Produced 丨 Tiger Sniff Car Group
The author 丨 thoughtful
Image source 丨 Enterprise courtesy of the picture
China's auto industry, plagued by supply chains, has finally ushered in some different news.
On March 10, 2022, NIO completed its listing on the Hong Kong Stock Exchange through the introduction of listing, with an opening price of HK$160. After the opening of the market, Weilai shares rose as much as nearly 6%, and as of the time of the Tiger Sniff press release, the stock price had fallen back to HK$160.4.
For Weilai, this secondary issuance through the introduction of listing has been one year later than planned, which is actually a "repair" move after the "dead sheep". Despite having more than 40 billion cash flows, the car company's strategic layout is so large that there is still a huge demand for financing. However, according to the requirements of the Hong Kong Stock Exchange, NIO cannot carry out financing methods such as stock issuance and bond issuance within half a year after listing.
However, for the car company with the most comprehensive industrial layout and the highest product and brand positioning among the new forces of Chinese car manufacturing, it can return to the Chinese capital market, and its own significance is greater than everything.
A year late, the vicissitudes of mulberry fields
For Weilai, choosing today's time point in Hong Kong, China, to "return to China" by introducing the listing method is really a dead sheep to make up for it. Because this company submitted a listing application as early as March 2021 a year ago, xiaopeng that went public earlier than July 2021, and the ideal of listing a month later.
The reason is that NIO once again confused the regulators in Hong Kong because of the identity confusion caused by its "user enterprises" to investors during the US stock listing roadshow. And this time the "wrong thing" is the user trust.
According to the announcement released by NIO in 2019, Li Bin, founder, chairman and CEO of NIO, established the NIO User Trust with 50 million shares under his name. In a public filing to introduce the listing in Hong Kong, NIO said that its user trust principal company is NIO Users Limited, which has 1.1% of the issued Class A common shares and voting rights, and will own 22.2% of the Class C common shares and voting rights. Li Bin is the founder, regulator, investment adviser and sole actual beneficiary of the company.
Although the establishment of the user trust has been more than a year since NIO first submitted the Hong Kong listing materials, it is obviously a pity that Li Bin and WEI's CFO Feng Wei still did not explain their doubts to the Hong Kong financial regulator in a timely manner. And this lost year directly allowed Weilai to miss the 2021 financing window that is relatively good for Hong Kong stocks.
In 2021, Xiaopeng and Ideal raised HK$14 billion and HK$11.8 billion respectively through dual listings in Hong Kong. In contrast, NIO can only use the method of introducing listing to carry out "secondary listing", and cannot use additional issuance and bond issuance to raise funds within half a year.
In response, WEILAI said that its company had cash reserves of about 47 billion yuan at the end of the third quarter of 2021, and completed a financing of 2 billion US dollars in the fourth quarter of the same year, and currently has sufficient cash reserves, and there is no urgent financing need in the short term.
Yu Tianyu, managing director of Kailian Capital and president of the research institute, said bluntly to Tiger Sniff: "No company does not want to raise funds when the second launch is issued." He said that the Chinese stock leader that was previously listed in the United States was originally a good fundraising opportunity through the secondary listing in Hong Kong, and JD.com, which was issued a second time in Hong Kong a year ago, is a good example. However, due to the recent continuous fluctuations in the US capital market in Chinese stocks, pricing problems are very large, resulting in a relatively mature company like Weilai with a much lower valuation, which will directly affect its fundraising scale. "For Weilai, it is obviously better to wait until the situation is stable before raising funds."
After all, from June last year to now, Hong Kong's Hang Seng Index has fallen by more than 30%, and the lowest price-to-earnings ratio of leading Internet companies such as JD.com has been close to 20 times, which is the cheapest period for hong Kong listed companies since the global financial crisis in 2008. If you raise funds now, I am afraid that no one in the whole Weilai will be happy.
In the final analysis, the reason why NIO has to list in Hong Kong despite all difficulties lies in the recent geopolitical factors. Leaving aside for the moment the recent "sanctions bucket" imposed on Russia by the Western world based on the conflict in Ukraine, the real case that happened last month to Tucson Future, an autonomous driving technology company that focuses on the research and development of truck freight, has been worthy of the vigilance of Chinese autonomous driving companies and even intelligent car companies.
The preferred language of the official website of this freight autonomous driving company originating in China has become "English" Image source: Tucson Future official website
In April 2021, Tucson Future raised $1.35 billion in its initial public offering, and during the same period, the U.S. federal government launched an investigation into Tucson Future, focusing on its relationship with China. According to reports, Sina is the future majority shareholder of Tucson, and its executives Cao Guowei and Bonnie Yi Zhang are members of the latter's board of directors.
Finally, in February of this year, Tucson Future reached an agreement with the U.S. federal government that Tucson future would transfer some technical oversight of the self-driving truck business to the U.S. government. The company will adopt a technology control program to restrict access to self-driving data from its China division, which mainly includes information such as source code and algorithms for its self-driving truck business. Two sina-related board members within the company will leave after their terms expire this year. Sun Dream, a subsidiary of Sina, has agreed not to appoint new directors. At the same time, Sina agreed not to increase its stake in Tucson Future, but would not be forced to divest itself of its current shares. According to Tiger Sniff, Tucson's future business in China is now close to suspension, and the company's development focus will be fully shifted to the US market.
"It can be seen that the 'geopolitical' factor has never affected the smooth operation of China's auto industry as much as it does today." Compared with traditional cars, the information and data security problems involved in smart cars have aroused the attention of governments." Zhang Junyi, managing partner of Oliver Wilver Consulting, told Tiger Sniff. "WEILAI needs one more 'back road' outside the US market. Listing in two markets at the same time is conducive to stabilizing NIO's stock price and reducing the impact caused by Sino-US trade frictions. ”
Li Bin arrived at his loyal Chinese capital market
Compared with 2019, Weilai has become a leader in the field of domestic high-end intelligent electric vehicles in Chinese mainland, and has been recognized by the market and investors. Less than 3 years ago, Weilai was still on the verge of bankruptcy because it could not get financing, and finally obtained 7 billion yuan of investment funds from the Hefei Municipal Government before gradually getting out of the predicament. Li Bin recalled the bitter experience of "looking for money" in 2019 in the CCTV "Meet the Big Coffee" column, but he also said bluntly that he was an investor and did not dare to invest money in Weilai at that time.
Today, Hong Kong-listed NIO not only reduces the impact of geopolitical factors, but also provides investors with a clearer perspective on the Chinese company. After all, Hong Kong is closer to Chinese mainland, and in less than three hours' flights, it will give way to the capital giants of the Pearl of the Orient to NIO's research and development center in Shanghai. In addition, as long as the latter crosses the Shenzhen River, it can drive an electric car from Weilai.
More importantly, in more than half a year, Chinese mainland funds can flow to NIO's listed entities in Hong Kong. According to the Shanghai-Shenzhen-Hong Kong Stock Connect inclusion rules, companies like NIO that have "same share different rights" (-W) can be included in the list of Hong Kong Stock Connect stocks if the listing time is 6 months + 20 trading days and meets the conditions for inclusion of other Hang Seng Composite Indexes and Hong Kong Stock Connect. On February 9 and 18, Xiaopeng Motors was included in the list of Shenzhen-Hong Kong Stock Connect and Shanghai-Hong Kong Stock Connect. It is expected that this month, Ideal Auto will also be included in the list of Shanghai-Shenzhen-Hong Kong Stock Connect and become an investment target for domestic individual and institutional traders.
In fact, some investment institutions told Tiger Sniff that they are increasing the proportion of new energy vehicles held in their funds. It is believed that with the fundraising activities launched by Weilai in the Hong Kong stock market after half a year, this new car-making force will continue to receive a large amount of money. After all, although Wei said that he was not short of money, there were many places to spend money. According to the data, NIO will enter 25 countries and regions by 2025 and provide services for local users. That is to say, in addition to selling cars, the power exchange and service system will also land in these countries. At the same time, WEILAI will also build 4,000 substations around the world by 2025, with more than 700 new stations built every year, plus the total amount of supporting batteries will be close to astronomical.
According to the leaked gambling clause between Hefei State-owned Assets and WEILAI, it can be seen that the latter will achieve revenue of 120 billion yuan in 2024 and list 6-8 models; the cumulative total revenue of 420 billion yuan and the total tax revenue of 7.8 billion yuan from 2020 to 2025 will be listed on the Science and Technology Innovation Board by 2025. Otherwise, the strategic investor has the right to demand that NIO repurchase shares at an annual interest rate of 8.5%.
"To quote Li Bin, Weilai is still just a little boy who has just walked out of the ICU ward, and is less than 8 years old." Zhang Junyi finally told Tiger Sniff, "His every move has made history in China's auto industry. "Therefore, obtaining financial support from the motherland through Hong Kong is definitely a great thing for Weilai."
Finally, Li Bin arrived at his loyal Chinese capital market.