Less than two months after its listing in Hong Kong, why did WEILAI knock on the door of the SGX again?

Less than two months after its listing in Hong Kong, why did WEILAI knock on the door of the SGX again?

NIO recently announced that it intends to list on the Singapore Exchange for the second time. According to the announcement disclosed by NIO, it has obtained a conditional listing qualification letter for the secondary listing on the Main Board from the Singapore Stock Exchange (SGX) and will issue the listing documents this month.

On September 12, 2018, NIO landed on the New York Stock Exchange, becoming the first electric vehicle company in China to go public in the United States. On March 10, 2022, NIO was listed on the main board of the Hong Kong Stock Exchange for the second time.

At the time of its listing in Hong Kong, NIO disclosed in its prospectus the possibility of seeking a listing in Singapore. The receipt of the conditional listing qualification letter from the SGX means that WEILAI is one step closer to listing on the SGX and may become the first new car-making enterprise listed in the United States, Hong Kong and Singapore.

As for why it chose to list on the Singapore Stock Exchange, Weilai told Shell Financial Reporter that Singapore is an important international financial center, and listing here can expand its investor base, especially the increasing number of Asian institutional investors.

However, the road in front of Weilai is not smooth at present. Sales have been questioned by "falling behind", the user "moat" that has not been profitable for 8 years, and is proud of has become a double-edged sword...

As the head player of the new car-making force, how will Weilai tell a "new story".

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After the successful listing on the Singapore Stock Exchange, the shares will be exchanged with the New York Stock Exchange, or become the first "three-place listed" new car-making enterprise

Similar to the previous listing on the Hong Kong Stock Exchange, NIO Class A ordinary shares will also be listed on the main board of the SGX in the form of an introductory listing, without new share issuance and fund raising, with a par value of US$0.00025 per share. At the same time, NIO's American Depositary Shares will continue to be listed and traded on the New York Stock Exchange.

Weilai said that the listing introduction document is expected to be released before the listing on the main board of the SGX and later this month. After the completion of the second listing, the shares listed on the main board of the SGX will be fully exchangeable with the American Depositary Shares listed on the New York Stock Exchange.

As for why it chose to list on the Singapore Stock Exchange, Weilai told Shell Financial Reporter that Singapore is an important international financial center, and listing here can expand its investor base, especially the increasing number of Asian institutional investors.

Citi previously released a research report saying that NIO's simultaneous listing in the United States, Hong Kong and Singapore can broaden NIO's financing platform, establish deeper ties with Asian investors, and build brand equity.

Zhang Xiang, an automotive industry analyst and dean of the New Energy Automobile Technology Research Institute of Jiangxi New Energy Technology Vocational College, also said in an interview with Shell Financial Reporter that listing in Singapore will broaden WEILAI's overseas financing channels; especially after being included in the "pre-delisting list", the new listing channel will have the potential risk of Chong Weilai only relying on the US capital market to obtain financing.

Just one day before NIO received the conditional listing qualification letter for the secondary listing on the main board of the SGX, 88 Chinese-listed companies, including NIO and Xiaopeng Motors, were included in the "pre-delisting list" by the US Securities and Exchange Commission ("SEC").

Although NIO responded on May 5, NIO has always complied with relevant laws and regulations and has been committed to actively exploring possible solutions to protect the interests of investors.

However, as of the close of trading on May 5, EST, NIO's U.S. stock price was $15.38, down more than 15% from the previous session, with a total market value of $25.692 billion, compared with the high of $55 billion in May 2021.

In the Hong Kong stock market, as of the close of trading on May 6, NIO's stock price fell by 11.47%, with a market value of about HK$206.5 billion, compared with the HK$267 billion market value at the beginning of the listing in March, "shrinking" more than HK$60 billion.

"Listing in Singapore further increases global tradability and liquidity, provides an alternative stock trading location, and further protects investor interests." Weilai responded to the shell financial reporter.

As a capital- and technology-intensive asset-heavy industry, car manufacturing is inseparable from the support of funds for the research and development of new technologies, the development of new models and the creation of brands. "To a large extent, the competition of new forces to build cars is also a competition of capital." Zhang Xiang pointed out that compared with Xiaopeng and Ideal, WEILAI's preemptive layout in the Singapore market also has certain strategic significance.

"Plans to make a profit in 2024", NIO's urgent timeline

The capital market is vigorous, but Weilai's actual operation is facing challenges.

When it was listed on the Hong Kong Stock Exchange in March this year, NIO said that it was "not short of funds". However, it should not be ignored that since its inception, WEILAI has been in a state of operating loss and has not yet made a profit.

From 2018 to 2021, NIO's net losses were 9.639 billion yuan, 11.296 billion yuan, 5.304 billion yuan and 4.017 billion yuan, respectively.

In terms of new car delivery, since The delivery volume of Weilai was surpassed by Xiaopeng in July 2021 and lost the monthly sales champion position of the new domestic car-making forces for the first time, the growth rate of Weilai's sales has slowed down significantly, and even been squeezed out of the Top 3 camp several times.

In the whole year of 2021, among the three enterprises of "Wei Xiaoli", Weilai delivered a total of 91,429 vehicles, which is nearly 7,000 vehicles lower than That of Xiaopeng, and the long-term pattern of "Wei Xiaoli" has been changed.

After a challenging 2021, Li Bin, founder, chairman and CEO of NIO, said that NIO will accelerate in 2022. Since the end of last year, WEILAI has released three new cars, ET7, ET5 and ES7 in one go; in 2022, R&D investment will increase by more than 1 times year-on-year, and R&D personnel will increase to 9,000 by the end of the year.

"Investing in research and development in core technologies can not only enhance the sustainable competitiveness of our technologies and products, but also improve the level of gross profit margin and profitability in the long run." Li Bin also clarified that its specific market expectations for the turnaround will occur in the fourth quarter of 2023 and achieve profitability throughout 2024.

However, since entering 2022, due to the impact of the epidemic and supply chain tension, the production rhythm of Weilai has been disrupted, and Li Bin's practice of sharing costs by scale effects has also been tested.

On April 9, due to the suspension of production by supply chain partners in many places due to the epidemic, WEILAI announced the suspension of production. On April 10, Weilai, which had announced that it would not increase prices, failed to resist the upward pressure on raw material prices and adjusted the prices of some vehicles.

Huatai Securities said that the rise in batteries and raw materials will have an impact on WEILAI's profit margin. Weilai did not want to increase prices before, but hoped to stimulate the scale to share costs to offset the pressure brought by the rise in raw materials and batteries and maintain a high gross profit margin.

In 2021, the gross profit margin of NIO vehicles was 20.1%. Li Bin proposed on the performance conference call that the "gross profit margin of 18%-20%" should be maintained in 2022.

Today, both sales volume and cost have challenged WEILAI's above gross profit margin targets. And the "100 billion bet" between it and the Hefei municipal government - "120 billion yuan in revenue in 2024 (listing 6-8 models), total revenue of 420 billion yuan from 2020 to 2025, total tax revenue of 7.8 billion yuan, and listing on the science and technology innovation board before 2025", is more like a sword hanging over Weilai's head.

If it fails to meet the above conditions, NIO will need to repurchase 7 billion yuan of hefei government's investment at an annual interest rate of 8.5% and bear the risk of default.

Users are "predicaed", and high standards of service are gradually being diluted

After the initial car-making period, new energy vehicles have entered the second stage of competition, and the route differentiation of the three "Wei Xiaoli" companies has become more obvious.

Xiaopeng continues to focus on technology and intelligence, trying to enter the high-end market; ideally, continues to deepen the cultivation of extended-range electric vehicles and expand market demand. In contrast, Weilai continues to emphasize user operations.

In Li Bin's view, "If you buy a car, you're not just buying a car, you're buying a ticket to a new lifestyle." ”

But Weilai's "tickets" cost a lot. Sales and administrative costs among the three fees continued to rise.

For the full year of 2021, NIO's sales and administrative expenses were 6.878 billion yuan, an increase of 75% over the previous year; higher than Xiaopeng's expenditure of 5.305 billion yuan in marketing and administration, which is about twice that of the ideal sales, general and administrative expenses.

Even so, Li Bin has emphasized Weilai's "user first" more than once in public. At last year's NIO Day, even in the face of the question of falling behind, Li Bin still said, "We did not take sales as seriously, what really made us nervous was that there were more and more users and more employees, how can we improve our services through the closed loop, and first improve the satisfaction." ”

In terms of the pursuit of the ultimate user experience, stories about Li Bin himself are not uncommon.

At the auto show, Li Bin himself can stand on the platform for 7 consecutive days to receive users; take the initiative to add users ToChat, eat with users, and send red envelopes to users; take out 50 million shares under his name to set up a user trust; after the 2018 Dragon Boat Festival, Weilai's first batch of ES8 trial cars rolled off the production line, a group of executives plan to drive ES8 from the Hefei factory to Shanghai overnight, Li Bin specifically avoided the planned return route to test whether the service system is in place.

However, with the improvement of vehicle delivery and the more diversified user composition, the positioning of user "moat" and "user enterprise" built by WEIlai is becoming a double-edged sword.

In July last year, the topic of Weilai car owners complaining about the defective seat once rushed to the hot search, causing widespread concern; in August, a NOP (Pilot Auxiliary Driving Function) accident plunged Weilai into a whirlpool, and a "joint statement" triggered "infighting" among car owners. In addition, the constantly dynamically adjusting user service rights and interests have also made the high standards of services advocated by WEILAI gradually diluted.

"User operation is a double-edged sword." Zhang Xiang believes that for Weilai, how to achieve a balance in the game of user reputation, cost and profit has become a major problem it is currently facing.

Beijing News shell financial reporter Zhang Bing Editor Chen Li Proofreader Liu Baoqing