Tech Giants: Starting from Bankrupt Companies

11: Chapter 11: The Year-End Myth and the Power of the FoundationThe last day of 2015 was filled with the atmosphere of ringing out the old year and ringing in the new. However, for the entire Chinese financial world, all attention was firmly fixed on one company: Spark Technology, which would release its 2015 annual financial report after the market closed today.

At 3:00 PM, the stock market closed. The stock price of Spark Technology settled at 8.15 rmb, an eightfold increase from the 1 rmb at the beginning of the year, but this was just the beginning.

At the Spark Technology headquarters, in that modern press conference hall, CFO Shen Nanpeng stood on the stage with a huge electronic screen behind him. He was still wearing his gold-rimmed glasses and meticulous attire, but there was a bit more composure and confidence between his brows than when he first joined. Below the stage, the big guns of major financial media were already standing by.

Good afternoon, media friends and investors. Shen Nanpeng’s voice spread throughout the venue via the microphone. Now, on behalf of Spark Technology, I will release the company’s unaudited major financial data for 2015.

He gently clicked the controller in his hand, and the screen behind him instantly lit up with clear tables and data.

2015 Spark Technology Sales Data

Chinese Market:

xinghuo no. 1 Standard Edition: 600,000 units, price 2999 rmb

xinghuo no. 1 Pro Edition: 200,000 units, price 3999 rmb

xinghuo no. 1 Max Edition: 100,000 units, price 4999 rmb

Overseas Market:

xinghuo no. 1 Standard Edition: 400,000 units, price 3500 rmb

xinghuo no. 1 Pro Edition: 200,000 units, price 5000 rmb

xinghuo no. 1 Max Edition: 100,000 units, price 7000 rmb

After the data was listed, there was whispering in the audience. Shen Nanpeng did not pause and went straight to the final page.

Key Financial Indicators

Total annual revenue: 6.234 billion rmb!

Net profit attributable to parent company shareholders: 2.701 billion rmb!

Net profit margin: 43.5%!

Boom!

Even though it was expected, when these numbers actually appeared on the screen, the scene instantly exploded! Flashes lit up, almost drowning out Shen Nanpeng.

6.2 billion in revenue! 2.7 billion in net profit!

A company that was still wearing the ST Spark hat at the beginning of the year, on the verge of delisting, with only a few hundred thousand in cash on its books, had not only come back to life within a year, but had also raked in over 2.7 billion in net profit! This was no longer a miracle; it was a myth.

The online media reacted the fastest. Within minutes of the data being released, headline pushes swept everyone’s mobile phones:

Spark Technology delivers an incredible report card: 6.2 billion in annual revenue, 2.7 billion in net profit, ST Spark reborn!

Creating a 6.2 billion myth in one year! Spark Technology interprets what China Speed is!

Immediately afterward, in-depth analysis reports from professional financial newspapers and brokerage research institutes were released overnight.

Galaxy Securities: Spark Technology—Redefining Growth Stocks, Target Price Raised to 35 rmb!

The report asserted: With its unparalleled cost-effectiveness and precise product segmentation strategy, Spark Technology has established an absolute advantage in the domestic market. Its strong momentum in overseas expansion and profitability far exceeding its peers indicate that it has become a giant that cannot be ignored in the global consumer drone field. Its valuation system should be reconstructed.

Finance Weekly cover story provided an in-depth analysis of its cost control and supply chain management, titled: Can the Spark Model be Copied? An Analysis of the Ultimate Efficiency Behind 2.7 Billion in Profit.

In the stock forums where ordinary retail investors gathered, the atmosphere was like a carnival.

27 times in one year! I held it from 1 rmb to now, the best decision of my life!

Su Chen is my daddy! No explanation needed!

I’m crying, I sold at 3 rmb back then, I’m kicking myself!

With this net profit margin, even a money printer wouldn’t be this fast, right?

The number one monster stock of 2015, who else but me!

The reaction of the capital market was simple and violent. Starting from the first trading day after the financial report was released, Spark Technology’s stock price began a journey of continuous limit-ups that made people stare in astonishment.

9.06 rmb! 10.07 rmb! 11.11 rmb! ... The stock price was like a wild horse off the leash, running all the way. All technical analysis seemed pale and powerless in the face of such strong fundamentals. In just one month, Spark Technology’s stock price rushed from the 8 rmb platform to a new historical high of 27.88 rmb! The company’s total market value also exceeded the 27 billion rmb mark!

From 1 rmb to 27 rmb, in one year, a twenty-seven-fold increase! ST Spark, this once shameful code, has now become the most shining and craziest monster stock legend in the 2015 A-share market, bar none.

Beneath this external clamor and the frenzy of capital, there was a solid power settled within Spark Technology.

In the spacious and bright new administrative building corridor, Administrative Manager Li Juan was walking quickly toward the conference room. She was one of those thirty-five old employees from the beginning of the year. Looking at the shiny floor tiles in the corridor, the brand-new R&D building rising outside the window, and the energetic, unfamiliar faces passing by, she sometimes felt dazed. She still clearly remembered that at the beginning of the year, in that dilapidated office, Su Chen stood on the stage, and below him were thirty-some confused and desperate faces. Now... She took a deep breath, a proud smile appeared on her face, and she pushed open the conference room door, ready to preside over the department’s year-end summary meeting.

In the newly completed R&D center, young engineer Zhao Lei, who had joined half a year ago, was fiercely discussing a circuit design difficulty of xinghuo no. 2 with his team members. His desk was piled with materials and drawings. Although he was busy, his eyes were bright. He had previously worked at another technology company where the R&D process was long and inefficient. After coming to Spark, under the standardized project management system introduced by Technical Director Evan Chen, although the pace was fast and the pressure was high, the goals were extremely clear, and resource support was in place. He felt that every bit of his effort could be seen, and this sense of achievement was unprecedented. He could clearly feel that the company was making huge, cost-no-object investments in technical R&D, which made him full of confidence in the company’s future.

The company’s hardware foundation was also no longer what it used to be. The original, slightly old industrial park had now been replaced by brand-new glass-curtain office buildings, a futuristic R&D center, and laboratories equipped with top-tier equipment. The total number of employees had expanded to 4,000, including 3,000 production staff, 200 administrative staff, and 800 R&D personnel! The skeleton of a technology giant was already full of muscle and standing here.

At this glorious moment, Spark Technology’s core management team also welcomed its last two key pieces of the puzzle.

In Su Chen’s office, he was having the final job interview with two new members.

The first was Liu Jian, the new Production Director. He was about forty-five years old, with a sturdy build, rough palms, and eyes that revealed a kind of steadiness and sharpness polished on the front line for a long time. His resume read: Former Production Vice President of Foxconn Technology Group, with over twenty years of consumer electronics manufacturing management experience. He had managed production teams of tens of thousands of people and was proficient in lean production, supply chain management, and extreme cost control.

Su Chen, Spark’s product design and cost control amaze me. Liu Jian’s voice was loud, carrying the air of a doer. My task is to take your design as a foundation and push quality and efficiency to the extreme, making Spark Manufacturing synonymous with reliability and efficiency.

The second was Zhang Shuo, the new Marketing Director. He looked younger, around thirty-seven or thirty-eight, dressed fashionably and appropriately, with sharp eyes and full of energy. His resume was equally dazzling: Master’s degree from Zhejiang University, former Marketing Vice President of Huawei Terminal Company. He had led the zero-to-one launch of several Huawei mobile phones in overseas markets and had rich experience in global brand marketing and channel construction, especially in integrated marketing communication.

Su Chen, Spark has already proven everything with its product power. Zhang Shuo smiled. Next, what we need to do is to make the SparkTech brand the first choice for innovation and value in the hearts of global consumers. The domestic market needs deep cultivation, and the overseas market needs us to tell our story even better.

Looking at the core team under his command, who were both resourceful and increasingly perfect, Su Chen stood in front of the huge floor-to-ceiling window of his office, overlooking the vibrant park at his feet.

Outside the window was the storm of the capital market, the spotlight of the media, and the admiration and pursuit of countless people.

Inside the window was a solid management team, an efficient R&D system, a loyal workforce, and a visible, booming foundation.

The myth had already been forged. And the future was right in his hands.