Wen | perseverance
Source| Bowang Finance
Recently, according to the Hong Kong Stock Exchange, NIO Automobile (NIO.N) announced that it has passed the hearing of the Hong Kong Stock Exchange and issued relevant listing documents, and the Class A common stock is scheduled to start trading on March 10, 2022, with the stock code "9866", and the co-sponsors are Morgan Stanley, Credit Suisse and CICC.
Source: NIO Prospectus.
According to the prospectus, NIO will be listed on the main board of the Hong Kong Stock Exchange in the form of an introduction, and will not involve the issuance of new shares and fund raising.
If NIO Is officially listed on the Hong Kong Stock Exchange, "Wei Xiaoli" will meet on the Hong Kong Stock Exchange again, and both will successfully achieve listing in the United States and Hong Kong.
But what exactly is an introduction to listing? What is the difference between this and Xiaopeng Motors and Ideal Automobile's previous secondary listings in Hong Kong? What is the impact of WEILAI Auto on its US stock market after its listing?
01 "Introduction to listing" or as a helpless move
The author here first do a bit of science popularization, the so-called introduction to listing, means that the company does not need to substantially take out the stock to sell to the public before listing, but directly apply for listing, just apply to obtain the qualification to list its securities on the market, and itself does not involve the raising of immediate funds, so there is no need to make any arrangements in the sale of securities. So in essence, the difference between introducing a listing and issuing new shares is that the former will not issue new shares, nor will it involve financing, naturally it will not raise new funds, and the shareholders' shares will not be diluted.
The explanation given by NIO is, "The purpose of this listing and landing in Hong Kong stocks is to provide investors with alternative trading locations, alleviate geopolitical risks, expand the investor base, and not dilute the interests of existing shareholders while the listing purpose can still be achieved." The listing of the two places will provide investors with more trading locations and more flexible trading hours, with the daily trading hours expanded from 6.5 hours to 12 hours. At the same time, the listing of the two places will help introduce more investors and be beneficial to the long-term development of the company. ”
In order to strengthen the above views, WEILAI Automobile also deliberately emphasized the cash reserve of 60 billion yuan. As of September 30, 2021, NIO had a total cash reserve of approximately RMB47 billion (US$7.3 billion), and in November, it completed the issuance of approximately RMB12.7 billion (US$2 billion) of ADDITIONAL US-stockED ATMs.
But is this really like the explanation given by WEILAI Automobile? I don't think so.
You know, for the company, the main purpose of the listing is to raise funds, on the contrary, the introduction of listing, can not bring new funds, but also will lead to media reports on this type of listing is not very positive, then the company received low attention from the market, the publicity effect will be relatively weak.
It is worth mentioning that Weilai Automobile is the first listed new energy vehicle company in China, and it is also the earliest company listed on the US stock market, but it is doubtful why Weilai Automobile, which is so "early and greedy", is only slower than Xiaopeng Automobile and Ideal Automobile in the process of returning to Hong Kong stocks? What is the reason behind this?
Of course, this is not the first time that WEILAI Auto has returned to Hong Kong stocks, and the reason for the stranding of the previous IPO may be the user trust shareholding issue involved in the founder, chairman and CEO Li Bin.
According to Sina Finance, NIO had previously submitted an application for a secondary listing of Hong Kong stocks in March 2021, but received inquiries from the Hong Kong Stock Exchange about its shareholding structure, including the user trust established in 2019. Industry insiders believe that "whether it is the Stock Exchange or the SGX, NIO's secondary listing has adopted the 'introduction form', which shows that NIO's user trust is problematic." The other said, "First in the form of 'introduction to listing', that is, the original part of the shares are listed for the second time, no financing is carried out, the part of the shares that are in question is not involved, and the commitment is resolved within a certain period of time." ”
According to a relevant filing document, Li Bin had previously transferred 50 million shares (including 189253 Class A shares and 49810747 Class C shares) to a NIO User Trust fund in 2019 to establish the NIO User Trust, giving some users "the opportunity to discuss and suggest how to use the economic benefits brought by these stocks", while Li Bin still retained the right to vote. The trust fund benefits from four directions, namely public welfare, environmental protection, operation and maintenance, and projects that the community deems necessary.
According to the 2020 financial report of the WEILAI User Trust Fund, the total budget of 6 million yuan and the total expenditure of 4.66 million yuan in 2020 are mainly used for the distribution of 2.08 million yuan of epidemic prevention packages for car owners nationwide, 1 million yuan of public welfare donations and community matching donations (including tax), and the balance is 1.34 million yuan.
Industry insiders analyzed that "the user trust holds shares, whether it sells, when to sell, how much to sell, and what is its impact on Li Bin's voting rights, these issues the Hong Kong Stock Exchange believes must be sorted out." It is precisely because Weilai Automobile has not substantively solved the above-mentioned trust shareholding problem, coupled with a vague explanation, so it can only take the option of introducing listing, which is a second choice.
02 Listing in Hong Kong has had little impact on the US stock market
Many readers may have keenly observed that since November 2021, the US stock market of NIO has continued to be bearish, and the stock price has fallen from the highest price of $44.27 per share on November 8, 2021 to the closing price of $21.77 per share on March 2, 2022, with the stock price slashing and the market value "evaporating" by $37.6 billion.
Source: Futu Cattle.
From the current point of view, Weilai Automobile's listing in Hong Kong has little impact on the US stock market, and the stock price rose on the day of the announcement on February 28, up 9.07% from the previous trading day, but the downward trend has remained in the following two trading days.
As Deutsche Bank analyst Edison Yu noted in the research note, "NIO management is looking to avoid raising capital against the backdrop of a recent decline in the stock price. In fact, THE FUNDAMENTALS OF WEILAI ARE MORE WORTHYING ATTENTION THAN THE LISTING ISSUE. ”
According to the data released by the National Passenger Car Market Information Joint Association, in the january 2022 sales ranking of new cars, Xiaopeng Automobile has rushed into the top ten with sales of 12922 units and ideal cars with sales volume of 12268 units, while Weilai Automobile has only achieved sales of 9652 vehicles, falling out of the top ten.
On March 1, Weilai Automobile released the news that the delivery volume in February was 6131 vehicles, an increase of 9.9% year-on-year, although it achieved year-on-year growth, but it fell sharply from the growth rate of 33.6% in January, and the "left behind" state continued. It is precisely because of the downturn in performance that it is impossible to gain the favor of investors, which is reflected in the capital market and the stock price has been in a downward trend for a long time.
Still, several Wall Street analysts who follow NIO gave the stock a buy rating with an average price target of $56.17, about 168 percent above its current price.
Barclays analyst Jiong Shao pointed out in a research report on February 8 that "China is not only the world's largest auto market, but its auto industry has also accounted for more than one-third of the world's profits." For the ev industry, China "has one of the most supportive and well-thought-out policy agendas." Against this backdrop, Jiong Shao gave NIO an "overweight" rating with a price target of $38.
CICC pointed out in a research report published on February 16 that "in the context of battery price increases and subsidies, it is currently a trend to see brand price increases to consumers to transmit cost pressure, and new forces and independent strong brands have abundant orders in hand, but the market has begun to worry about the high demand, and the new orders and sales in March are more critical." "In this context, AS an independent brand in the mainland, NIO maintains a leading edge in the penetration rate of new energy vehicles.
03 Frequent cross-border activities
The industry recognizes that the new energy automobile industry is in the "blue ocean", and the mobile phone industry has long entered the "red ocean".
But what is surprising is that Weilai Automobile, as the "first echelon" of the new car-making force, is going to run to make mobile phones.
With the information that "Yin Shuijun, the former president of Meitu Mobile Phone, has joined Nio and is responsible for the mobile phone business", the fact that Weilai Auto laid out mobile phones directly sat on the facts. There is no doubt that the mobile phone laid out by Weilai Automobile must be the mainstream smart phone of the moment.
According to data from the China Automobile Association, in December 2021, the production and sales of new energy vehicles in mainland China reached 518,000 units and 531,000 units, up 120.0% and 113.9% year-on-year, respectively, and 6.7% and 11.1% month-on-month, respectively; in 2021, production and sales reached 3.545 million units and 3.521 million units, up 159.5% and 157.5% year-on-year, respectively, and are expected to maintain high growth in 2022. There is no doubt that the new energy automobile industry will continue to develop rapidly in the future and is still in a "blue ocean".
In contrast, the mobile phone market, according to IDC data, between 2016 and 2021, China's smartphone shipments showed a downward trend year by year, from 467 million units to 300 million units, of which only contributed 48.5% of the annual sales in the second half of 2021, and the market performance was less than expected. In addition, driven by many factors such as the popularization of vaccines, the normalization of the epidemic, the continuous recovery of the terminal consumer market, the stabilization of the supply of driver chips, the accelerated penetration of 5G, and the improvement of brand product value and competitiveness, according to research institute CINNO Research, the sales of smart phones in the Chinese market are expected to reach about 340 million units in 2022, an increase of 8% year-on-year. It can be seen through the data that under the influence of various factors such as the continuous shortage of upstream core components supply, the repeated epidemic situation in many parts of the country, and the decline in the purchasing power of the consumer market, the growth rate of the mobile phone market is only single digits, and the market competition is more intense, undoubtedly in a "red sea".
In fact, NIO is not the first car brand to announce the entry of mobile phones. In September 2021, Hubei Xingji Times Technology Co., Ltd., founded by Li Shufu, chairman of Geely Holding Group, signed a strategic cooperation agreement with Wuhan Economic and Technological Development Zone and officially announced its entry into the field of mobile phones.
Li Shufu also publicly expressed his views on mobile phones: "Mobile phones are rapid iterations of portable mobile terminals, and are application carriers for electronic product market verification and software innovation, which can not only allow users to share innovative achievements as soon as possible, but also transfer a safe and reliable part of the results to the application of cars, so as to realize the close interaction between car machines and mobile phone software technology." In the future, cross-border to build a user ecological chain, according to the law to build a corporate moat has become a major trend, mobile phones can link the Internet of Vehicles, satellite Internet, to create a rich consumption scenario, to strengthen the ecosystem, to provide users with a more convenient, more intelligent, Internet of Everything multi-screen interactive life experience. ”
In addition, in 2022, when the meta-universe continues to be hot, under the charm of "touching the edge and rising", Weilai Automobile launched a charge, but it was not "tolerated".
According to Tianyan, the status of a number of "NIO Yuan Universe" trademarks that NIO applied for registration in November 2021 was changed to a notice of rejection, and the international classification included means of transport, financial property management, scientific instruments, etc.
Before that, there were well-known brands Gree and Lenovo mobile phones, but the results were not optimistic, and now Weilai Automobile's entry into the mobile phone industry really has a future? The answer is still needed from the market, we will wait and see.