Chapter 402 Subprime Mortgage
It was 7 o'clock in the morning on the 10th when He Zhongqiu finally got up from his bed in the hotel, having only slept for 5 hours.

Just after finishing breakfast, I received a call from Zhang Heli, saying that he and a group of Chinese reporters were preparing to return to China.

"Zhongqiu, are you participating in the track and field competition in Shi City?"

"Oh yeah, number 16."

"Okay, CCTV will definitely send a special reporter to interview you. I'm going to try to get in. If that doesn't work, I'll just buy a ticket and go in myself."

"No, Mr. Zhang, you have been following me for five years, and now you have to follow me to the track and field stadium. I am very annoyed even if you are not annoyed. I heard that CCTV has many beautiful hostesses, and they are pleasing to the eyes. Let them send a beautiful lady over."

"Haha, OK, OK, I'll report your request to the station."

At 12 noon, the Knicks' special plane took off from Los Angeles and arrived in New York at 5 pm.

The road outside the airport was filled with vehicles belonging to Knicks fans. When the bus came out, the earth-shaking horn sounded and lasted for a long time.

In New York, there were three consecutive days of celebrations from the 8th to the 10th. Even the opening of the World Cup on the 9th did not affect the Knicks' celebrations. A total of more than million people participated in the celebrations.

Starting from the 11th, He Zhongqiu entered the off-season.

However, he didn't have many days to rest, as He Tianwang's schedule was set from June 6th to August 13th, and his scenes had to be filmed in two months and could not be overdue, as he had to participate in a domestic track and field competition on August 8th.

At least half of the Marvel movies are shot in the studio, and there are not many real fighting scenes, so the physical exertion is not great and it is not a problem for him.

Tang Yan and Bai Bingbing had their summer vacation at the end of May, but the two girls were very hardworking and did not return home, but continued to study at home every day.

On the 12th, after breakfast, when Tang Yan and Bai Bingbing went to the study to read, Yang Xue talked about the listing of the martial arts school.

She said: "Sanjin, the remaining three branches have been opened. Now we have reached the listing goal of 100 branches, and we can officially proceed with the listing procedures."

“Has the issue price been decided?”

He Zhongqiu didn't understand either, so he asked the most crucial question directly.

Yang Xue said: "The third-party evaluation agency's valuation of the company's listing is almost the same as our own team's valuation, a full $20 billion, 1 million higher."

"What about the price-to-earnings ratio?" He Zhongqiu asked.

Yang Xue nodded and said, "The underwriter Cartoon Company suggested that we list the company at a price-to-earnings ratio of 10. They believe that with the profitability of the martial arts school, a price-to-earnings ratio of 10 should be able to be successfully issued, and there is a high probability that the company will not break even."

"10 times as high? Also, what does break serve mean?" He Zhongqiu didn't quite understand. He only knew about break serve in tennis.

Yang Xue explained: "Breaking the issue price means that the stock price falls below the issue price when it is listed. There are several main reasons for the break. One is the market problem, and the other is the issue price and price-earnings ratio are too high."

"If we do 10 times, is that a bit too high? You said 5 times last time," He Zhongqiu asked.

"That's just a conservative estimate. Let alone listing in the United States, I don't even know how to list in China. I'm not much better than you."

Yang Xue complained about herself and then said, "Sanjin, this is determined based on the profitability of the martial arts school. It is not set randomly. The cartoon company thinks 10 times is reasonable."

"To put it simply, although our martial arts school is only worth $0.833 per share, we have a good profit prospect. If you want to buy our stock, you must pay a premium. A 10 times P/E ratio means $8.33."

"If the P/E ratio is set too low, it will definitely not be cost-effective for us. If it is set too high, the stock listing may not be successful and may even fall below the issue price."

He Zhongqiu nodded and asked, "Sister Xue, last time you said that the average P/E ratio of U.S. stocks is 7.5 times. Doesn't that mean we won't have much room to grow after we go public?"

Yang Xue was startled and said with a smile: "You got it wrong, I didn't make it clear at the time, I was talking about the issue price-earnings ratio, not the general price-earnings ratio.

The current average P/E ratio of U.S. stocks in the secondary market is 35 times. Generally, the P/E ratio of U.S. stocks is between 20 and 30 times. The stock market is a bit overheated now.

If we set the issue price at 20 times the P/E ratio when we go public, it will definitely not work and the issue will fail. We cannot eat all the future profits.”

He Zhongqiu finally understood, nodded and said, "Then our issue price is $8.33?"

"Correct."

Yang Xue nodded and continued, "The total share capital is 32 billion shares. After the successful issuance, the total market value is 266 billion US dollars.

Among them, the circulating shares are 8 million shares, and the market value of the circulating shares is US$66 billion. The funds we raised are this US$66 billion.

The market value of the 24 billion original shares we hold is $200 billion, and there is a two-year freeze period. They can only be circulated and cashed out two years after listing."

"How long will it take to be on the market?" He Zhongqiu asked excitedly.

"It's basically ready. It will be submitted for review in a week and is expected to be ready in two months." Yang Xue said with a smile.

"it is good."

He Zhongqiu nodded and asked, "Has the internal equity subscription of the martial arts hall been completed?"

"It's done, just waiting for your signature." Yang Xue nodded.

According to U.S. listing rules, a listed company's outstanding shares must not be less than 50 shares and not less than 25% of the total share capital.

In addition, the company must have at least 800 shareholders, and each shareholder must hold no fewer than 100 shares.

Now He Zhongqiu owns all the 24 billion original shares, and he allocated 5% or 1.2 million shares to Yang Xue, 2% or 4800 million shares to Xia Song, and 1% or 2400 million shares to Wellington Philip.

In addition, 2% of the shares, or 4800 million shares, will be subscribed by the company's employees and all coaches hired by the martial arts school. The maximum number of shares per person is 1000 shares, and the subscription price per share is US$0.833.

In addition, the company's middle-level backbones and second-rate coaches can subscribe up to a maximum of 3000 shares.

Company executives and Wuying-level coaches, first-class coaches, can subscribe for up to 1 shares.

The unsubscribed shares will also be retained in case the martial arts school expands in the future and will be subscribed by hired coaches and middle and senior management. The subscription price will be calculated based on the premium at that time.

After taking out 2.4 million shares, He Zhongqiu still has 21.6 billion shares left. After the successful listing, the share ratio will be diluted and he will have 67.5% of the controlling rights, which is absolute control.

Yang Xue's 1.2 million shares account for 3.75% of the total share capital, and together with He Zhongqiu, they account for a total of 71.25%. "Have Jing Ge and the others accepted it?" He Zhongqiu asked.

"Don't worry, no one is a fool. The martial arts school is developing so well, and everyone has subscribed to the maximum amount. Wu Jing is a first-level coach in the martial arts school and has subscribed for 1 shares." Yang Xue said with a smile.

"Then let's go to the company this afternoon to sign the contract and push for the listing as soon as possible," said He Zhongqiu.

"Okay, I'll go after taking a rest."

Yang Xue said this, thought for a moment and said: "The listing team that Philip has put together is indeed good, and he himself is very capable. The 45 branches in the United States account for almost half of them, and the United States is also the best-run and most profitable branch."

He Zhongqiu explained, "So I gave him 1% of the shares. Brother Xia got 2%. He runs the martial arts school all by himself. Except for the one in the United States, he also established branches in other regions. He has lost more than kilograms in the past two years."

“Sanjin, that’s not what I’m saying. This is what they deserve.”

Yang Xue shook her head and said, “A few days ago, there was a senior accountant in the team that Philip formed, and he accidentally mentioned something.

Three years ago, he participated in the listing of a commercial bank that specialized in real estate lending. Now the major shareholder of the bank is selling a large number of shares.

"What does it mean? The bank is in trouble, and the boss is cashing out and running away?" He Zhongqiu didn't quite understand, but he guessed it right.

Yang Xue nodded and said, "I have had people collect some information these days. In order to stimulate the real estate market, the US government has released a lot of money in recent years, and financial institutions have lent a lot of money. In addition, the credit assessment of borrowers is too relaxed, so it is easy to get a loan from the bank. Now many banks engaged in real estate lending have a lot of bad debts."

"What does it have to do with us?" He Zhongqiu asked.

Yang Xue shook her head and said, “I don’t understand finance and real estate either, but if a large number of such banks have a large number of bad debts, it may trigger some very bad chain reactions.

For example, we had the problem of triangular debt in our country in the past, which seriously affected the domestic economic development.

For example, the Southeast Asian financial crisis in 97 was man-made and destructive. Afterwards, tens of millions of people in our country were laid off and hundreds of thousands of companies went bankrupt. "

At this point, she thought for a moment and said, "Sanjin, I've thought about it. No matter what the storm is, cash is king. In the next two years, we shouldn't invest recklessly. It's safer to have some cash in hand."

He Zhongqiu nodded thoughtfully and said, "That's fine. We have so many companies, so we have to have some reserves. Otherwise, if the capital chain is broken, it's no joke."

At two o'clock, the two arrived at the 13th floor of the Mander Building.

"Oh, the big boss is here."

Seeing him, Philip ran up excitedly and gave him a big hug.

"Congratulations, Wellington, you will be a billionaire soon." He Zhongqiu said with a smile.

"Everything is given by you, Wolverine. Without you, I am nothing." Philip said very seriously.

He Zhongqiu patted Phillip on the shoulder, hugged Xia Song behind him, and said, “Brother Xia, congratulations to you too.”

Xia Song used to be a big guy with some fat on his face, but now he has lost almost one-third of his weight, and there is no trace of fat on his face.

During these two years, he spent one-third of his time flying in the sky, flying an estimated hundreds of thousands of kilometers, traveling back and forth between dozens of cities around the world, working more than 18 hours a day, and suffering a lot.

Although he was exhausted, he was in very good spirits and said excitedly: "Zhongqiu, 4800 million shares, IPO means 4 million US dollars, you gave too much."

He Zhongqiu laughed and said, "You are the founder of He's Martial Arts School, a veteran among the veterans. It's only right that you get 2% of the shares."

"Thank you!"

Xia Song was deeply touched.

Think about when I first met He Zhongqiu in 02, who could have imagined that this day would come?
After the successful listing, he will have a net worth of US$4 million. If the martial arts school develops for a few more years and has thousands of branches, he will have a net worth of US$10 billion or even more. All of this was brought to him by He Zhongqiu.

When he sent He Zhongqiu to the NBA, He Zhongqiu said that Xia Song was his benefactor, but today, He Zhongqiu is his benefactor.

He Zhongqiu said: "Brother Xia, you will be even busier after the listing. There are 1000 secondary branches waiting for you. Please hire more capable people to help you."

Xia Song nodded and said, "I remember that. I won't go to the secondary branch library by myself."

He Zhongqiu teased: "That's good, I don't want to see you die from overwork."

"Ha ha……"

Xia Song couldn't help but laugh. He really felt that his body was a little broken. He was really too tired and he was just holding on.

Afterwards, He Zhongqiu signed some documents in the company, and the listing procedure of He’s Martial Arts School officially started.

The next day, He Zhongqiu, Yang Xue, He Xue and He Yang flew to Luocheng, and Tang Yan and Bai Bingbing also followed.

There were many people accompanying them, including nannies and security guards, most of whom were people around Yang Xue, totaling more than 30 people. He Zhongqiu chartered a small passenger plane.

We took off at 10am and arrived in Los Angeles at 4pm. Ross Lewis and Frank Zhang came to pick us up at the airport.

"Boss, the company is ready to go public. Why not do it next year?" Ross Lewis shouted immediately after getting in the car.

He Zhongqiu teased, "Are you jealous of Xia Song and Philip?"

Ross Lewis chuckled and said, "Boss Xia and Wellington got 4800 million and 2400 million shares from you. After listing, they will be 4 million and 2 million US dollars. Who wouldn't be envious? Frank, what do you think?"

Frank Zhang nodded and said enviously: "Ross, your film company can go public, but if my agency wants to go public, it will take at least a few years to develop.

Moreover, even if the company goes public in the future, the price-earnings ratio will not be very high. Brokerage companies belong to the lowest category in the secondary market and have little potential.”

Ross Lewis said with disdain, "Frank, are you laughing? With the Boss brand, the agency will sooner or later become a first-tier agency in the sports and Hollywood world."

Frank Zhang chuckled. It was still a little far from the first-tier cities, but it was already close to the second-tier cities. The scale was getting bigger and bigger. The nearest floor of the office building was not enough, so he was going to rent another floor.

In addition, he plans to divide the agency into two parts, one is the sports agency department and the other is the Hollywood agency department, for easier management.

(End of this chapter)