On May 10, the electric vehicle company Zeekr was successfully listed on the New York Stock Exchange with the stock code "ZK", becoming Li Shufu's ninth IPO.
Since its establishment in 2021, ZEEKR's revenue has continued to grow, reaching 51.67 billion yuan in 2023. At the same time, affected by the fierce competition in the new energy vehicle industry, the market value of ZEEKR on the first day of listing is close to "halved" compared with the valuation of the A round of financing in February 2023.
Valuations have plummeted
On May 10, ZEEKR was successfully listed on the New York Stock Exchange with the stock code "ZK". On the day of listing, the issue price of ZEEKR was set at $21/ADS, and on the first day of the IPO, the opening price of ZEEKR ADS was $26, and as of the closing price of $28.26, an increase of 34.57%, with a market value of $6.898 billion.
Image source: Wind
Due to the oversubscription, ZEEKR expanded its IPO and issued a total of 21 million ADSs, each corresponding to 10 ordinary shares, raising approximately US$441 million.
On the evening of May 10, Geely Automobile, the parent company of Zeekr, also announced that An Conghui, CEO of Zeekr and former executive director of Geely Automobile, has resigned as executive director, member of the sustainable development committee of the board of directors and chairman of Geely Automobile, and will focus on serving as director and CEO of Zeekr, so as to prevent the core management of Geely Automobile and Zeekr from overlapping.
The scheduled listing of ZEEKR marks that it has become the fourth new Chinese car-making company to land on the U.S. stock market after NIO, Xpeng and Li, and it is also the fastest IPO of a new energy vehicle company in history.
In his speech on the day of the listing, An Conghui said that the models customized by ZEEKR and Waymo will soon enter the U.S. travel market, and its household products will also be launched in China and other markets.
The ZEEKR brand was established in 2021, and the brand's first model, ZEEKR 001, was officially released in April 2021, and it has only been 37 months.
Although it has become the fastest IPO in China, ZEEKR has been on the road to listing for nearly a year and a half. On December 13, 2022, Geely Automobile announced on the Hong Kong Stock Exchange that Zeekr submitted a draft registration statement for a possible initial public offering to the SEC on a confidential basis on December 7, 2022, New York time.
In February 2023, ZEEKR announced the completion of a $750 million Series A financing, with a post-investment valuation of about $13 billion at that time.
It is worth noting that as of the close of the first day of listing, the market value of ZEEKR was $6.898 billion, which was close to halving compared with the valuation at the time of the A round of financing.
This is mainly related to the fierce competition in the new energy vehicle market in the past two years. The great competition and the unknown industry pattern make investors more conservative in their evaluation of new energy vehicle companies. It can be found that compared with the highs in 2021, the US stock prices of NIO and XPeng have fallen by more than 80%; Since 2024, Tesla's stock price has also fallen by nearly 30%.
In addition, ZEEKR's persistence in listing may be related to the group play of the parent company Geely Automobile. ZEEKR CEO An Conghui once said that Geely's goal is to become a Volkswagen group in the era of new energy vehicles, and it has been actively planning a multi-brand strategy.
After Geely's Lotus, which is positioned as a million-dollar pure electric luxury brand, became the first auto IPO company in the U.S. stock market in 2024, ZEEKR became Li Shufu's ninth IPO. At the same time, Geely's Cao Cao Travel has also officially submitted a prospectus to the Hong Kong Stock Exchange on April 29, seeking a Hong Kong stock listing.
Revenue, profit and fire
From the prospectus, it can be found that ZEEKR's revenue, gross profit margin performance, profitability, and cash flow reserves show completely different "ice and fire".
From 2021 to 2023, ZEEKR's revenue will be RMB 6.528 billion, RMB 31.9 billion, and RMB 51.67 billion respectively, with rapid revenue growth.
ZEEKR said that the company's revenue growth was mainly due to the increase in vehicle sales. At present, ZEEKR has delivered more than 240,000 cars; Among them, a total of 49,148 vehicles have been delivered since the beginning of 2024, a year-on-year increase of 111%; A total of 16,089 vehicles were sold in April, ranking fifth among new energy vehicle brands.
At the same time, the gross profit margin of ZEEKR automobile business has increased significantly in the past few years, with 1.8%, 4.7% and 15.0% from 2021 to 2023, respectively.
In horizontal comparison, in 2023, the gross profit margins of NIO, Xpeng, Li Auto, and Tesla will be 9.5%, -1.6%, 21.5%, and 18.2% respectively. Among new energy vehicle companies, ZEEKR's gross profit margin has a certain advantage.
The above advantages of ZEEKR are largely due to the support of its parent company, Geely Automobile. At a time when peers are still anxious about heavy assets such as production lines and factories, ZEEKR, which is backed by a big tree, appears lighter, and the brand can devote more energy to R&D and sales.
Prior to the listing of ZEEKR, Geely Group had transferred 51% of its equity in Ningbo Weirui, which is responsible for the supply of battery powertrain and battery packs, and CEVT, which is responsible for intelligent software, to ZEEKR, so that ZEEKR has a more complete supply chain.
At the same time, the products of Ningbo Weirui and CEVT are provided to a number of Geely Group's car brands, but after the equity transfer, the revenue of the two companies is owned by ZEEKR, which also alleviates the profit dilemma in the early days of ZEEKR's establishment.
Source: ZEEKR prospectus
However, even if the revenue and gross profit continue to improve, ZEEKR is still in a state of continuous loss and needs to replenish liquidity through listing.
According to the prospectus, from 2021 to 2023, the net loss of ZEEKR will be 4.514 billion yuan, 7.655 billion yuan, and 8.264 billion yuan respectively, with a cumulative loss of more than 20 billion yuan in three years.
At the same time, ZEEKR's current cash flow is also difficult to support its high R&D expenses, which are increasing year by year.
At the end of 2023, the amount of cash and cash equivalents totaled 3.26 billion yuan. According to the prospectus, from 2021 to 2023, the R&D expenses of ZEEKR will be 3.160 billion yuan, 5.446 billion yuan and 8.369 billion yuan respectively. According to this data, even if ZEEKR's follow-up R&D expenses do not continue to grow, the current cash flow will be difficult to last for half a year.
Electric vehicles require a lot of financial support in technology research and development. In the competition of new energy vehicle companies, all domestic automobile manufacturers are adhering to the spirit of "no one can work hard in research and development", and continue to increase the weight in many technical fields such as batteries and intelligent driving, striving for product leadership and high-speed technology iteration.
In 2023, NIO's R&D expenses will be 13.43 billion yuan, a year-on-year increase of 23.9%; Ideal's annual R&D expenses were 10.59 billion yuan, a year-on-year increase of 56.1%; Tesla's annual R&D expenses exceeded $3.9 billion, and it also shouted the slogan of "investing more than $10 billion in the field of autonomous driving" in 2024.
From this point of view, if you want to maintain competitiveness, ZEEKR's R&D investment does need to reach the level of 10 billion yuan. Therefore, it is also important to solve the cash flow shortfall.
Reviewer: Cheng Zhu Editor: Wang Yin Proofreader: Jiao Yuanyuan Producer: Wang Zhuying
Issued by: Fei Yangsheng