Lei Jianping January 12
Apollo Smart Mobility Group Co., Ltd. (stock code: "860") announced today that it has reached a strategic merger and acquisition with WM Motor, further confirming the listing path of WM Motor.
The transaction price of WM is US$2.023 billion (about HK$15.871 billion), the target company accounts for about 80.93% of WM's total share capital, and WM's valuation of this transaction is US$2.51 billion.
Apollo is considered HK$0.55 per Share for placing up to a maximum of 7,123,363,636 Placing Shares to not less than six independent placers. Net proceeds from the Placing are estimated to be approximately HK$3,526 million.
According to people familiar with the matter, the announcement was approved by the Hong Kong Stock Exchange for listing, and the transaction consideration of the two companies was also reviewed and approved by the Stock Exchange, and the follow-up process was mainly for Apollo to conduct due diligence on WM, considering that WM had submitted its A1 prospectus on May 31, 2022 and completed 3-4 rounds of responses to HKEx questions, it was originally planned to complete the SEHK hearing in October 2022; Therefore, the above due diligence is based on materials that have been fully reviewed by the Hong Kong Stock Exchange and is planned to be completed within 2-3 months.
It is optimistic that WM has a high probability of completing the listing in the second quarter of 2023.
Received three financial supports More than US$500 million in equity financing on the listing date
According to people familiar with the matter, WM announced that it has recently received three new financial supports, which will replenish the liquidity of WM Motor before completing the listing.
The three financings mainly include: a well-known commercial bank in Hong Kong and Macao - HK$250 million, the above-mentioned well-known commercial bank in Hong Kong and Macao is one of the participating banks of WM's existing syndicate, reflecting the continuous support of the existing syndicate to WM;
Zhengwei International - 500 million yuan, Zhengwei International is the largest copper mining enterprise in China, and the cooperation with Zhengwei means that the two sides will make strategic progress in the integration of upstream and downstream industrial chains (upstream resources such as nickel, manganese, cobalt, silicon, lithium, etc.). In addition, the cooperation project between WM Motor and Zhengwei Group is expected to land in Chengdu. In addition, well-known investment institutions in Hong Kong and Macao, including the Li Ka-shing family and Macau Ho Group, continue to be optimistic about WM and China's new energy vehicle track.
Agile Group – HK$1.5 billion; Agile is the largest investor in WM's previous Series D round, and is currently the largest shareholder of WM other than management; This time, we will continue to increase our support for WM's working capital in terms of operations and products.
Three new tranches of funding (period financing) will be used to increase cash reserves, replenish cash flow and required working capital.
According to people close to WM, on the listing date of the completion of the RTO, WM is expected to complete no less than US$500 million in equity financing.
It will cooperate with Apollo to push new cars of more than $100,000
According to reports, Apollo Mobility has EVPower, 3D printing, design, technology research and development and other businesses; WM's advantages include production qualifications, production capacity, intelligent platform, core three electricity, channels, brands, etc.
Apollo currently has no production facilities in Japan and has not yet launched mass-produced EVs. The strategic merger with WM can take advantage of WM's two fully qualified intelligent manufacturing bases in Wenzhou and Huanggang, with an annual production capacity of 250,000 units, and the strong technical experience generated by more than 100,000 intelligent vehicles that have been delivered to users, deepen the intelligent pure electric market, and increase its own technology accumulation in the fields of autonomous driving and intelligent cockpit.
After the strategic merger, WM took the opportunity to realize the brand upward, further improve the product matrix, and penetrate the three major markets of ultra-luxury, high-end and mainstream: 1, the Appollo sports car with a price of 2 million US dollars, covering the ultra-luxury car market; 2. Smart EVs priced at 600,000-800,000 RMB covering the high-end market (A@X brand is planned to be launched in the near future); 3. The price is 15-350,000 yuan, covering the mainstream market of WM Motor;
According to people close to WM, while completing the merger and listing, WM Motor will complete the brand and product strategy upgrade - WM will jointly develop with Apollo, and will launch a product release in the near future X@A mass-produced smart coupe, which is expected to cost more than $100,000.
WM's valuation was lowered to US$2.51 billion, and Mr. Cun was redeveloped
WM announced in March 2019 that it had completed a series C financing of 3 billion yuan, led by Baidu Group, with the participation of Taihang Industrial Fund and Linear Capital.
In September 2020, WM completed a total of RMB10 billion in Series D financing, jointly led by Shanghai State-owned Investment Platform and SAIC, and continued to participate in this round of financing by Baidu and Haina Asia Venture Capital (SIG).
At the end of 2021, WM completed the D1 and D2 rounds to raise a total of US$600 million. With the D1 and D2 rounds of financing in place, WM's total financing amount is about 35 billion yuan.
WM submitted a prospectus on May 31, 2022 to prepare for listing in Hong Kong, but after Leapmotor rushed to list in Hong Kong, WM's listing path in Hong Kong was affected.
WM's valuation takes into account the interests of Series D investors, and with reference to the changes in the market value of comparable companies listed in Hong Kong and the United States, the current valuation fully reflects the advantages of RTO's listing path and minimizes the irrational impact on valuation caused by the uncontrollability of the secondary market. The advantages of RTO mode listing are fast completion, new money, and valuation is not affected by secondary market fluctuations.
The average price-to-sales ratio of listed companies in the reference industry in 2021 is about 3.9 times (3.3 times for NIO; 1.9 times for Xpeng, 4.3 times for ideal, and 6.1 times for Zerorun). WM's deal was 3.7 times price-to-sales ratio; compared with the valuation of US$5.7 billion in 2021, WM's valuation fell by 56%, close to the industry average (NIO down 51%, Xpeng down 71%, and Ideal down 35%).
Some investment bankers pointed out that the senior management of WM with Shen Hui as the core is a new force in car manufacturing with a clear understanding and ability to respond to industrial cycles such as the automotive industry cycle, industrial chain cycle, and product cycle, so when in 2022, a number of friendly companies suffered a slash in stock prices, and some friends fell by 55% of their stock prices after listing, WM immediately made strategic adjustments.
When the supply chain fluctuates and the price increase of core components (such as batteries and chips) cannot be controlled, it not only effectively saves valuable cash, but also sends a clear signal to the industry that Mr. Survive and develop.
The salary cut is a reminder that the loss-making sales model is not sustainable
According to reports, WM Motor's total revenue in 2020 reached 3.446 billion, a year-on-year increase of 51.6%; In 2021, the total revenue reached 6.364 billion, a year-on-year increase of 77.5%. In 2021, WM Motor's gross profit margin was -5.1%.
Prior to this transaction, WM's shareholding structure
Before the transaction, Baidu held 5.96% of the shares of WM, Yaleju held 6.46%, Shen Hui held 27.69%, Wang Lei held 3.13%, and directors and employees held 13.75%.
Post-transaction, new company structure
Before 2020, WM was a new automaker alongside Xpeng and NIO. Since then, with the launch of ideal automobiles, the reshuffle of the new force field of car manufacturing once triggered voices about WM falling behind.
Shen Hui, founder and CEO of WM Motor, once responded, "The new energy track is a long-term track, to use a metaphor, it is like playing football, now the first 15 minutes of the first half are not finished, who wins and who loses is not known." What I want to say is that our team has a very big advantage over other new forces, that is, we have fought in the bloody battle of fuel vehicles, and we have experience, from 0-300,000 vehicles. ”
In order to survive, at the end of November 2022, WM also took the initiative to optimize its organizational structure, including layoffs and salary cuts. "To some extent, such actions are 'labor pains' for employees, but we hope that through these actions, the company reminds all management and employees that running a business should be done with efficiency and competitiveness, not through continuous financing."
Shen Hui said, "We are also employees, and we also have to take care of employees. At the same time, we must also remind everyone that we must 'throttle' while 'open source', rationalize the value chain and structure, and pursue sustainable and healthy development under the condition of controlling costs." And from management's perspective, the pay cut is a reminder to yourself. Because it is not 'pain in the flesh', it is not easy for you to do things that do not involve your own interests. When you have a feeling, a lot of things are easy to do. ”
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