Story of a Big Player from Gangnam

Chapter 814: Miura Machines in Japan - Part 1

It was Thursday.

Gun-Ho went to work in GH Mobile in Jiksan Town. As usual, Gun-Ho stopped by GH Mobile's second factory first. GH Mobile had acquired this additional factory when it had reached the limit of the capacity of the first factory. The second factory was situated right next to the first factory. It used to be a packaging company for food such as cookies and candies.

The second factory was 2,500 pyung large, and Gun-Ho acquired it for 4 billion won. 3 billion won out of 4 was from Dyeon Korea for the building that GH Mobile contributed for that company. And, the remaining 1 billion was part of the cash that GH Mobile had in its reserve.

"It was definitely the right decision that we acquired this second factory", said Gun-Ho as he was looking at the exterior of the factory building before walking into it.

"Because of this additional space, the first factory could and still can have enough room to make the work environment more efficient. In addition, the parking problem was resolved as well."

When Gun-Ho entered the factory building, President Song was there, which was unexpected.

"You are here, Mr. President Song."

"Yes, sir. I was on my way out after rebuking the manager here. We found a few defective products."

Gun-Ho noticed that President Song was carrying some products. They were probably those defective products that President Song just referred to.

"Is it serious? Do I have to worry about it?"

"No, sir. But, it's not ignorable either."

"Does that mean we should expect to get a defective product claim for the entire already-produced quantity?"

"These are still usable, and I already talked with the client company for this product about the defect. They agreed to take the product by making some adjustments on the product cost."

"Which client company is that?"

"It's Mandong Company."

"We haven't had defective products for a long time, have we?"

"Right. President Jong-Suk Park from GH Machines came earlier this morning to help us find out the cause that led to the defect. According to him, it was the speed with which the product was cooled. They have to let them cool quickly, but the cooling happened slowly when the defect occurred, which caused the problem."

"Is President Park still here?"

"No, sir. He just left."

Gun-Ho and President Song headed to the office walking side by side, and the employees there stood up to give a bow to them, on the way. When they arrived at Gun-Ho's office, President Song followed Gun-Ho to his office.

Gun-Ho said, "Please have a seat. Let's have a cup of tea together."

"Sure, sir."

Gun-Ho asked Secretary Hee-Jeong Park to bring two cups of tea. After taking a sip of his tea, President Song said, "The sales are steady. We are making a sales revenue in the range between 530 million won and 550 million won every day."

"So, our monthly sales revenue should be more or less 1.6 billion won."

"That's correct. GH Mobile is currently at proper production capacity with the two factories, but once our annual sales revenue reaches 200 billion won, it will have to be working at full capacity."

"Hmm."

Proper production capacity included currently running equipment and the equipment that could be added to the production line right away if necessary. A production facility's full production capacity included idle equipment and stand-by equipment.

Gun-Ho said to clarify what President Song just said, "You mean we will soon need an additional factory—the third production facility."

"That right, sir."

"Do you think we'd better have our third factory in Changwon City?"

"Changwon City would be good, but Dangjin City is better for our current situation, given the increased product orders from A Electronics."

"Hmm."

"Dangjin City has several agricultural and industrial complexes. There are Seokmoon Agricultural and Industrial Complex and Songak Agricultural and Industrial Complex, for example. If we either acquire or rent an already-built factory in an agricultural and industrial complex, we don't have to build our production facility from scratch."

"Since we haven't reached our maximum production capacity yet, let's talk about this again next fiscal year."

President Song smiled faintly because he understood what Gun-Ho said as he had no intent to invest any funds in expanding the business this year. That meant that it was highly possible that he would receive a dividend this year with net earnings. That was probably why President Song smiled.

Gun-Ho continued, "If we establish the third factory next year, we would have more than 1,000 workers in total."

"That's right, sir. GH Mobile will become a big company with a yearly sales revenue of 200 billion won, and which has Dyeon Korea as its subsidiary company—a registered firm with KOSDAQ."

"GH Mobile owns 900,000 Dyeon Korea's shares. Well, since we split a share in half, we have 1.8 million Dyeon Korea's shares to be exact, and a share is worth 5,000 won."

"That's correct, sir."

"Our account book must be indicating our Dyeon Korea's shares as investment assets of 9 billion won."

"That's right, sir. Dyeon Korea's stock price is currently in the range between 20,000 won and 30,000 won. But, our account book is still showing the initial price of 10,000 won with 900,000 shares."

"Hmm."

President Song continued as he placed his cup of coffee back at the table, "If we sell our Dyeon Korea shares at this very moment, since the current market price is 20,000 won, we will make 36 billion won. Since the price is on the rise lately, we might be able to sell the shares at 30,000 won as well. If we do that, we will make 54 billion won."

"That sounds about right."

"If we sell our Dyeon Korea shares to an institutional investor such as National Pension Service or Korea Development Bank when its price hits 30,000 won, we would make 54 billion won, and that amount will come to GH Mobile."

"GH Mobile's cash assets will increase then."

"That's right, sir. If that happens, GH Mobile would make a disposition gain on investment assets of 45 billion won. We initially invested 9 billion won in Dyeon Korea, and its stock price increased, and that made our Dyeon Korea shares worth 54 billion won. If we subtract our original investment funds of 9 billion won from 54 billion won, our profit would be 45 billion won."

"Our financial statements that would be shown in the audit report will then indicate that GH Mobile's profit on investment assets is 45 billion won."

"That's correct. 45 billion won is enough money to pay off GH Mobile's entire debt."

"Hmm."

"Well, you are the expert in this field, sir. I know that you probably already pictured it in your head at some point. I guess I was like holding a candle to the sun."

"Haha. Well, let's have some more tea."

"Yes, sir."

After President Song left the office, Gun-Ho checked the current price of Dyeon Korea stock with his smartphone. Dyeon Korea's current market stock price was 22,000 won.

"22,000 won… I still have a long way to go."

Gun-Ho turned off his smartphone, and he headed out to GH Machines in Baekseok Agricultural and Industrial Complex.

When Gun-Ho arrived at GH Machines, the workers there were busily building up machines for Dyeon Korea. Jong-Suk Park was involved in building a machine only partially these days. After he reached the point where he had to use the twin screws, he let other engineers finish the remaining process. The usual noises that could be heard in a healthy and vigorously working factory were resounding in GH Machines' production site. Gun-Ho could hear the noises of a die casting machine, welding, hammering, etc.

"President Park. How are you?"

"Bro! Good to see you!"

"It looks good that all of the workers here are wearing a uniform that says GH Machines. The worksite looks very organized."

"We finished building two sets of machines for Dyeon Korea and sent them already. Haha."

"Did you receive the pay for those two machines?"

"I was supposed to receive the pay after a month according to the usual practice in the industry. But, I talked to Director Kim about my situation. I told him that GH Machines is a newly established company, and we don't have cash in the reserve just yet, so if he could send us the pay now, it would be enormously helpful. We are close enough to call each other brothers after all. Well, that worked. He sent me the pay."