rare opportunity for us. ”

That's a good understanding. But the key is when will the market inflection point appear? We can wait for a year or two. But in three or four years, are we going to wait?" asked Catherine.