WEILAI has been listed in two consecutive places, in order to cash out to the original investors? Or a betting agreement like a fish in the throat

This article is the 479th original work of deep dive atom

In the second half of 2021, when Xiaomi, Baidu, Skyworth, 360 and other companies announced cross-border entry into the car-making industry, the new forces of car-making entered the key moment of the second half, weilai showed its defeat at an inopportune time. Sales faded out of the first camp, revenue turned positive far away, product accidents occurred frequently, and there were obvious cracks in the moat operated by Weilai.

As the head player of the new car-making force, Weilai Automobile is facing a crisis that is no less than the near bankruptcy in 2019. The sluggish sales volume reflects its urgent supply chain crisis, as well as the difficulty of not yet emerging from production capacity.

On the one hand, there is the loss of the sales market, and on the other hand, the pressure of the capital market. Can Weilai, which is in a dilemma, still achieve the grand goal of 120 billion yuan in revenue in 2024, and the time bomb placed in Weilai's "VAM agreement" has infinitely increased the possibility of detonation.

01

The helplessness of the IPO

Once, NIO has created a series of impressive achievements: the earliest to achieve 50,000 mass production vehicles; the earliest cumulative delivery of 100,000 vehicles; the first Chinese new energy vehicle brand listed in the United States. After experiencing the highlights of the past two years, due to the continuous pressure of multiple pressures such as the epidemic and supply chain fluctuations, Weilai's growth momentum began to return to rationality, and it began to be snubbed in the capital market.

According to the data, in May 2021, the value of the US stock market reached 55.447 billion US dollars, but as of the close of trading on May 6, EST, THE US stocks of NIO automobile plummeted to 14.92 US dollars, with a market value of 24.923 billion US dollars, which has been reduced by more than 30 billion US dollars compared with before, with a maximum decline of about 75%.

△ NIO stock

Of course, the U.S. stock market plunged not only because the earnings data was "not good-looking." Since last year, Chinese stocks in the United States have been affected by some well-known influences, and NIO only relies on the US capital market to obtain financing and faces certain potential risks. On May 4, NIO was included in the "pre-delisting" list by the US SEC and faced the risk of being censored and delisted in the Us. Although it is not yet known whether the US stock market will eventually be delisted, the choice of "multi-site listing" can indeed share the risk of delisting.

On May 6, the third day of the list, NIO announced its intention to list for the second time on the Singapore Exchange. According to the announcement disclosed by NIO, it has obtained a conditional listing qualification letter for the secondary listing of the main board from the SGX on May 5 and will issue the listing documents this month.

△ Listing qualification

Two months ago, on March 10, NIO completed its secondary listing on the Hong Kong Stock Exchange. Similar to the way it was listed on the Hong Kong Stock Exchange, NIO will still list on the main board of the SGX in the form of introducing listing, which means that NIO has been listed in Hong Kong and Singapore in the past two months, and it will not be able to expand financing in the short term.

Is WEILAI's move just to give the original investors the opportunity to cash out? NIO's explanation is to provide investors with alternative trading locations to mitigate geopolitical risks. But Weilai's original plan was not like this. In March 2021, it was reported that WEILAI submitted a secondary listing application in Hong Kong "through secret means". However, due to issues such as the income, ownership and voting rights of the user trust, it is impossible to explain clearly, and the Hong Kong Stock Exchange has suspended the plan of Weilai's secondary listing.

However, in July 2021, Xiaopeng Motors, which had submitted its final form, was listed in Hong Kong with a financing of HK$14 billion, followed by a successful listing of Ideal Motors in Hong Kong in August, raising HK$11.8 billion. Watching the old rivals successively exert their strength, Weilai had to return to Hong Kong stocks in the way of "skipping fundraising and parachuting into Hong Kong stocks".

Weilai's move not only posted a listing fee of 58.3 million yuan for the Hong Kong Stock Exchange, but also had no choice but to introduce the way of listing in Singapore. Some securities analysts said that if the dual listing of Hong Kong stocks was approved at that time, it would not be so complicated. Xiaopeng Automobile and Ideal Automobile are both double first-time listings, not afraid of US stock delisting, while Weilai is different, just changing the trading location, the essence is still to buy and sell US stocks.

In other words, it is not that Weilai is not short of money, but because the Hong Kong stock IPO is not smooth, the funds that were originally intended to be raised through Hong Kong stocks have been diverted through the additional issuance of US stocks.

02

Nio's future is short of money

According to NIO's 2021 financial report, NIO's total revenue for the whole year was RMB36,136.4 million, an increase of 122.3% year-on-year; as of December 31, 2021, NIO held cash and cash equivalents, restricted currency funds and short-term investments totaling RMB55.4 billion. From the perspective of book cash flow, Weilai does not need to rush to raise funds through IPO channels, but it is far from reaching the point of "rich and willful".

Car manufacturing requires heavy investment, in the new force car companies, on the ability to spend money, Wei said that the second no one dares to call the first, this more than 50 billion cash for Weilai is really enough?

Compared with Xiaopeng and Ideal, NIO will have to wait at least 4 months before it can raise funds in Hong Kong. Moreover, in February this year, Xiaopeng Automobile became the first new car-making force to enter the Hong Kong Stock Connect, "harvesting" the Hong Kong market and southbound funds one step ahead of Weilai.

In fact, NIO has been in a state of operating loss since its inception. The net loss was 23.328 billion, 11.413 billion, 5.611 billion and 10.572 billion yuan respectively, and the net loss in less than 4 years exceeded 50 billion yuan. Although the amount of loss is gradually decreasing, it is still difficult to achieve profitability in the short term.

△ Niolai Automobile

From the perspective of sales, Weilai has fallen out of the top three of the "new forces", and the first-mover advantage in the new energy automobile industry is gradually being lost. The decline in sales volume not only brought about a direct reduction in revenue, but also affected the investment confidence of the capital market.

From a product point of view, unlike Xiaopeng and Ideal, Weilai does not yet have a real sense of "explosive" products. This year is a key year for NIO, according to the plan, NIO technology platform NT2's sedan products ET7 and ET5 and the first SUV product ES7, will be delivered one after another. Among them, whether ET7 can smoothly open the market is the key to the development of Weilai. After the role of the attacker and defender is changed, Weilai is bound to need more funds to ensure operations, research and development, supply chain, etc.

In addition to putting into production of new models, NIO also needs a lot of money to invest in replacing power stations. According to the plan, from 2022, NIO will add 600 new substations per year in the Chinese market, and by the end of 2025, the global total number of NIO substations will exceed 4,000. The cost of a substation is as high as 2 million or so. Simply calculated, the cost of building a single station, Weilai needs to invest 1.2 billion yuan a year, and this number continues to grow.

According to Li Bin, WEILAI wants to achieve full profitability in 2024, but in the context of continuous expansion and loss, WEILAI must reserve enough funds to prepare for large-scale close-knit combat.

03

The VAM alert hanging in 2025

Previously, many analysts believed that WEIO would raise funds in Singapore to continue to replenish funds. But in the end, NIO still adopted the method of introducing listing in Singapore to achieve the fastest listing.

No company does not want to raise funds when it is launched in the second issue, which is the consensus of the capital community. Compared with the 2021 Xiaopeng and Ideal Hong Kong stock listings to raise 14 billion and 11.8 billion Hong Kong dollars respectively, Weilai's operation seems to be a bit of a compromise.

Therefore, the focus of the problem has to fall on the 2020 VAM agreement with the Hefei government. In April 2020, NIO and Hefei State-owned Assets reached a strategic cooperation, Hefei State-owned Assets invested 7 billion yuan in NIO China, NIO invested 4.26 billion yuan, and the two held 24.1% and 75.9% of the shares of NIO China respectively.

△NIO Hefei plant

In a deleted official Microblog of the Hefei Municipal Government, Hefei asked WEILAI to list on the Star Market by 2025. In addition, the Hefei government's requirements include:

NIO China filed an IPO within 48 months of receiving the investment and completed the listing within 60 months;

Revenue in 2020 is 14.8 billion yuan (3 models listed); revenue in 2024 is 120 billion yuan (6-8 models listed); total revenue from 2020 to 2025 is 420 billion yuan, with a total tax of 7.8 billion yuan.

If the above conditions are not met, NIO will need to repurchase 7 billion Yuanhe government investment at an annual interest rate of 8.5% and bear the risk of default. This is the tight curse on Wei Lai's head.

Revenue pressure will gradually ease with the release of new models and the improvement of the supply chain. It is reported that the order of WEILAI ET5 has exceeded 100,000, which is almost the annual sales of all models of Weilai in 2021. Guosen Securities expects NIO to deliver 143,000 vehicles in 2022 and 270,000 vehicles in 2023. According to the average price of 368,000 bicycles, in 2023, nearly 100 billion yuan of revenue can be achieved by selling cars alone, and the difficulty of completing the requirements of the Hefei government is not as high as imagined.

The most difficult part of this VAM agreement is the listing on the Science and Technology Innovation Board. At present, the science and technology innovation board is not "friendly" to car companies, before that, Geely, Weima, Nezha, zero run, etc. have terminated the listing process of the science and technology innovation board, and car companies have successively hit a wall in the science and technology innovation board. Insufficient technology content, low proportion of R&D investment and continuous losses are common problems of new power car companies. If the conditions of the science and technology innovation board remain unchanged, Weilai, which aims to achieve full profitability in 2024, is almost impossible to complete the listing in less than a year.

In the absence of precedents for the listing of car companies, WEIlai may be more likely to first transition from US stocks to Hong Kong stocks, then from Hong Kong stocks to Hong Kong Stock Connect, and finally to the science and technology innovation board.

There is a saying in long-distance running competitions: running early does not mean running fast, and it does not mean that you can run far. Li Bin, who is about to ring the bell in three places to list, how to break the game in the future, whether he can ring the science and technology innovation board in 2025, this gamble is still continuing.