Duan Yongping: Five Steps to Help Everyone Identify Money Printing Machine Companies!!

Duan Yongping views business models as the primary filter for investment.
In his eyes, a good business model's core is the ability to generate abundant free cash flow over the long term and to be difficult for competitors to copy—like a "money printing machine" business.
Below are the five main criteria he uses for judgment:
1. Long-term stable cash flow and high profitability
A good business model can "consistently generate substantial profits over the long term and maintain stable net cash flow," often described as "profits and net cash flow are always robust." The core idea is "buying a company is buying the discounted future cash flows," ensuring continuous cash flow in the future.
2. Strong moat (sustainable differentiation)
A moat is "a long-lasting differentiation," the irreplaceability that makes "users unable to do without you." Duan Yongping straightforwardly states: "Business models without differentiated products are basically not good business models," and "profits come from lack of competition." Differentiation is fundamental to avoiding price wars.
3. Low capital expenditure, high return on investment (light assets)
A good business "does not require continuous massive capital investment to maintain high returns (ROE/ROIC)," preferring "light asset, high return" businesses. Conversely, businesses that require ongoing large capital expenditures to operate are considered "hard businesses."
4. Strong resilience to change (not easily disrupted)
A good model "is less affected by changes," capable of resisting risks such as technological substitution, policy shocks, sudden shifts in competitive landscape, and consumer preference migration. The metaphor "long slope, thick snow" is used—"long slope" refers to a long industry lifecycle, and "thick snow" indicates high profits and high retention rates.
5. Pricing power
The fundamental principle of a business model is the ability to "raise prices without losing customers." Pricing power comes from irreplaceable value, not monopoly status. Apple’s ability to continuously raise prices and Moutai’s stable price increases are manifestations of pricing power.
Characteristics of "bad business models" from Duan Yongping’s perspective (for reverse reference):
1. Severe product homogenization, falling into price wars: such as airlines, solar components, etc., "products lack differentiation, ultimately leading to price wars."
2. Low entry barriers, intense competition: easily attracting new entrants, continuously diluting industry profits.
3. High capital expenditure, low returns: requiring ongoing large investments to sustain operations, with cash flow consumed by capital spending.
4. Lack of pricing power, relying on subsidies or low-price competition: using money-burning subsidies to gain market share, with long-term distributable net cash flow being negative or very thin.
5. Weak risk resistance, easily disrupted by technology: such as some traditional retail and non-ecosystem hardware manufacturers, vulnerable to e-commerce and new technologies.
Can everyone use these five positive and five negative standards to evaluate whether the company they are buying has a good business model?