Losses after multiple rounds of financing The new forces of second-tier car manufacturing have accelerated their "catch-up" capital markets

The second echelon of new car-making forces began to accelerate the "catch-up examination" of the capital market.

A few days ago, it was reported that the new car-making force Nezha Automobile, the main body of Hezhong Automobile, officially launched the Hong Kong stock listing plan, planning to raise 1 billion US dollars, sponsored by CITIC, CICC, Morgan Stanley and UBS. In response, United Motors responded, "I have not heard of it, and the news will be released as soon as possible." ”

In addition, Zero Run Auto has also been exposed to new progress in overseas listing plans, and the information disclosed by the CSRC shows that Zhejiang Zero Run Technology Co., Ltd. submitted to the International Department of the China Securities Regulatory Commission for the "Approval of Overseas Initial Public Offering of Shares (Including Ordinary Shares, Preferred Shares and Other Stocks and Derivative Forms of Stocks)" was accepted. The information does not disclose the specific capital market chosen by zero-run cars, but the rumors of its listing in Hong Kong have been circulating in the industry for a long time.

Behind this is that many companies have gone through multiple rounds of financing but are still in a state of loss. According to the information revealed in the previous counseling work report of WM Motors, from 2017 to the end of September 2020, the cumulative loss of WM Motors was 11.4 billion yuan. Car manufacturing is a heavy asset industry, which requires a lot of capital investment and a long return cycle; for the new forces of car manufacturing, the listed blood transfusion has been on the string.

Bai Yiyang, manager of the research department of CMB International Securities Co., Ltd., said, "In the next one or two years, the competition in the new energy vehicle market will become more intense as the investment of traditional car giants increases; second-tier brands need to use IPO financing to continue to invest and further enhance brand awareness." ”

The new forces of second-tier car manufacturing have set off a new round of IPO boom

Although the information disclosed by the CSRC confirms the rumors of zero-running cars going overseas, it does not disclose the specific capital market selected by zero-running cars, and zero-running cars said that everything is subject to the announcement disclosure. In fact, as early as November 2020, Wu Baojun, co-founder and president of Zero Run Auto, had revealed that Zero Run Auto intended to list on the Science and Technology Innovation Board, saying that it would strengthen the docking with the capital market; in July 2021, it was revealed that it did not rule out other listing plans, and a month later Zero Run Auto announced the completion of the Pre-IPO round of 4.5 billion yuan financing, so far, Zero Run Auto has completed a total of 7 rounds of financing, and the disclosed financing amount has exceeded 12 billion yuan.

In addition to zero-running cars, Nezha Automobile has also been reported to be listed in Hong Kong a few days ago, but this is not the first time that it has heard the news of its IPO. As early as July 2020, United Motors had said that it planned to IPO on the Science and Technology Innovation Board in 2021; since then, there have been many news related to listing, and in January this year, there was news that Nezha Automobile hoped to raise about 500 million US dollars before the IPO, and the valuation after the new round of financing was 7 billion US dollars, and the earliest IPO in the second half of this year, Nezha Automobile's response has no detailed information to disclose.

In addition, The main body of Gaohe Automobile, Huaren Express, has also recently reported the news that it will IPO. Huaren Express (a brand of Gaohe Automobile) is working with UBS and Morgan Stanley to arrange a potential listing, potentially raising $300 million to $500 million. The company originally planned to list in the United States, but has now changed the listing location to Hong Kong, and discussions are still ongoing. In this regard, The Chinese Express said that it was not aware of it.

After the folding of the science and technology innovation board, WM Motors also reported that it was impacting Hong Kong stocks. In October last year, WM Motor announced the completion of a us$300 million D1 round of financing led by PCCW and Shun Tak Group, of which PCCW was founded by Li Zekai, the second son of Li Ka-shing, and Shun Tak Group was founded by Stanley Ho; in December last year, WM Motor and Hong Kong Electric Energy Company reached a cooperation; in January this year, Li Century appointed the company's senior management announcement, the board of directors appointed Shen Hui as a non-executive director, co-chairman of the board of directors, chairman of the nomination committee and a member of the board's investment committee, holding 28.51% of the shares The industry speculates that WM Motors may be listed on the Hong Kong stock market through Li Century.

In fact, from the current perspective of the entire new car-making forces, the first camp of the new car-making forces, Weilai Automobile, has achieved A U.S. stock listing, and it has been rumored that it plans to seek a second listing in Singapore in 2022, and Xiaopeng Motors and Ideal Automobile are realizing the dual listing of U.S. stocks and Hong Kong stocks; while the second camp is still in the state of impact IPO.

Why have Hong Kong stocks become the preferred option for new forces?

From Xiaopeng Automobile and Ideal Automobile to the Hong Kong Stock Exchange as a secondary listing position, to Huaren Express, Nezha Automobile, WM Motor, and Zero Run Automobile, there is news that they will go to Hong Kong for IPO. Bai Yiyang said, "Listing in Hong Kong can meet the access conditions of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, and facilitate A-share investors to use the shares of Hong Kong stock investment companies to open up channels for mainland capital docking." ”

In the view of Ren Wanfu, an analyst in the automotive industry, going public in Hong Kong is the best way to list the new car-making forces. Cao He, president of Allianz Auto Investment Management (Beijing) Company, said frankly, "There are very few opportunities left for unlisted companies in the other securities markets. At the same time, Hong Kong stocks have also left a channel for mainland investors to go south. ”

Previously, the new car-making forces were interested in using the science and technology innovation board as the first place for listing, of which WM Automobile has completed the listing counseling of the science and technology innovation board, but in the end there is no following, and it was exposed or will find a way for Hong Kong stocks. "The regulator still holds certain reservations about the 'scientific and technological innovation' attribute of the new forces, and at present, some of the new forces enterprises use design and research and development outsourcing, foundry production, etc., and the overall value of self-research is relatively low." Bai Yiyang analyzed.

In addition, the A-share policy has tightened supervision and deepened, and last year the CSRC and the Shanghai Stock Exchange successively disclosed, notified and dealt with a number of illegal enterprises and sponsors, resulting in a sharp withdrawal of enterprises listed on the Science and Technology Innovation Board, resulting in a rare wave of withdrawal on the Science and Technology Innovation Board; in July last year, the Central Commission for Discipline Inspection issued a document saying that it would conduct special supervision and inspection of the operation of public power in the whole business chain of securities issuance and registration of the CSRC to purify the political ecology and capital market ecology. In the industry's view, the tightening of A-share requirements means that it will be more difficult for car companies to list; Bai Yiyang said that Relatively speaking, Hong Kong stocks are more flexible and less difficult than A-shares.

Compared with the A-share market, the listing process of Hong Kong stocks is more convenient, and from the perspective of the listing cycle, the time of domestic listing is often longer than that of Hong Kong; from the perspective of success rate, Hong Kong is a filing system, and the success rate is higher than that of mainland listing; in addition, Hong Kong stocks are closer to the global capital market.

"The new car-making forces choose Hong Kong stocks for listing, mainly because the investor structure of the Hong Kong stock market is relatively good, and investors are more familiar with Chinese companies; in addition, there are more financial instruments in the Hong Kong capital market, which can help investors obtain market returns through various channels." Bai Yiyang said, "Listing in Hong Kong can meet the access conditions of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, and facilitate A-share investors to invest in the company's shares with Hong Kong stocks, thus opening up channels for mainland capital docking." ”

Behind the rush to go public: after multiple rounds of financing, it is still in deficit and blood transfusions are urgently needed

In recent years, the new car-making forces have achieved different degrees of growth in terms of sales and revenue, but they have not yet reached the critical point of profitability, and they still need "blood transfusion"; taking the first camp of the new car-making forces as an example, in the first three quarters of 2021, the net losses of Weilai Automobile, Xiaopeng Automobile and Ideal Automobile were 835 million yuan, respectively. 21.5 million yuan and 1.590 billion yuan are still in a state of loss; and according to the information revealed by WM Motors' previous counseling work report, from 2017 to the end of September 2020, WM Motors' cumulative losses were 11.4 billion yuan.

In Bai Yiyang's view, the IPO of the new car-making forces is mainly financing; Ren Wanfu added, "After the company has gained a firm foothold, the follow-up development still needs a lot of financial support, and in the case of institutional investment in automobiles narrowing, listing has become a new channel for financing." Daniel Zhang, co-founder and CEO of United Automobile (the main body of Nezha Automobile Operation), once admitted, "The listing is only a node or a milestone in the 'Long March', but it is far from the end." For us, it is just to increase the channel of listing financing, which may be more convenient for financing. ”

Car manufacturing is a heavy asset industry, which requires a lot of capital investment, and will also consume a lot of resources, bringing the company a long-term financial burden, and a long return cycle. Zhang Xiang, an analyst in the automotive industry, believes that "after experiencing multiple rounds of financing such as ABC, it is difficult for new car-making forces to continue to obtain financing from investment companies, and they need to broaden the financing scope and financing amount on a larger platform, so there is a phenomenon of successively seeking listing." In addition, for enterprises, the successful listing of IPO is also an endorsement, and the successful listing shows that its financial structure and corporate governance are relatively healthy, and it also provides a better platform for its subsequent development. ”

But going public doesn't mean sitting back and relaxing. Bai Yiyang said, "Successfully listed new power companies still need to face the dynamic competitive landscape and the market's test of profitability; at present, the car-making track is still very crowded, and it is difficult to guarantee that a company will be able to succeed." The competition in the automotive market has gradually evolved from mechanical fuel system, to three-electric system, and then to the intelligent ecosystem, and only by grasping the next generation of technology trends can we avoid becoming the next Zotye and Haima. ”

"For the new car-making forces, the current success is only temporary, and continuous innovation is still needed to maintain the competitiveness of the enterprise." Ren Wanfu said, "The second-tier forces should not only focus on Wei Xiaoli, but also establish their own unique competitive advantages and constantly break through their own bottlenecks in order to gain a firm foothold in the future competition." At present, the competition pattern of the new forces of car manufacturing is not stable, the head enterprises are tending to be stable, and the competition of waist enterprises is becoming more and more fierce. ”

According to the forecast of the China Automobile Association, the sales volume of the mainland new energy vehicle market this year may reach 5 million vehicles, an increase of 45% year-on-year, which will not be too difficult for the new car-making forces, but in the final analysis, the competition in the competition is the core technology and product competitiveness, as well as the financing ability of enterprises. In this "scuffle" and listing boom, sales volume and product competitiveness are still fundamental.

Beijing News shell financial reporter Wang Linlin Editor Yue Caizhou Proofreader Zhao Lin