Written by / Han Ling
Edited / Mao Shiyang
Chery listing regeneration variables
Chery Holdings, which has been running for 18 years on the road to listing, may once again rub shoulders with A-shares.
"Now that Lixun Precision has come in, the equity change is so large, it is impossible for Chery to be listed again in a short period of time." On March 3, a person familiar with the matter told caijing weekly.
"Finance and Economics" Weekly learned that Chery has proposed an accelerated listing plan in 2020, with the goal of landing on the capital market in 2022. To this end, Chery has rapidly increased its sales efforts in the past two years, hoping to cross the million sales mark in 2021 and pave the way for the performance of the listing. In 2021, Chery sold 962,000 vehicles, an increase of 31.7% year-on-year, although it did not exceed one million, but this is chery's best sales performance since its inception. The outside world once believed that this gave Chery a chance to make a breakthrough in listing.
However, a month ago, Luxshare Precision spent 10 billion yuan to acquire the equity of the "Chery" company, which caused a sensation in the industry, and the outside world speculated that the intention of "Fruit Chain Brother" Luxun Precision to enter the car industry also made the news of Chery's listing surface again, and it became more confusing.
According to the announcement issued by Lixun Precision, the company's controlling shareholder, Lixun Co., Ltd., acquired 19.88% of the shares, 7.87% of the shares of Chery and 6.24% of the shares of Chery New Energy from Qingdao Wudaokou New Energy Automobile Industry Fund Enterprise (hereinafter referred to as Qingdao Wudaokou), the largest shareholder of Chery Holdings, for 10.054 billion yuan. After the completion of the transaction, Qingdao Wudaokou will no longer be the largest shareholder of Chery Holdings, and Wuhu Construction Investment Co., Ltd., wholly owned by the State-owned Assets Supervision and Administration Commission of Wuhu City, Anhui Province, will become the largest shareholder of Chery Holdings again.
This makes the rumors of Qingdao Wudaokou's shareholding in Chery shengsheng change have an accurate answer. "Finance and Economics" Weekly learned that Qingdao Wudaokou is the first capital party to enter Chery after launching mixed reform in 2018.
"Chery 'abandoned' the Qingdao Wudaokou Fund at this time and turned to the next home (Lixun Precision), it should be when cooperating with Qingdao Wudaokou, the listing promotion encountered obstacles, otherwise it would have been listed long ago." The above-mentioned insider told the "Finance World" weekly.
The news of the change in listing began to circulate within Chery.
"Some of the new executives are rushing to the market." On March 5, a source close to Chery told Caijing Tianxia Weekly that between 2019 and 2020, Chery absorbed a large number of executives from the automotive industry, and some senior industry people missed out on new cars, and these companies no longer have their places, hoping to get a piece of Chery's listing.
In fact, Chery, which sprinted to the market, is considered to be the last piece of cake in the automotive industry. In 2020, Chery Automobile's mixed reform was completed, and Chairman Yin Tongyue said to the outside world, "In the past, Chery has been immersed in technological innovation, and there is not much practical experience in capital market operation, and it is also the only (traditional) vehicle company in China that has not been listed." ”
However, as to whether the listing process is advancing normally, Chery has different opinions circulating within it.
The above-mentioned sources close to Chery told Caijing Tianxia Weekly that there is a possibility that Chery no longer promotes the overall listing of "Chery Holdings", but splits its Chery Automobile, Chery New Energy and other sectors to go public, of which Chery New Energy is the most likely. However, this segment will sell 98,600 vehicles in 2021, and most of them rely on Chery QQ Ants priced at 30,000 to 50,000 yuan.
In fact, at present, the valuation of domestic A-shares and H-shares for vehicle companies is low. According to the stock price at the close of trading on March 7, 2022, Geely Dynamics' price-to-earnings ratio was 18 times, while SAIC Motor's was less than 9 times. In order to win more attention in the capital market, it is reported that SAIC motor is considering splitting its intelligent and electric vehicle sectors and listing them separately. In this context, Chery's promotion of the overall listing at this time may not be the best solution.
However, for the internal executives anxiously waiting for Chery to go public, it is not known whether they can wait for the latest changes to land.
"It may also be just a statement that stabilizes the hearts and minds of the military." The sources said that if a new listing plan is to be launched, it may once again become a distant future.
In early March, Yin Tongyue told the media when attending the "two sessions" in Beijing that Wang Laichun, chairman of Luxun Precision, "purchased Chery's shares based on internal strategic needs." This is Yin Tongyue's most recent public appearance, and the listing target is not mentioned.
In the eyes of the outside world, for Chery, Qingdao Wudaokou is a financial investor, while Lixun Precision is a strategic investor, looking forward to business synergy, and listing is not necessarily the main goal.
Why does Qingdao Wudaokou "fade out"?
In the eyes of some industry insiders, Chery's failure to go public so far is a very "absurd" thing. In 2004, when Chery first mentioned the listing plan, the number of domestic listed companies was 1377, and at the end of February 2022, it increased to more than 4700, but Chery, a well-known company in the field of automobile manufacturing, still failed to land.
During this period, domestic independent brand car companies such as Changan, Great Wall, Geely and BYD have already landed on the capital market, and the market value has also achieved substantial growth, surpassing the former independent first-line "big brother" Chery. From the leader of its own brands in the past to the current catch-up, Chery cannot help but feel frustrated.
In 2019, in order to get chery as an excellent target, the Qingdao municipal government highlighted the siege among a number of competitors, and then Qingdao Wudaokou Fund won chery's capital increase and share expansion project with an amount of more than 19.6 billion yuan, and finally held 51% of chery Holdings and 35.58% of chery Automobile's equity, replacing the Wuhu State-owned Assets Supervision and Administration Commission and becoming the actual controlling person of Chery Holdings.
At that time, it seemed that the entry of Qingdao Wudaokou Fund was actually to accelerate Chery's listing, which was almost the closest Chery to listing in 18 years. However, the cooperation between the two sides has not been as smooth as expected.
"The '20 billion yuan of funds' of the Qingdao Wudaokou Fund at that time may not have been in place, or not all of them were in place." Cao He, president of Allianz Investment Management (Beijing) Co., Ltd., told Caijing Tianxia Weekly, "If all the funds have been given to Chery's account, the listing will be carried out along the water." ”
In fact, Qingdao Wudaokou's withdrawal from the Chery system was already beginning to appear in August last year. Public information shows that in August 2021, Zhou Jianmin, the actual controller behind Qingdao Wudaokou, withdrew from Chery Automobile, but was still among the senior managers of Chery Holdings.
In addition, in December last year, Chery also added Zang Yijie, Jiang Yi, Yu Zhijun and other senior management personnel, all of whom are senior executives of Qingdao Urban Construction Investment (Group) Co., Ltd., which is 100% owned by the State-owned Assets Supervision and Administration Commission of the Qingdao Municipal Government. Among them, Zang Yijie was the deputy director of Qingdao State-owned Assets Supervision and Administration Commission, and is currently the general manager and director of Qingdao Urban Construction Investment (Group) Co., Ltd.
In the eyes of the outside world, this shows that the Qingdao Municipal Government does not want to completely withdraw from Chery. After Lixun entered the bureau, Qingdao Wudaokou still holds 26.89% of the shares of Chery Holdings, in addition, the cooperation project between Qingdao and Chery is also being carried out smoothly. The latest information shows that the four workshops of Chery Automobile's Qingdao base have completed the main construction, and process equipment will be introduced in April this year, which is Chery's fifth production base in China.
In fact, after Qingdao Wudaokou paid about 10 billion yuan, its follow-up funds had problems. The media quoted sources as reporting that Qingdao Wudaokou was unable to solve the problem of more than 10 billion yuan of funds in the follow-up, and once sought a financing restructuring of 6 billion yuan. Public information shows that Qingdao Wudaokou pledged the equity of Chery Holdings and Chery Automobile, a total of 4 times, which also confirms the shortage of funds in Qingdao Wudaokou to a certain extent.
Each other, Zhou Jianmin, chairman of Qingdao Wudaokou Fund, who is also the vice chairman of Chery Holdings and the vice chairman of Chery Automobile, claimed that "there is no refinancing in Qingdao Wudaokou, and the mixed reform of Chery Automobile and Chery Holdings is going smoothly". Yin Tongyue himself also revealed to the media that the funds for participating in Chery's mixed reform have been 100% in place, and the listing of related sectors of enterprises after the end of the stock reform is being promoted in an orderly manner. Although both sides released positive signals, the two sides did not respond positively to the follow-up 10 billion yuan funding problem.
However, Yin Tongyue's statement that "the listing issue is advancing in an orderly manner" will be affected by more uncertainties after Lixun Precision comes in, so that Chery's listing will encounter more uncertainties.
Unlike the previous Qingdao Wudaokou Capital, the cooperation between Luxun Precision and Chery is at the industrial level, and to a certain extent, it will change some of Chery's production or business model. Cao He believes that this may lead to the postponement of Chery's listing process.
Chery has been running on the mayor for 18 years, and the management has repeatedly said that it "does not consider"
"Chery should have been listed a long time ago", which is not only the voice of Chery employees, but also the outside world's feelings about Chery's listing.
As early as 2004, when the Anhui Provincial Government carried out a joint-stock system transformation of Chery, it revealed its intention to promote Chery's listing. But at that time, Chery's management was conservative, believing that it should wait until Chery's products and profitability improved before considering going public.
Unexpectedly, Chery waited for nearly 18 years.
After missing out on 2004, Chery's road to listing was full of twists and turns. At the end of 2006, Lu Jianhui, then deputy general manager of Chery Automobile Company, said that Chery was considering raising funds through an IPO to expand production.
That year, Chery's annual production capacity was close to 700,000 vehicles, but it was still trying to expand production capacity, ready to increase the annual production capacity to 1 million vehicles, at this time Chery is expanding at a high speed, according to Chery's planning, the capital demand reached tens of billions of yuan, listing naturally became Chery's preferred financing method.
Yin Tongyue also publicly admitted that he will start the listing financing plan as soon as possible. In 2008, it was reported that the legal documents for Chery's listing had been completed and would be submitted to the CSRC at a later date. In the same year, the global financial crisis broke out, Chery Automobile's operating profit was only -194 million yuan, and the listing plan was once again stranded.
In 2009, both the stock market and the domestic auto market picked up, and Chery restarted its IPO again. At that time, Chery sold 20% of its equity to five investment companies, including Huarong Asset Management Co., Ltd., for 2.9 billion yuan, raising 2.9 billion yuan. So far, Chery's equity has been further diversified. The industry speculates that from the background of investment companies, financing is only one aspect, and more importantly, it is to prepare chery for A-share listing.
Even Chery executives themselves admitted that Chery is actively planning to go public and prepare for the overall listing. However, in 2011, Chery's senior management changed its opinion on the listing. Yin Tongyue said in an interview that due to the existence of some related party transactions and other issues such as Chery Automobile, it does not have the conditions for listing, and he also believes that "the stock market is not particularly healthy", so he does not consider listing for the time being.
Chery's listing once again lost its timetable, and the answers of both Yin Tongyue and other executives were vague, and did not directly explain the impact of so-called internal relations and related party transactions on Chery's listing.
In 2009, Chery's annual sales had exceeded 500,000 units, ranking sixth among passenger car companies and first among independent brands, and its contribution to the economic growth of Wuhu City reached 15%. It can be said that automobile manufacturing has become a pillar industry in Wuhu, based on Chery, Wuhu has introduced more than 1,000 automotive industry chain enterprises.
Later, as the domestic automobile market competition became more and more fierce, independent brands such as Great Wall and Geely ushered in rapid development after listing, and Chery also put the listing on the agenda again at this time. As a result, mixed reform is imminent. In 2018, Chery decided to introduce external investors with a cash injection of not less than 20 billion yuan, and invested in Chery Automobile in the form of capital increase and share expansion. According to the plan, Chery will sell 51% of the state-owned controlling stake.
Chery said that the capital increase and share expansion is mainly to cope with the increasingly fierce industry competition, promote the overall listing, and activate the institutional mechanism. The new capital party Qingdao Wudaokou Fund entered the market in this context.
In fact, although Qingdao Wudaokou is Chery's largest shareholder, because Chery's equity system implements "different rights for the same shares", the Wuhu SaOUS Has a substantial "one-vote veto power", which is also widely interpreted by the outside world as "preventing the loss of state-owned capital".
Nowadays, Luxshare Precision has entered the market, Qingdao Wudaokou has "withdrawn", and Chery has not only pressed the pause button on the IPO process, but also its follow-up business development direction has become confusing.
Is the "new business" with Luxshare Precision easy to do?
Chery has not been able to achieve a listing, in addition to being affected by Chery's equity and management decisions, it is also related to its own operating status.
Statistics show that Chery Automobile, the most important segment under Chery Holdings, achieved revenue of 34.762 billion yuan in 2020, an increase of 8.13% over 2019; but the net profit was only 7.3718 million yuan, down 98.12% from 392 million yuan in 2019. The Great Wall and Geely, which are also independent car companies, perform better than Chery in terms of annual sales and net profit. Great Wall sold more than 1.11 million vehicles in 2020, with a net profit of 5.362 billion yuan, while Geely sold 1.32 million vehicles that year and had a net profit of 5.53 billion yuan.
At the beginning of March, Yin Tongyue explained for the first time the strategic significance of introducing Luxshare Precision, saying that "now is the stage of high integration of the automobile and IT industries, and the cooperation between the two sides is not only the integration of technology and ecology, but also the integration of management", at the same time, Yin Tongyue said that the two sides have no plans to launch new car brands.
However, for the specific direction of cooperation, at present, Luxshare Precision and Chery have not announced more details of cooperation. On the evening of February 21, 10 days after announcing its entry into the car manufacturing field, Luxshare Precision once again announced a refinancing plan with a scale of 13.5 billion yuan to lay out the automotive sector, of which investment in Chery is expected to be the main use of funds.
"Luxun Precision wants to refinance through the capital market and fill in the funds to Chery, which in the long run may be preparing for Apple's auto foundry." Cao He said, but he also further expressed his concerns, "Whether Lixun Precision can smoothly enter Chery and be the next home of Qingdao Wudaokou Fund, it is still difficult to determine, if Luxun Precision does not go in, then the problems facing Chery are more serious." ”
In this cooperation agreement, Luxshare Precision will jointly form a joint venture with Chery to develop and manufacture new energy vehicles, while Chery will occupy the leading position of the joint venture company.
According to the "Investor Relations Activity Record Table" released by Luxun Precision, in the next 12-18 months, the joint venture projects will be put into production one after another. The main customer target is expected to be foreign traditional brand car companies and domestic "Smart EV" brands, that is, OEM for new cars.
This also makes the industry speculate whether Chery will become the next "Foxconn". However, cooperation may be mainly to solve the real problem of overcapacity. According to Caijing magazine, since last year, Chery has been looking for a partner in the field of technology manufacturing to help its software development and solve its overcapacity problem, and Luxun Precision and Foxconn are among them.
At present, Chery's planned passenger car production capacity has exceeded 2 million units, while in 2020, Chery New Energy's sales volume will be only 43,000 units, and the sales volume of the entire Chery Holding Group (including joint venture brands) will be 730,000 units. Last year, Chery's annual sales reached 960,000 vehicles, but according to this calculation, Chery's 2 million production capacity is still somewhat excessive.
A person familiar with the matter revealed that as early as 2010, Foxconn, which already had the idea of building a car, had contacted Chery, but in the end, due to the disagreement between the two sides in concept, this cooperation did not land. Now that new energy vehicles are on the cusp, Chery has chosen Lixun Precision as a partner, and it is not difficult to understand the field of vehicle foundry.
For Chery, automotive OEM can not only alleviate its own overcapacity problem, but also add additional benefits to Chery. Jianghuai because of the new car manufacturing force Weilai OEM ushered in a new profit growth point, only in 2018, 2019 two years, Weilai paid Jianghuai Automobile manufacturing costs and loss compensation of 604 million yuan, for Jianghuai, which is hovering on the edge of net profit turning positive, it is tantamount to sending charcoal in the snow.
In fact, Chery's asset-liability ratio is also high. In 2020, Chery Automobile's total liabilities reached 62.049 billion yuan, and the debt ratio reached 70.17%, which has exceeded the industry's recognized 70% "safety line". Yin Tongyue admitted that Chery's asset-liability ratio has been very high since the first day, even reaching 75%. But he feels that this high debt ratio is normal, "Wuhu military enterprises, shipyards, Wuhu robots are all incubated by Chery, which requires huge capital investment." ”
But is the road of OEM easy to go?
As more and more companies pour into the field of car manufacturing, the domestic new energy market is already a red sea.
The foundry of new energy vehicles is mainly represented by "Wei Xiaoli", among which Weilai chooses Jianghuai Automobile OEM and Xiaopeng chooses Haima Automobile OEM. However, the seemingly solid OEM relationship has gradually disintegrated as car companies build their own factories. The cooperation between Xiaopeng and Haima Automobile was terminated late last year, and Xiaopeng's factories in Guangzhou and Wuhan are already under construction.
In addition, there are already veteran players like Magna and Foxconn in the oem field, and Chery OEM who enters the game late will face more challenges. Magna reached a cooperation with BAIC BJEV in 2020 to launch the BE21 electric hardware platform and join the new energy foundry field. Foxconn, on the other hand, announced last year that it would provide oem services for global companies after establishing a joint venture with Geely.
With the increase in competitors, Chery is still full of challenges to solve the problem of overcapacity through OEM, and it may be more difficult to achieve listing in the short term.