As a mage, I just want to pursue the truth

Chapter 106 Only Monopoly Can Enjoy Excess Profits
Pricing in foreign markets will be higher than in the domestic market. Coupled with the rapid iteration speed of domestic mobile phones, the profits in foreign markets are considerable.

Take rice as an example. In 2020, rice’s overseas revenue exceeded domestic revenue for the first time.

Previously, Cheng Gang worked as an investment director at Shunwei Capital and was well aware of the profit sources of the mobile phone industry.

Shunwei Capital invested in many mobile phone supply chain companies after Lei Jun founded Dami.

Cheng Gang asked back: "Mr. Chen, when your company buys Qualcomm's patent license, will Qualcomm charge a tiered fee?"

Qualcomm generally sells chips and then charges a package fee for other patents.

"Science Biotechnology's brain-computer connection patent is the only one that can be commercialized on the market. I think it is completely reasonable for it to enjoy an appropriate premium."

"Thanks to our Chinese-based brain-computer interface mobile phones, OPPO has made a lot of profits in Greater China."

Generally speaking, high-end Bluetooth headsets launched by mobile phone manufacturers account for less than 20% of the mobile phones purchased with Bluetooth headsets.

After the launch of brain-computer connected mobile phones, the proportion of people who bought brain-computer connected headphones together with them was almost 100%.

Almost all major mobile phone manufacturers operate in this way. They are also very cunning in setting it so that only their brain-computer connection to the phone can be matched with their own headphones.

If users use other brain-computer connection devices, mobile phone manufacturers say that there will be no restrictions, but in fact their operations will become laggy.

Dami has been trying to gain a firm foothold in the high-end market in the public opinion field, but OV, which has been working silently, has occupied a lot of the high-end market that Huawei withdrew from.

On the contrary, we have always emphasized that only rice in the high-end market is priced high, and every time we set the price high, we have to repeatedly emphasize to users how cost-effective and technologically advanced our product is, so we sell it at such a high price.

The target consumers of high-end mobile phones don't really care about cost performance. This is a very contradictory point for Xiaomi.

Regarding the second phase of brain-computer connection patent licensing, major mobile phone manufacturers have privately coordinated and tried to advance and retreat together, trying to delay and avoid too much price increase this time.

"If we agree to Kechuang Bio's request this time, the price will be raised to eight hundred next time, and one thousand the next time!"

"You know, Qualcomm's 5G patent fees are not so outrageous! Do we have to accept such high patent licensing fees?"

Qualcomm's 5G patent licensing fee is sixty-five percent of the sales price of each mobile phone multiplied by five percent.

“We need to be consistent.”

Everyone privately said that they wanted to resist the monopoly of Ke Chuang Biotechnology, but the first company to sign a patent licensing contract was Samsung.

In order to occupy the high-end market in Europe and the United States before Apple, Samsung signed a patent licensing fee of 500 RMB.

Before the news of Samsung signing first got out, Rice was the second to sign.

When the news of the signing of the agreement between the two companies came out, the alliance to resist the monopoly hegemony of the scientific and technological innovation and biological industry came to an end before it was even established.

After the disclosure of Ke Chuang Bio's new round of brain-computer connection patent licensing agreement, the outside world has witnessed the huge profits of monopoly.

The price was raised by 150% at one time, and there was no room for bargaining.

This is an excellent popular science education on the fact that science and technology is the primary productive force, and it makes China realize why we must climb to the upstream of the industrial chain.

It also made everyone realize how valuable monopoly technology is, and the news quickly ignited the public opinion circle. Pharmaceutical stocks have been under pressure for 22 years, and their valuations have been doubled down from news to capital. The previous core track does not seem to be so core, and the seemingly technologically advanced pharmaceutical companies do not seem to have as much technological moat as everyone imagined.

As a company in the pharmaceutical sector, Kechuang Bio will also be viewed with suspicion by institutions and retail investors, who wonder why it can enjoy such a high valuation?
A big V on Xueqiu published a long article to discuss this issue.
"As the news improved, Kechuang Biotech, which had been falling for several consecutive days, finally turned positive, and today it even returned to 2,000 yuan with a long positive line with high volume.

It is rumored that this is because the unit price of the brain-computer connection patent license of the English Department of Ke Chuang Biotechnology is 500 yuan. The news has not yet been confirmed, and Ke Chuang Biotechnology has not issued an announcement.

But judging from the trading volume, it should be true. Retail investors cannot support such a large volume at the unit price of Ke Chuang Bio.

Today I want to talk about whether the trillion RMB valuation of Sinovation Biotech is worth it. CATL reached its highest valuation in December last year, with a market value of 12 trillion RMB.

现在回落后估值还有1.2万亿。而宁德时代20年净利润只有50亿元，科创生物21年全年的净利润在100亿左右。

People would say that CATL has high expectations and high growth, and that the penetration rate of new energy vehicles will further increase in the future, so CATL can enjoy a high valuation.

But think about it from another perspective. Isn't Kechuang Biotechnology a high-growth company? Without looking at its innovative drug pipeline, Kechuang Biotechnology's net profit growth in the field of brain-computer connection alone is expected to exceed 100% in the past two years.

Originally, the market expected that the brain-computer connection research and development of the English department would be completed this year. As a result, Ke Chuang Bio completed the research and development target that should have been completed for the whole year in January.

In other words, Ke Chuang Bio's profits in this area can be released in advance. Just as the production capacity of high-end phones of major mobile phone manufacturers has not yet started this year, the profits in this area are worth looking forward to.

As a small shareholder of CStone Biotech, I have been holding CStone Biotech since its listing until now, and I have increased my holdings in the past two days.

I have more expectations for it, not just brain-computer connection to mobile phones. My expectation for Ke Chuang Bio is that it can truly break through the boundary between cyberspace and real space through brain-computer connection, and together with other Chinese companies, realize the metaverse.

I hope that the next industrial revolution will be initiated by China and we can occupy the upstream of the industrial chain.

This expectation is of course very vague. To be honest, there is something real. Currently, brain-computer connection technology is used in English, Japanese, Korean, Arabic and Russian.

The research and development progress of brain-computer connection technology for these languages ​​will definitely exceed expectations.

In addition, the brain-computer connected prosthetics that Ke Chuang Biotechnology is developing have recently released an official demonstration video, and the effect is very obvious. I personally compared it with similar videos from abroad and feel that Ke Chuang Biotechnology's prosthetics are obviously more flexible.

Once the brain-computer connection is implemented, it will be able to support a trillion-dollar valuation.

As for the endorphin and innovative drug pipeline, the innovative drugs are not currently managed by Mr. Zheng himself, but are also being worked on by a team led by Dr. Hua Guo who came from Pfizer Pharmaceuticals.

With financial support and no pressure on time and performance, I believe that Sinovation Biotech can steadily build a systematic drug research and development pipeline.

It is entirely possible to become a pharmaceutical giant that is competitive in the international market in the future.

Therefore, I think the trillion-dollar market value of Ke Chuang Bio is not overestimated, but underestimated.

The decline in recent days was caused by the funds' big sell-offs, rather than any problems with the company's logic or performance.

It can also be clearly seen that although the stock price has been falling, foreign capital continues to flow in, with northbound funds having a net inflow of several hundred million every day.

After the European asset management giant’s annual report came out last year, they also increased their holdings in CStone Biopharma significantly in the fourth quarter.

Investors who have invested in Sinovation Biotech don’t have to worry at all. Just be prepared to grow with this great company.”

(End of this chapter)