(Image source: Courtesy of ZEEKR Automobile)
The second to break into the U.S. stocks, the three-year-old Zeekr Automobile "dream", and Li Shufu, chairman of Geely Holding Group, also received the ninth IPO. On May 10, Eastern time, ZEEKR Automobile was listed on the New York Stock Exchange and officially listed for trading with the stock code "ZK". On the first trading day, ZEEKR opened at $26 per share, 23.8% higher than the issue price of $21, and completed the first day of trading at $28.26, an increase of 34.57%. In three years, the Zeekr Automobile, which is backed by Geely, grew rapidly and landed in the capital market in only 37 months. On the one hand, ZEEKR Automobile replenishes funds through the capital market, and on the other hand, absorbs more resources to accelerate the development of overseas markets.
Ring the bell for the fastest "new car"
Following "Wei Xiaoli", ZEEKR Automobile has become the fourth new Chinese car-making company to land on the U.S. stock market.
(Image source: Courtesy of ZEEKR Automobile)
However, compared with the earlier establishment of "Wei Xiaoli", ZEEKR Motors has just turned three years old. In April 2021, ZEEKR Automobile was officially established, and in April of the same year, the brand's first model, ZEEKR 001, was released, and it took only 37 months from its establishment to its successful IPO. From the perspective of listing time, it took seven years for Tesla to go public, and it took four years, six years and five years for "Wei Xiaoli" to land in the capital market respectively. In addition to becoming the fastest Chinese new energy vehicle manufacturer to land on the U.S. stock market, Li Shufu's listed companies have also reached 9, including Geely Automobile, Volvo, Polestar, ECARX, Qianjiang Motorcycle, Hanma Technology, Lifan Technology, Lotus and Zeekr Automobile.
Not only is the pace of listing fast, but the establishment time is still short, ZEEKR Automobile's revenue and gross profit margin are also outstanding. According to the prospectus, from 2021 to 2023, the revenue of ZEEKR Automobile will be 6.528 billion yuan, 31.9 billion yuan, and 51.67 billion yuan respectively. At the same time, the gross profit margin of ZEEKR vehicles was 1.8%, 4.7% and 15% respectively. In horizontal comparison, the gross profit margins of Weilai, Xpeng and Ideal vehicles last year were 9.5%, -1.6% and 21.5% respectively.
Behind the short listing process and bright revenue, compared with the self-made "Wei Xiaoli", the Zeekrypton automobile backed by Geely has an inherent advantage. It is understood that before the establishment of ZEEKR Automobile, Geely spent five years and invested more than 20 billion yuan to launch the pure electric architecture - SEA Haohan, and the first mass-produced model equipped with the architecture was the first model of ZEEKR - 001. At the same time, in 2021, Geely transferred 51% of the equity of Ningbo Weirui and all the equity of CEVT (Central European Automotive Technology Center) to ZEEKR Automobile to further improve the supply system of ZEEKR Automobile. From the production system to the car-making structure, it is from Geely, which undoubtedly enables ZEEKR to move forward lightly in the asset-heavy car-making industry.
Cui Dongshu, Secretary-General of the Passenger Car Market Information Association (hereinafter referred to as the "Passenger Association"), believes that Geely's support for ZEEKR Automobile has not only received financial support, but Geely, which has been deeply involved in the automotive industry for many years, has rich experience and a perfect manufacturing system, which can fully support ZEEKR Motor. Compared with other new car manufacturers, ZEEKR has more competitive capital.
"Flying solo" has twists and turns
Despite Geely's support all the way, the road to market for ZEEKR cars is not smooth.
Geely has been actively promoting the IPO of Zeekr Automobile. More than a year after its establishment, there was news that ZEEKR Automobile planned to go public. In October 2022, Geely Automobile announced that it proposed to spin off Zeekr Auto and list it independently, and the Hong Kong Stock Exchange of China has confirmed that the company can be spun off; In December of the same year, Geely Automobile announced on the Hong Kong Stock Exchange that Zeekr Automobile had submitted a draft registration statement for a possible initial public offering to the SEC on a confidential basis. On February 13 last year, Geely Automobile announced that it would issue and distribute about 139 million Series A preferred shares to five investors, totaling US$750 million, and in November of the same year, Zeekr Automobile officially submitted its IPO to the United States. According to the prospectus, ZEEKR Automobile plans to be listed on the New York Stock Exchange with the stock code "ZK". However, due to weak investment market sentiment, ZEEKR Motors once shelved its listing plan. Until April this year, ZEEKR Auto restarted its IPO.
However, the valuation of ZEEKR Automobile, which restarted the IPO, has shrunk significantly, and its valuation has dropped to $5.126 billion. A reporter from Beijing Business Daily noticed that in February last year, the post-investment valuation of ZEEKR Automobile's A round of financing was about 13 billion US dollars. At this time, the valuation is less than 40% of the A round of financing, although the market value of ZEEKR Automobile rose to $6.898 billion on the first day of trading, it is far from the valuation at the time of the A round of financing. In the eyes of the outside world, the shrinkage of valuations has a lot to do with the cooling of investors' enthusiasm, and the market's valuation expectations for new energy vehicle companies have changed greatly from three years ago. According to third-party data, there is a significant gap between the current stock price of "Wei Xiaoli" and the peak after listing, of which Li Auto fell by 50%, and Weilai Automobile and Xiaopeng Motors fell by nearly 90%.
(Snowball screenshot)
Why choose to IPO when valuations are not high? The answer can be found in the ZEEKR automobile prospectus. According to the prospectus, from 2021 to 2023, ZEEKR Automobile will lose 4.514 billion yuan, 7.655 billion yuan, and 8.264 billion yuan respectively. In addition, as of the end of last year, the asset-liability ratio of ZEEKR reached 132%. At the same time, ZEEKR Automobile's R&D investment continues to rise, with R&D investment of 3.16 billion yuan, 5.446 billion yuan, and 8.369 billion yuan from 2021 to 2023, with a cumulative R&D investment of nearly 17 billion yuan.
The ZEEKR car, which has a "golden spoon", urgently needs to enhance its "hematopoietic" ability. "As a heavy asset field, traditional car companies incubate 'trumpets' to help them grow, but in order to let 'scars' adapt to market competition, they will let them 'fly solo'." Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, believes that with the continuous increase in R&D investment, the demand for funds for ZEEKR Automobile has also increased, so it has become an inevitable choice to supplement funds through listing, on the one hand, to obtain funds, on the other hand, to obtain more capital support. As for the reason for the separate listing from Geely Automobile, Zeekr Auto explained in the prospectus that this is because of the company's different brand positioning and the search for operational, managerial and financial independence.
According to a person related to ZEEKR Automobile, about 45% of the funds raised from this listing will be used to develop more advanced pure electric vehicle technology and expand product portfolio; About 45% will be used for sales, marketing and expansion of the service and charging network; Approximately 10% will be used for general corporate purposes, including working capital needs, to support business operations.
"Volume" to overseas markets
At the same time as the capital flow "replenishes", the listing of ZEEKR Automobile on the U.S. stock market paves the way for its global development.
For this IPO, An Conghui, CEO of ZEEKR Automobile, believes that the listing of ZEEKR Automobile is only the starting point. He said, "ZEEKR is a global brand, and it was born to face the global market. In the face of global capital, users, and technology, the United States is a gathering place of global capital, and is optimistic about new energy vehicles, which determines our long-termism, which can make the global management of ZEEKR more transparent and better participate in global competition."
An Conghui also pointed out the direction for the development of ZEEKR automobiles. At present, the domestic auto market "involution" intensified, data show that in the first four months of this year, the domestic sales of new energy vehicles were 2.52 million, a year-on-year increase of 34.4%. According to data released by the China Passenger Car Association, the penetration rate of China's new energy vehicle market exceeded 50% in the first half of April this year. Under the intensification of competition in the domestic market, car companies have "rolled" into overseas markets. According to statistics, in the first four months of this year, the export volume of automobiles was 1.827 million units, a year-on-year increase of 33.4%. NEV exports totaled 421,000 units, reflecting a 20.8% y/y increase.
In the face of market changes, ZEEKR Automobile has also opened its overseas layout. It is reported that ZEEKR 001 and ZEEKR X have been sold and delivered in European countries. According to the plan, this year, ZEEKR Automobile will enter the market of eight European countries, and then enter the market of 50 countries and regions such as Southeast Asia, the Middle East, South America, and Australia. At the same time, ZEEKR has six R&D centers around the world, with more than 7,000 global R&D personnel, and builds all models with a global standard system.
"The landing on the U.S. stock market will further enhance the global management capabilities of ZEEKR Automobile, open up new financing channels for ZEEKR Automobile, enhance its popularity and influence in the global market, and help ZEEKR Auto better deploy overseas markets." Yan Jinghui said that as a high-end new energy vehicle brand of "Geely", the listing of Zeekr Automobile in the United States will also help enhance the brand image and international influence of "Geely". An Conghui revealed that based on the Haohan-M architecture, the customized models cooperated by ZEEKR Automobile and Waymo will soon enter the U.S. travel market, and its household products will also be launched in China and other markets.
Beijing Business Daily reporter Liu Yang Liu Xiaomeng