The curtain of reorganization was opened, and the new Wuling was born

The author | Mr. Dongguan Da

| Electric Guild

On May 6, a person close to Wuling Motors revealed that the company will issue a circular on the capital increase of Wuling New Energy and the notice of the special general meeting of shareholders before May 11, and all aspects of the work are being intensively docked in the past few days.

"Within 15 working days of the issuance of the Circular, the Company will hold an independent general meeting of shareholders and, if all goes well, it is expected that the relevant restructuring agreement will come into force at the end of June."

The restructuring of Wuling New Energy, which lasted for 5 months, officially entered the countdown stage.

01

Wuling New Energy was established on June 4, 2021, with Yuan Zhijun, President of Guangxi Automobile Group and Chairman of the Board of Directors of Wuling Automobile, as the legal representative, with a registered capital of 700 million yuan and 100% owned by Guangxi Automobile.

On March 31 this year, Wuling issued an announcement that according to the asset restructuring and capital contribution intention reached in December last year, Wuling Automobile, Guangxi Automobile, Wuling Industry and Wuling New Energy have formally signed a capital increase agreement, asset sale and related party transaction agreement for the next two years.

The 36-page announcement details the restructuring and business transaction model that will revolve around the newly formed vehicle company.

According to the agreement, the first three enterprises will increase the capital of Wuling New Energy by 2.906 billion yuan in three phases, and transfer the new energy vehicle business and assets originally operated by Wuling Industry to Wuling New Energy to achieve the restructuring of Wuling Automobile's new energy business.

After the completion of the capital increase, the registered capital of Wuling New Energy will increase from 700 million yuan to 1 billion yuan, and the capital reserve will increase from 900 million yuan to 1.286 billion yuan. Guangxi Automobile Group, Wuling Automobile and Wuling Industry will hold 70%, 13.37% and 13.13% of the shares of Wuling New Energy respectively.

It is worth noting that according to the announcement issued by Wuling Motors on December 1, 2021, within one year after the completion of the third phase of capital contribution, Wuling Motors has the right to choose to further subscribe to the new equity interests of Wuling New Energy and increase its shareholding ratio to more than 50%.

The restructuring of Wuling New Energy is another step in the integration of Wuling Automobile's independent industries after the old Liuzhou Wuling Group was listed in Hong Kong through a backdoor listing and reorganized and renamed Guangxi Automobile.

However, unlike Wuling Motors, whose previous new energy vehicle business was mainly commercial vehicles, the restructured Wuling New Energy ambition is to cover the entire new energy market segment and industrial chain, including the passenger car field.

Previously, sources said that this year, Wuling New Energy or will launch a new energy passenger car, "is a plug-in hybrid 7-seat household MPV, similar to the size of The Five Ling Capgemini under the same as that of Auto-GM-Wuling."

This means that after 20 years of the establishment of the joint venture passenger car company SAIC-GM-Wuling, Wuling Automobile Capital has finally decided to set up another vehicle company covering passenger car business.

Next, the possibility of the association between Wuling New Energy and SAIC-GM-Wuling, which are also invested by Guangxi Automobile, in new energy products will become the key to determining the new energy restructuring pattern within the Wuling system.

At present, the future development plan of Wuling New Energy is still in the preliminary stage of program formation and has not yet been finally adopted. However, according to the above-mentioned insiders, the sales targets initially mentioned by Wuling New Energy are:

The first 3 years (i.e., 2022-2024) exceeded 80,000 vehicles; the second 3 years (i.e., 2025-2027) exceeded 200,000 vehicles.

In addition, Wuling New Energy also plans to achieve independent listing in the future, or land on the Gem.

02

Wuling Automobile is one of the top 100 global auto parts suppliers, mainly covering three major business segments - auto parts, engines and special purpose vehicle sales and manufacturing business, Guangxi Automobile Group as its controlling shareholder, the shareholding ratio of 56.54%.

Judging from the situation in recent years, auto parts have always been the most important source of income for Wuling Automobile. Although this is only the largest supplier of the star enterprise SAIC-GM-Wuling, it has been mistaken for many years as the main listed entity of SAIC-GM-Wuling, and there has been no highlight moment in the 15 years since its backdoor listing.

However, this restructuring, which has just entered the implementation stage, is expected to break the current situation of Wuling Automobile.

The predecessor of Wuling Motors was Liuzhou Machinery Factory, a long-established factory founded by Li Zongren in 1928, which was not inferior to Citroën (1919), Maybach (1921) and Bentley (1919) in history, when Liuzhou Machinery Factory was used in military manufacturing and produced airplanes and rifles.

After the founding of the People's Republic of China, Liuzhou Power Machinery Factory was formally established (1958) and began to produce engines for ships, because the country's demand for shipbuilding decreased, the country began to develop agricultural mechanization, and Liuzhou Power Machinery Factory transformed into the production of tractors. At that time, it was a period of national economic difficulties, and the working environment in the factory was very difficult, and it was in this environment that Liuzhou Power Machinery Factory manufactured the "Harvest Brand" tractor in only 4 years, and in the same year the factory was renamed Liuzhou Tractor Factory.

In the 1980s, with the rise of the domestic automobile industry, China introduced Japanese Mitsubishi pickup trucks to learn from automobile manufacturers, at this time the Liuzhou tractor factory was not included in the state-trained automobile manufacturers, but Wuling was extremely sensitive to the market, and Wuling believed that mini vans might be an opportunity for the market.

In 1985, Liuzhou Tractor Factory began to manufacture micro cars, and the factory was renamed Liuzhou Micro Automobile Factory, at this time Liuzhou Micro Automobile Factory already had the prototype of Wuling Hongguang production line, mainly manufacturing micro-surfaces, trucks and other models, and the production capacity in 1985 was close to 5,000 vehicles.

In 1989, Liuzhou Wuling Automobile Enterprise Group was formally established, in 1991, the output of Wuling Automobile reached 13100 vehicles, ranking third in the domestic micro-car industry, since then Wuling Automobile began to show its fists, and the output has increased year by year.

To the great surprise of the industry, it was such a tractor factory that became the leading leader in the domestic micro-car industry in less than 20 years after transforming into an automobile factory, and its sales exceeded 100,000 units in 1998.

In 2001, Liuzhou Wuling Automobile Enterprise Group transferred 75.9% of the shares in the vehicle sector to SAIC Motor Group, and SAIC Wuling Automobile Co., Ltd. was formally established, and on June 4, 2002, through the sino-foreign joint venture reorganization, SAIC-GM-Wuling Automobile Co., Ltd. was formally established.

At this time, Liuzhou Wuling had the technology and financial support of SAIC, and the development officially entered the fast lane. In 2003, the legendary "god car" Wuling Light was launched, followed by the introduction of wuling rongguang, wuling hongguang and other upgraded models, which have become the best-selling models in the market.

From the original Liuzhou Machinery Factory to the current SAIC Wuling, from the underprepared Wuling Light to the "God Car" Wuling Hongguang, Liuzhou Manufacturing has completed the transformation.

Nowadays, Guangxi Automobile has reorganized Wuling New Energy with the strength of the Group, which will surely make the layout of the Wuling automobile industry have more possibilities.

For Wuling Motors, the R&D expenditure related to the former Wuling Industrial New Energy business will be transferred to Wuling New Energy, effectively reducing R&D costs and having a positive impact on the profits of Wuling Motors.

In addition, Wuling Industry will serve as a key strategic supplier to provide auto parts for new energy vehicles produced by Wuling New Energy. Undoubtedly, with the continuous expansion of the production of new energy vehicle products by Wuling New Energy, it will provide more and more business opportunities for Wuling Industry, and then provide a stable growth point for the performance of Wuling Motors.

Automobiles are the first pillar industry of Liuzhou Industry, with an annual output of nearly two million vehicles. The surrounding supporting industrial chain and supply chain of new energy vehicles established around SAIC-GM-Wuling jointly constitute a new energy automobile industry cluster, which can create an output value of 100 billion yuan per year.

Whether in the eyes of the capital market or in the base camp of Liuzhou, the restructuring of Wuling New Energy is revealing that the impact is far greater than the business integration and strategic adjustment on paper. The future is worth looking forward to.

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