Chapter 451 - 206: Cooperation and Procurement (Part 2)

Chapter 451: Chapter 206: Cooperation and Procurement (Part 2)

However, one of the analysts shook his head. "We also need to consider market fluctuations and how we’ll sell the energy after production. After all, the grid-connection review process for new energy is extremely strict right now. There are a lot of uncertainties."

Xue Hua calmed down as well. "That’s a good point. We can’t just look at the profits and ignore everything else."

The vice president also chimed in, "Right. A project like this will definitely require using Hailufeng Company’s patented technology, and they’ll certainly charge patent fees. If they follow their usual business model, they’ll most likely require us to pay an annual fee."

"Yes, that’s highly likely," Xue Hua agreed.

But even after discussing it for over twenty minutes, they still felt the project was profitable.

After all, the output of 100,000 battery units was laid out right before them. Even after considering the various risks, there was still room for profit.

For a corporation, a project with such visible profit margins was worth investing in, even if it came with certain risks.

This year, thanks to Egyptian Catfish Meal, Haida Group’s net profit had soared to nearly 6 billion yuan, roughly 300% of last year’s total.

This gave Xue Hua and the other senior executives more confidence, but they also recognized the potential risks in the aquaculture industry.

The main issue was that major domestic aquaculture companies were all expanding their operations to varying degrees. This would only intensify internal competition within the industry, continuously driving down gross profit margins.

It was precisely because he saw this potential risk that Xue Hua believed they had to be cautious about expanding their aquaculture operations. At the same time, they needed to learn from Hailufeng Company, constantly broadening their own company’s industrial scope and improving its risk resilience through diversification.

Xue Hua, who had been keeping a close eye on Hailufeng Company, had recently discovered that they had registered a massive number of patents related to microbial fuel cell technology. In the short span of about half a year, their patent count for this technology had skyrocketed to 377.

Then, at the end of November, they announced that the first pilot project for their microbial fuel cell technology had passed its trials and had begun supplying power to Hailufeng Company’s facilities in Gongping Town.

At the time, although Xue Hua didn’t know the specific details of the technology, his intuition told him that Hailufeng Company only ever rapidly expanded its investments after the underlying technology had already proven successful.

This was because Jiang Miao’s past performance had led Xue Hua to subconsciously believe that this project had a nine-out-of-ten chance of being a success.

After reviewing the patents registered by Hailufeng Company and the related papers published by Lin Shuya, he felt that this technology was practically a tailor-made upgrade for the aquaculture industry.

And so Xue Hua, who had been wrestling with how to diversify his business, had rushed over to Gongping Town with his team for an inspection.

After discussing it with the vice president and others, Xue Hua made up his mind. "I’m planning to invest in the Gaozhou biofuel project first. It’s only a billion yuan. Even if we lose it all, the company can absorb the blow."

"I also think it’s worth a shot." The vice president naturally didn’t object, and it wasn’t because he was just sucking up.

After all, the vice president was also one of the company’s shareholders, and with a considerable stake at that. He didn’t need to flatter anyone. He agreed with Xue Hua’s decision because he saw the project’s bright future.

Investing certainly had its risks, but it was a path every company had to walk. Who wouldn’t want to coast to an easy victory if they could? Unfortunately, the world didn’t offer such luxuries, at least not for private enterprises.

Once Xue Hua and his team finished their internal discussion, they went to find Zhang Haitao again.

"Oh? Is your company really planning to invest?"

Xue Hua nodded. "Yes. We plan to invest in a biofuel production facility next to our Gaozhou aquaculture base. Aside from the land and basic construction, we’d like your company to handle the contract for all other supporting facilities."

Zhang Haitao’s smile became increasingly hard to suppress. "General Manager Xue, let’s talk details in the office. It’s windy out here."

"Alright..."

They negotiated for an entire day.

Finally, they completed a preliminary letter of intent for cooperation.

The Gaozhou biofuel project was designed for a scale of 100,000 microbial fuel cell units, with an annual output of 300 million kWh of electricity, 60 million cubic meters of natural gas (with 90% methane content), and 350,000 tons of organic fertilizer.

The project contract was priced at 1.154 billion yuan. In addition, there was an annual patent fee of 500 yuan per biofuel cell unit, totaling 50 million yuan per year.

This patent fee not only covered the use of the technology but also included maintenance for malfunctions and the supply of special bacterial strains.

For Haida Group, if this investment could reach 80% of its designed production capacity, they would be able to recoup their costs very quickly.

Haida Group had run the numbers.

Compared to pig farming, the combined benefits of the power, gas, and fertilizer cogeneration project were much better.

Their group’s pig farming base in Gaozhou produced roughly 350,000 pigs annually. This year, with better profits, they were earning 460 yuan per pig, for a gross profit of 161 million yuan.

Meanwhile, the long-term contract price for natural gas that Huaren Gas Co., Ltd sold to the local gas company in Gaozhou was 3.2 yuan per cubic meter.

Even if they had to pay a transit fee to Huaren Gas and sold it to them for 2.5 yuan per cubic meter, the 60 million cubic meters of natural gas would still be worth 150 million yuan.

From the natural gas output alone, they could cover the entire investment cost in about 7.6 years.

When factoring in the output of electricity and organic fertilizer, they could basically cover the investment cost in about 4 to 5 years.

Although they had to pay Hailufeng Company a 50 million yuan patent fee every year, Haida Group was already used to it.

After all, Hailufeng Company had developed the technology and held the patents. If you didn’t pay the price, you couldn’t use the technology. It was as simple as that.