The increase in holdings of 220 million shares of Extreme Kr was approved by the shareholders' meeting Geely Automobile's intelligent electrification reform accelerated

Source of this article: Times Finance Author: Li Guyue

On the evening of December 17, Geely Automobile (0175.HK) announced that the extraordinary general meeting of shareholders formally passed the proposal to acquire the shares of Extreme Kr by vote. Among them, Geely Automobile will acquire 220 million ordinary shares of Extreme Kr from Geely Holding Group, accounting for about 10.34% of the current issued share capital of Extreme Kr.

After the completion of the transaction, Geely Automobile's stake in Extreme Kr Automobile increased to about 58.31%. According to the share purchase agreement, the transaction consideration was 5.602 billion yuan, which was repaid in part cash and shares. After the completion of the acquisition and the allocation and issuance of consideration shares, Li Shufu, chairman of Geely Holding Group, will increase his stake in Geely Automobile by 2%.

In the industry's view, behind Geely Automobile's increase in the shares of Extreme Kr Automobile, it reflects the helmsman Li Shufu's overall control of Geely Holdings and the strategic planning for the development of different companies under it, as well as the strong support and open attitude towards the transformation of intelligent electrification.

Image source: Geely Auto

"Geely Holdings in the stage of rapid growth in the valuation of Extreme Kr, the transfer of Extreme Kr shares to Geely Automobile, reflecting the importance and support for the latter, after the completion of the transaction, will further increase Geely Automobile's high-quality assets in electric intelligence, science and technology ecology, etc., and it is more conducive to Extreme Kr to explore external financing resources in the future to achieve the sustainable development of business operations." On December 17, a senior industry insider told Times Finance.

Behind Li Shufu's increase in Geely Automobile, it also reflects his confidence in the overall operation of the latter, the strong support of sales trends and long-term development, and further releases a positive signal to investors.

According to Oriental Wealth Choice data, in the past 2 months, more than 20 brokerage institutions have bought and overweighted Geely Automobile. Anxin International Securities Research Report said that it is believed that Geely Automobile, as the leader of its own brand, launched "Raytheon Power" and "Intelligent Geely 2025" to point out the direction for its development in the next few years, accelerate the transformation to an intelligent travel company, and enter a new stage of development.

Increase in volume and profit Increase in holdings to release investment confidence

Behind the continuous increase in holdings by major shareholders, in addition to its long-term support for Geely Automobile, it also reflects Li Shufu's optimism about the fundamentals and future development potential of Geely Automobile's profitability and sales performance.

This year, Geely Automobile accelerated the pace of transformation and upgrading, with a diversified profit structure and steady operation. According to Geely Automobile's interim report, in the first half of this year, Geely Automobile's revenue reached 45 billion yuan, an increase of 22% year-on-year; profit attributable to shareholders after deducting share payment was 3.02 billion yuan, an increase of 31% year-on-year, profit attributable to shareholders was 2.38 billion yuan, and net profit was 2.41 billion yuan.

For the business highlights of Geely Automobile, Dai Qing, senior vice president and CFO of Geely Automobile Group, said at the performance conference at that time that one was to fully open the era of Geely 4.0 structured car manufacturing, and the product competitiveness was further improved; the second was to launch the Chinese star series of models, which were widely welcomed by the market; the third was the efficient and high-quality research and development system, so that the technology output became a new highlight of the company's profitability, accounting for 29% of profits; the fourth was to establish a krypton joint venture company and enter the high-end smart pure electricity market; fifth, the proportion of sales of new energy models increased as well as strong growth in export sales.

In fact, since the beginning of this year, under the multiple pressures of the industry such as chip shortage and rising raw materials, Geely Automobile has bucked the trend. According to the latest sales results, in November this year, Geely Automobile (including Lynk & Co) sold 135869 units, an increase of about 22% month-on-month; new energy and electrification models sold 16,161 units in November, an increase of about 137% year-on-year; and from January to November this year, its total sales volume was 1169264 units.

Comparing the industry horizontally, Geely's automobile sales performance significantly outperformed the market. According to data from the Association, wholesale sales of manufacturers in November were 2.15 million units, up 8.9% month-on-month and 5.1% year-on-year.

In the industry's view, in the short term, Geely CMA, SEA and other architecture platform new models are expected to open a new round of product cycle, volume and price rise, performance repair flexibility is high; in the medium and long term, electric intelligent transformation to give the company new development opportunities, on the one hand, can give full play to the advantages of technical hard core, on the other hand, it is expected to achieve curve overtaking in brand power, product definition and innovative marketing, etc., and accelerate the market share, pointing to international first-line car companies.

According to the Changjiang Securities Research Report, Geely Automobile, as an independent leader, will take off again in the 4.0 era. In the short and medium term, Geely ushered in the 4.0 era modular product cycle, and sales and performance are expected to grow rapidly. In the long run, Geely's intelligent electric layout is leading, and it has cooperated with Volvo to maintain strong competitiveness in the industry transformation.

Seek extreme krypton openness and synergy to promote the revaluation of Geely's value

In fact, behind the continuous strengthening of fundamentals, Geely Automobile is also fully promoting the intelligent electrification reform.

Geely Automobile's plan to increase its stake in Extreme Kr Technology demonstrates its confidence in the development prospects of Extreme Kr Technology. If krypton technology is consolidated, it will significantly increase the company's earnings in the next three years. Ping An Securities previously said in a research report.

Judging from the latest market performance, in November this year, the first complete monthly delivery of the Extreme Kr 001 reached 2012 vehicles, with an average amount of 335,000 yuan, continuing to lead the high-end development of the brand.

Guosen Securities said that as the pioneer of the SEA Haohan architecture, the first model of extreme krypton 001 has been a warm market response since its listing, and it is expected to launch 6 new models based on the SEA architecture in the next 3 years, helping Geely gain a firm foothold in the field of high-end intelligent pure electricity, and sales are expected to reach 7,000 units in 2021.

Of course, the development between Extreme Kr and Geely Automobile is complementary. In order to accelerate the seizure of the intelligent electric vehicle track, Geely Automobile has carried out in-depth layout and vertical integration of the whole industrial chain of new energy intelligent networked vehicles from vehicle manufacturing, infrastructure development, to three electricity, chips, operating systems, automatic driving, etc., forming a hard-core technical strength of intelligent software and hardware full-stack self-research, laying a solid foundation for Extreme Kr to stand out.

Looking ahead, Geely will also explore more external financing opportunities for Extreme Kr to help it develop better. In less than a year since its establishment, the development momentum of Extreme Kr has been rapid and the resources have been rapidly assembled. At the end of August this year, Extreme Krypton Automobile announced that it had received a $500 million Pre-A round of financing, using a co-creation and co-investment method, with a post-investment valuation of $9 billion. What is even more shocking is the star investment institution and heavyweight enterprise standing behind the extreme krypton automobile, it is reported that this investment is led by Intel Capital Strategy, and has a number of investors including trillions of "Ning Wang" Ningde Times, Station B, Boyu Investment and Hongshang Industrial Holding Group Co., Ltd.

According to a research report released by Citi a few days ago, it is expected that the shareholders of Extreme Kr will be further enriched, including from the world's leading advanced driving assistance systems companies and technology companies.

According to the China Merchants Securities Research Report, attention is paid to the increase in valuation of extreme krypton. "Extreme Kr sales are expected to reach a new level and promote continuous improvement of fundamentals. The continuous and rapid increase of krypton is the catalyst for the company's value revaluation, and the company's valuation system is expected to transition from a pure fuel vehicle company to a leading intelligent electric vehicle manufacturer. ”