Nio's announcement yesterday showed that its Class A common stock will be listed on the main board of the Singapore Exchange Securities Exchange (i.e. SGX) through an introduction, with a par value of US$0.00025 per share.
Nio has received a conditional listing qualification letter from SGX and the relevant introductory documents are expected to be published this month.
After listing, SGX shares will be fully convertible with American Depositary Shares listed on the NYSE.
As of December 31, 2021, NIO had 1.415 billion Class A common shares, 128 million Class B common shares and 149 million Class C common shares outstanding, and all Class B common shares were converted into Class A common shares on March 10 this year.
According to the previously published Governance Charter:
Class A common stock holders shall have 1 vote per share on all matters submitted to NIO for voting at the General Meeting of Shareholders.
Class B common stock holders shall have 4 votes per share on all matters submitted to NIO's general meeting of shareholders.
Class C ordinary shareholders shall have 8 votes per share on all matters submitted to NIO's general meeting for voting.
After the previous listing on the Hong Kong Stock Exchange, WEILAI's internal shareholding structure has not changed: founder, chairman and CEO Li Bin actually holds 10.6% of the shares and has 39% voting rights; Tencent holds 9.8% of the shares, with 17.4% voting rights; and British investment institution Baillie Gifford & Co holds 6.5% of the shares and has 3.5% voting rights.
Delisting risk?
As early as February this year, when it submitted a prospectus to the Hong Kong Stock Exchange, NIO said that it had applied to the main board of the SGX for a second listing in the form of an introduction. After more than two months, it was officially announced that it had obtained a conditional listing qualification letter on the main board of the SGX.
Similar to the listing on the Hong Kong Stock Exchange, the introduction and listing method adopted this time does not involve the issuance of new shares and the raising of funds.
According to industry analysts, this kind of listing behavior that only lists and does not raise funds is aimed at providing alternative trading locations for corporate investors, alleviating geopolitical risks, and expanding investor groups. At the same time, while achieving the purpose of listing, it will not dilute the interests of existing shareholders.
The day before receiving the SGX listing qualification letter, NIO was added to the "Pre-Delisting" list by the SEC .SEC. Chinese stocks such as Ideal and Xiaopeng, which are listed on the US stock market, are also among the "pre-delisted".
The reason why it became a "pre-delisted" company is because after the SEC passed the final amendment to the Foreign Accountability Act, it required foreign listed companies to provide audit papers to the U.S. Public Corporation Accounting Oversight Board (PCAOB), including specific audit plans, summaries of material matters, memorandums of issues, analysis forms, correspondence on material matters, etc.
However, mainland legislation clearly stipulates that overseas listed companies are not allowed to provide audit papers to overseas institutions without authorization.
In the full version of the 2021 annual report released at the end of April, NIO also hinted at the risks associated with the Foreign Company Accountability Act.
Specifically, NIO auditors, as auditors of public trading companies in the United States and accounting firms registered with PCAOB, are subject to U.S. law. Therefore, the PCAOB conducts periodic reviews to assess compliance with applicable professional standards. However, because the auditors are located in China, a jurisdiction where the PCAOB cannot conduct an investigation without the approval of the Chinese authorities, they are not subject to PCAOB review.
If the PCAOB is unable to inspect, or fully investigate, auditors based in China, NIO shares will be banned from trading in the U.S. in 2024; if proposed legal amendments are enacted, nio U.S. stocks could be banned from trading by 2023. This means that Weilai faces the threat of delisting in the US stock market.
NIO also mentioned that if their shares and American Depositary Shares are prohibited from trading in the United States, it is impossible to determine whether they can be listed on non-U.S. exchanges.
However, for the "coincidence" between the pre-delisting list and the Singapore listing, Weilai responded that there is "no causal relationship".
Cash replenishment
On the other hand, after NIO lands on the SGX, it will further broaden the company's overseas financing channels, especially in the Singapore market, where technology stocks are relatively scarce.
According to NIO's 2021 annual report, the net cash income from financing activities last year was 18.1 billion yuan, mainly from the proceeds from the issuance of common shares (12.6776 billion yuan), all the amounts from the issuance of convertible acceptance bonds (9.5608 billion yuan), third-party borrowings (6.112 billion yuan) and the exercise of stock options (144.6 million yuan).
As of December 31, 2021, NIO's cash and cash equivalents, restricted cash and short-term investments were RMB55.4 billion. Net cash proceeds from financing represent 32.67% of its cash reserves.
In the short term, Weilai does not need to worry about cash problems, which is why it declared that "only listing, no financing, will not have too much impact on its own performance" when it was listed on the Hong Kong Stock Exchange, but the competition in the smart electric vehicle track is far from really starting, and listing to make up for cash is still Weilai's key task in the future.
This year, WEILAI will focus on launching the second generation of products, including the ET7 that has been delivered, the ET5 that has been delivered in September and the ES7 that has not yet appeared, and the market verification cycle of the second-generation products will be further extended under the supply chain pressure and production pressure brought about by the repeated epidemics. The key to the next turnaround is also the performance of the new product. The thick cash "blood bar" is undoubtedly the backing for many uncertain damages in the future.
In addition, technology research and development, going to sea, changing electricity, and even entering the mobile phone industry need more adequate financial support.
It is worth noting that as of press time, NIO shares plunged 15.17% to US$15.38 per share, the largest decline since March 2020, while HONG Kong stocks fell 11.47% to HK$122 per share.
"The revolution has not yet succeeded, and comrades still need to work hard."