2018.11.24 Zhao Na Views:
CoStone Capital started its engagement in buyouts in 2004. After nearly 15 years of practice, it has gradually fashioned its own principles: only invest in familiar fields, tie itself closely to the company’s management team, get highly involved in corporate operations, and obtain more benefits beyond efficiency improvement through industry collaboration.
CoStone Capital started its engagement in buyouts in 2004. After nearly 15 years of practice, it has gradually fashioned its own principles: only invest in familiar fields, tie itself closely to the company’s management team, get highly involved in corporate operations, and obtain more benefits beyond efficiency improvement through industry collaboration.
In 2015, a trillion-level market opportunity appeared in front of CoStone Capital: Columbia Broadcasting System ("CBS") intended to sell its equity in Xcar. At that time, vertical media in the automotive industry had successively landed on the US capital market, and what attracted CoStone was the huge market prospects in the automotive service sector.
CoStone Capital has had its own methods of improving operational efficiency from management perspective. Through in-depth participation in the external acquisitions of companies such as Huachangda (300278), EFORT (688165), and CONBA (600572), and the actual operation of automotive projects of Pharmplus and Excar, CoStone Capital has a deeper understanding of the industry, and more insights into corporate governance and teamwork.
In fact, CoStone Capital dispatched an entire team to support the company's management team in reforming the company's strategy, management structure, business operations, and corporate culture. Now Excar has the “interest-based social platform” and the “auto life-circle service platform” rolled out and is exploring with its partners such as China Grand Auto(600297) more possibilities in a hybrid of online and offline.
Furthermore, Xcar has been focusing on the big trend of consumer structure changes in the automotive aftermarket, using its advantages in community and organizing various online and offline car club events to enhance user stickiness in a way to expand car owners on the one hand and increase the user base in post-90s groups and 4-6 tier cities on the other hand.
With the development of new energy and artificial intelligence, automobiles have been redefined. CoStone Capital has begun to increase investment in areas such as autonomous driving, vehicle financing, secondhand trading, and car maintenance.
Tao Tao said, “The core value created through a buyout is to improve corporate management, accelerate endogenous growth, yield synergies through strategic cooperation or industrial M&As, and ultimately maximize benefits through the capital market.” CoStone benchmarks itself against 3G Capital, a Brazilian-American investment firm. This company started out with the acquisition of a Brazilian beer company and has now become the shareholder of the world's largest brewer.
The exploration on the project has allowed CoStone’s managers to acquire the core skills as entrepreneurs, and the accumulation of experience has become the solid foundation for the team to participate in more buyouts. Only with this foundation can CoStone go further and further on the path of buyout.
Above are the excerpts from 21st Century Business Herald. Access to the source text: http://epaper.21jingji.com/html/2018-11/26/content_97122.htm
Rewritten by Lu Ying; Edited by Li Yunzhen, Du Zhixin
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026