Rapid start-up, bold listing, self-financing.
Author: Zhang Lin
Editor|Wang Bo
Yesterday, ZEEKR Intelligent Technology Holdings Co., Ltd. (hereinafter referred to as "ZEEKR") officially landed on the New York Stock Exchange. From its establishment to listing, ZEEKR took only three years, which is the fastest record for China's new energy vehicle companies.
An Conghui, President of Geely Holding Group and CEO of Zeekr Intelligent Technology, said at the listing ceremony: "Special thanks to the New York Stock Exchange, which has a history of more than 200 years, for recognizing our 37-month-old automotive technology company. ”
In terms of sales and revenue performance, ZEEKR also has a good performance, and has launched five models: ZEEKR 001, ZEEKR 009, ZEEKR X, ZEEKR 007, and ZEEKR MIX. As of the end of April this year, ZEEKR has delivered more than 240,000 cars, which is a very good result for a company that has only been established for three years.
However, ZEEKR also has the common problem of new energy vehicle companies, and its losses have increased year after year, and the more it sells, the more it loses. Perhaps because of this, ZEEKR has already laid out the plan to go public from the beginning of its establishment.
And after the fuel car has a sub-brand of Lynk & Co, ZEEKR shoulders the heavy responsibility of the high-end of Geely Automobile's pure electric brand.
1. Rapid time to market
On the evening of May 10, Beijing time, An Conghui rang the bell for the listing of ZEEKR on the New York Stock Exchange.
Bell ringing ceremony, image source: ZEEKR
Due to the oversubscription, ZEEKR expanded the size of the IPO, issuing a total of 21 million American Depositary Shares (ADSs) at a price of US$21 per share, each ADS corresponds to 10 ordinary shares, raising about US$441 million.
At the end of the first trading day, ZEEKR reported US$28.26 per share, up 34.57% from the issue price, with a market value of US$6.898 billion (about 49.85 billion yuan). Both the stock price and market capitalization performance are better than previous market expectations.
Founded in March 2021, ZEEKR completed the listing in just over three years, and is currently the fastest listed car company in China.
Such a rapid speed of listing means that ZEEKR has started the listing layout from the beginning of its establishment, or even before its establishment.
In 2020, Geely Automobile applied for an IPO on the Science and Technology Innovation Board, but at that time, due to factors such as policy and market environment, Geely Automobile withdrew its IPO application materials in June 2021 and issued an announcement stating that the board of directors of Zeekr had decided to explore different external financing options for the company's sustainable development.
At this time, it was only 3 months before the establishment of ZEEKR.
The "external financing plan" in the announcement is considered to be a hint that ZEEKR is ready to start a listing plan, and China Merchants Securities said in a research report released thereafter, "It is expected that the separate listing of ZEEKR Intelligent Technology in the future may be one of the important options for external financing solutions." ”
At this time, ZEEKR has already shown a certain product power in the market, and its first model, ZEEKR 001 (ZEEKR 001), brings together almost all the forward-looking technologies of Geely Automobile in the field of pure electric vehicles. ZEEKR officially opened the pre-order of ZEEKR 001 on April 15, 2021, and on June 15, ZEEKR announced that all deliverable orders for 2021 have been sold out.
After the product itself was recognized by the market, the listing process of ZEEKR began to accelerate.
In October 2022, Geely first disclosed the spin-off and listing plan of ZEEKR, and two months later, Geely Automobile announced on the Hong Kong Stock Exchange that ZEEKR Automobile submitted a draft registration statement for a possible initial public offering to the SEC on a confidential basis on December 7, New York time.
At the subsequent 2022 results conference, An Conghui revealed that in early December 2022, ZEEKR had submitted a draft registration statement for a possible IPO to the SEC on a confidential basis, and it is currently under regulatory review, and said that "if the market window is right in the future, it will be publicly submitted at the right time and strive to complete the listing." ”
In August 2023, the China Securities Regulatory Commission (CSRC) confirmed the filing information for ZEEKR's overseas listing. According to the overseas issuance and listing filing notice, ZEEKR intends to issue no more than 926 million ordinary shares and list on the New York Stock Exchange in the United States.
In November 2023, ZEEKR Motors publicly submitted an IPO prospectus to the U.S. Securities and Exchange Commission, planning to be listed on the New York Stock Exchange under the ticker symbol "ZK".
Interestingly, on November 30, 2023, there was market news that due to weak market sentiment, ZEEKR has temporarily shelved its US IPO plan and will continue to observe the market situation and decide when to resume the listing plan. In response, ZEEKR responded that it had publicly submitted a prospectus to the Securities and Exchange Commission, and various preparations were progressing in an orderly manner.
On May 3 this year, ZEEKR submitted an updated quasi-prospectus (Red Herring Prospectus) to the Securities and Exchange Commission (SEC), except that there is no price information such as the issue price and underwriting discount, and the other parts are no different from the official prospectus. And the emergence of this prospectus means that the listing of ZEEKR has been confirmed.
Now ZEEKR has been listed smoothly according to the plan and listed on May 10, which is already a great success and glory for an ordinary company or entrepreneur, but for ZEEKR, it has just begun.
2. Double pressure
In order to complete the task of brand improvement, Geely Automobile has been working silently for many years.
In the past, almost all of Geely Automobile's products were concentrated in the middle and low end, and the prices of Emgrand and Envision's best-selling models were not high at that time. According to Geely Automobile's 2014 financial report, the average pre-tax ex-factory price of its vehicle products was only about 51,000 yuan, which was a truly "people-friendly" product.
Geely Automobile's average pre-tax ex-factory price, image source: Geely Automobile's financial report
Since then, Geely has continued to explore ways to improve the brand, that is, "how to build better cars and buy them more expensive." ”
In 2015, Geely Automobile formulated the "Blue Geely Action", revealing the strategic goals of Qili New Energy. However, the reality is that at that time, the domestic new energy market was just starting, the industrial chain and consumer market maturity were not perfect, and a large number of new energy vehicles flowed to the B-end market (such as taxi companies), and the progress of Geely Auto brand electrification did not make substantial progress.
On the contrary, in the field of fuel vehicles, due to the acquisition of Volvo, Geely Automobile has a certain amount of technology accumulation and brand endorsement, and the sub-brand Lynk & Co Automobile, which was established in 2016, has truly completed the strategic task of Geely Automobile brand for the first time.
In 2016, Geely Automobile's sales of fuel vehicles were 766,000 units, and in 2017, it came to 1.247 million units, of which Lynk & Co contributed a lot. In 2020, Lynk & Co also won the 2020 WTCR Constructors' World Cup Constructors' Championship, thus becoming an important member of the international market recognition on the world automotive stage.
Lynk & Co car at the race, image credit: Lynk & Co
However, Geely Automobile could not accept its own bias, and after the success of Lynk & Co, Geely was eager to need a similar brand in the field of electric vehicles to complete the brand's upward cause.
At the same time, Geely Automobile's own electric vehicle products do not seem to have the ability to support the company's high-end electrification. In recent years, Geely Automobile has created models such as Geometry, Emgrand New Energy, and Galaxy, but the starting prices of these series of models are below 150,000 yuan, and the actual sales price may be even lower, and consumers have formed product awareness.
Geely has also considered using external brands to create new energy products, such as Polestar, a brand for the luxury electric vehicle market established by Volvo and Geely in 2017.
But this new brand with the halo of "Volvo" can be described as very "crotch-pulling" in actual performance. According to Jiemian News, Polestar's deliveries in China from 2020 to 2023 are only 5,000 vehicles. In January, SEB lowered Polestar's valuation from 18 billion kroner to 0 kroner.
A valuation of 0 may be due to the fact that the asset does not generate any economic value or is not at all popular with the market. In the financial and investment worlds, this is rare, but it does exist. It is a fact that Polestar has been abandoned by the market.
Therefore, ZEEKR must carry the banner and help Geely Automobile create the market impression of high-end electric vehicles. And ZEEKR 001 has been successful to a certain extent. According to the data, the cumulative delivery of ZEEKR 001 alone in 2022 will reach about 72,000 units, with an average order value of more than 336,000 yuan.
ZEEKR 001 (new), image source: ZEEKR
But building an electric car is extremely expensive, even with its back to a big tree, Zeekrypton is not immune. From the perspective of financing, public information shows that ZEEKR has only completed two rounds of financing in August 2021 and February 2023, with a total financing scale of 1.25 billion US dollars, which is obviously far from enough for a new energy vehicle manufacturer.
According to the financial report data, in 2021, 2022, and 2023, the net loss scale of ZEEKR will be 4.514 billion yuan, 7.655 billion yuan, and 8.264 billion yuan respectively. There is a trend of increasing year by year.
At the same time, according to the prospectus, on April 15, 2022, ZEEKR signed a 10-year loan with Geely Automobile, with a total amount of 9.7 billion yuan; On November 30, 2022, Ningbo Weirui, a subsidiary of ZEEKR, signed another 10-year loan with Geely Automobile, totaling 1.6 billion yuan. Both loans are used to replenish liquidity.
As of the end of 2023, ZEEKR's cash and cash equivalents are only 3.3 billion yuan. According to the current annual loss amount, it is difficult for ZEEKR to maintain long-term operation without listing and financing.
Although Geely Automobile is a veteran car company in China's auto industry and the founder of Zeekr, Geely Automobile, which has carried out many new energy breakfast cars, is well aware of the iron law of burning money and the risk of bankruptcy of new energy vehicles, and obviously does not want to increase its debts too much.
Combined with information such as ZEEKR's R&D investment, loss degree and listing rhythm, "Jiazi Lightyear" analyzes that Geely Automobile may have set the tone for its short-term business development at the beginning of its establishment: rapid start-up, bold listing, and self-financing.
3. There is a long way to go
According to the relevant regulations, ZEEKR's red herring prospectus lists a large number of factors that may adversely affect ZEEKR's operation to remind investors of the relevant risks. However, the current state of China's new energy vehicle market has made it impossible for many people to simply regard this risk warning as a "routine".
Zeekr's current market capitalization of $6.898 billion is better than its pre-IPO peak valuation of $5.44 billion, but lower than previously expected.
In August 2021, the post-investment valuation of ZEEKR's Pre-A round of financing was about $8.9 billion; In February 2023, the post-investment valuation of ZEEKR's Series A financing was about $13 billion. The current market capitalization is only about 77.1% of the Pre-A valuation and about 53% of the Series A valuation.
At the same time, the amount of funds raised by ZEEKR has also shrunk significantly. According to the original plan, Zeekr originally expected to raise about $1 billion in financing. But at the beginning of the year, that expected amount was adjusted to $500 million. Now, Zeekr has raised only about $441 million.
The decline in the valuation and amount of funds raised by ZEEKR is related to the development of China's new energy vehicle market in recent years, and a large number of car companies are in a state of loss and are at risk of being eliminated from the market. The market value of car companies that have been listed, such as Weilai and Xiaopeng, has also shrunk seriously, and even Tesla has begun to enter a state of sales anxiety.
Wang Dongsheng, fund manager of Dingsa Capital, said to Jiazi Lightyear: "The competition in this industry is too fierce now, as far as the new forces are concerned, in addition to ideals, the market value of NIO and Xpeng is also falling very fast, and it is not certain whether the new car companies can survive in the next two or three years." ”
An independent investor, Fengwu (pseudonym), also told "Jiazi Lightyear": "Based on the information available, I am not quite sure when and how much money ZEEKR will make. Fengwu is also a ZEEKR car owner, and his concerns about the competitiveness of the model are another major factor affecting his judgment of the future ZEEKR stock market.
He said: "At present, ZEEKR mainly relies on the 001 model, and none of the other models can be called truly successful. "From the perspective of specific terminal sales, the sales volume of ZEEKR 001 in 2023 will account for 64.24% of the total annual sales of ZEEKR, which is a real explosive product, but it remains to be seen whether other models can be increased.
For example, ZEEKR MIX, which is called "baby bus" by netizens, attracted a lot of attention during the Beijing Auto Show, but a woman with children at the scene told "Jiazi Lightyear" that the concept of ZEEKR MIX focusing on family travel is good, and the design is also very innovative, "But what's the use of turning this chair around, I have driven to the suburbs, do I still want to sit in the car with my children to play cards or play games?" ”
ZEEKR's newly launched ZEEKR MIX, photo source: "Jiazi Lightyear" shooting
However, some capital market people and industry professionals have expressed a positive attitude towards ZEEKR. A staff member of the marketing department of a leading new energy car company told "Jiazi Lightyear": "ZEEKR's car is very good, and the price is also the most expensive in Geely. The implication is that ZEEKR can better complete the building of its own high-end brand.
Judging from the analysis of the research reports of existing securities companies, the capital market is also optimistic about the future development of ZEEKR. Orient Securities, Soochow Securities, Minsheng Securities, etc. have all put forward the view that the sales of ZEEKR may continue to rise in the research of related companies in recent months.
ZEEKR has a huge mission and aura, but at the same time, it can't stay out of it, and in the face of fierce market competition, listing may be just the beginning.
(Cover image source: ZEEKR)