ZEEKR's listing once soared by 40%, who is the biggest winner?

Brief reference

2024-05-12 13:25Posted in Beijing Science and Technology Creators

In this listing, the valuation of ZEEKR is less than half of the original financing scale, and in the capital bureau of ZEEKR, who is the loser and who is the biggest winner?

Author|Qian Yu

Edited by Wilderness

微信公众号:略大参考(ID:hyzibenlun)

On May 10, 2024, Zeekr Intelligent Technology, a subsidiary of Geely Holding Group, successfully rang the bell with ZK as the stock code. At the listing ceremony of the New York Stock Exchange, Yuan Jing, CFO of ZEEKR, Li Donghui, director of ZEEKR, An Conghui, director and CEO of ZEEKR, and Gui Shengyue, director of ZEEKR, were smiling very happily.

While the top level was laughing, the workers at the bottom fell out.

Some netizens who are suspected of being employees of ZEEKR posted rumors on platforms such as Xiaohongshu, Maimai, Weibo, etc., that they lost huge losses after participating in ZEEKR's equity incentives. Netizens claimed that the exercise price of ZEEKR equity incentive (ordinary shares) was as high as 100 yuan. According to the ratio of 10 ordinary shares can be exchanged for 1 depositary share, 1,000 yuan can be exchanged for a depositary share with a price of 28.26 US dollars (204.22 yuan). ”

As of press time, Slightly Larger Reference tried to contact a number of voices for verification, but did not receive a reply.

In the capital bureau of ZEEKR, who is the loser and who is the biggest winner?

01 The "joys and sorrows" of equity incentives

The reason why An Conghui laughed heartily at the scene of the ZEEKR bell is very simple.

An Conghui joined Geely Holding Group in 1996. Since then, he has held various key positions such as Chief Engineer and General Manager of Geely Holding Group, serving as Vice President of Geely Holding Group from 2003 to 2011 and President of Geely Holding Group since December 2011. An Conghui is the executive director of Geely Automobile, as well as the director and CEO of ZEEKR, and one of the souls of ZEEKR design.

As a high-level executive, An Conghui has not won many options.

An Conghui received 68 million shares, representing 3% of the total shares before the issuance and 2.7% of the total number of shares after the issuance. In the above table, ZEEKR disclosed the number of equity awards received by An Conghui, but did not disclose the exercise price.

ZEEKR's equity incentive can be traced back to 2021 at the earliest, and has undergone multiple rounds of equity changes since then. However, An Conghui still holds 3% of the equity, and the proportion of equity obtained by An Conghui in the early stage is not low, and the price is likely to be extremely low.

An Conghui's exercise price can be glimpsed from the equity of several other executives. According to the prospectus, the exercise price (or purchase price) of Zhu Ling's equity awards related to common shares is US$0.0002 per share. According to the estimation that each ADS of ZEEKR corresponds to 10 ordinary shares, as long as the price of ZEEKR ADS is above $0.002 per share when the executives can exercise the options, the executives who obtain the options at a low price will successfully and easily make profits.

On the whole, the "book yield" of the executives led by An Conghui is quite high.

As of December 31, 2023, 93011731 RSUs (restricted stock units) under the 2021 Plan have been granted and are still being issued, excluding RSUs that have been cancelled after the relevant grant date. Therefore, other senior executives also hold certain shares, but the shareholding ratio is very low. In the prospectus, the shares held by ZEEKR executives other than An Conghui and Li Shufu account for less than 1% of the total issued shares of ZEEKR, and are only marked with "*".

However, not everyone will be able to get an exercise price of $0.002 per share. Slightly larger reference called the recruiter responsible for the development of ZEEKR battery, the recruiter said, "Most (companies) will have options, but whether the specific personnel have options and option prices also depend on the importance of the employee's position and the company's system." ”

There is no doubt that An Conghui is "far ahead" in equity incentives. ZEEKR further divides the equity incentive plan into two types: service period-based and performance-based. According to Geely Automobile's announcement on equity incentives in August 2021, "Considering the positioning and medium and long-term development plan of ZEEKR, it has been determined that the annual sales volume in 2025 will not be less than 650,000 units, and the market position assessment index in 2025 will be the top three in the global high-end smart electric vehicle market share." ”

In line with the general, at Geely Automobile's results conference for the first half of 2023, An Conghui also set Zeekr's future goal as "sales of 650,000 units in 2025".

For An Conghui, the current listing is only "rich on paper", and only in 2025 can we further discuss whether to "settle for safety".

02 Li Shufu who disappeared

On the first day of listing, ZEEKR rose 40% from the issue price in intraday trading. As of the close of the U.S. stock market, the stock price of ZEEKR closed at $28.26 on the first trading day.

It is difficult to determine whether Li Shufu can laugh when he sees the stock price of ZEEKR of $28.26 and the market value of $6.898 billion.

After all, Li Shufu has not paid much to Extreme Krypton.

First of all, Li Shufu will build a supply chain with ZEEKR as a "pro-son". Internally, ZEEKR 001 is developed based on the vast SEA architecture. It is reported that Haohan SEA was jointly built by Geely and Baidu, spending nearly 20 billion yuan. In addition, Zeekr's Falcon Eye Vidar fusion perception system, body structure and skeleton are also derived from Geely.

Secondly, Li Shufu merged high-quality assets into ZEEKR in the early days. In October 2021, 51% of the equity of Ningbo Weirui was acquired by the Shanghai subsidiary of ZEEKR Holdings. Prior to the launch of ZEEKR 001, a large part of ZEEKR's revenue came from the sale of batteries and other components to Geely Group, as well as R&D services.

Even in the past year, Li Shufu has not stopped sending related party transactions to ZEEKR. According to the prospectus data, ZEEKR will provide 2.4978 billion yuan of R&D services and sell 8.4618 billion yuan of batteries and other parts to Geely Holdings in 2023, and in 2023, ZEEKR will sell 3.2626 billion yuan of batteries and other parts to Geely Automobile, and 2.7303 billion yuan of batteries and other parts to Geely Automobile's affiliates.

While Li Shufu supports ZEEKR on the asset side and income side, he does not forget to transfer cash on the capital side.

According to the prospectus, Li Shufu's Geely sent a loan of 11.3 billion yuan to ZEEKR. Specifically, in April 2022, Zhejiang Zeekr signed a 10-year loan agreement with Zhejiang Geely Automobile Manufacturing Co., Ltd., with a total principal amount of RMB 9.7 billion. In November 2022, its subsidiary, Ningbo Viridi, entered into a 10-year loan agreement with Zhejiang Geely Automobile Manufacturing Co., Ltd. in the aggregate principal amount of RMB1.6 billion.

Finally, Li Shufu did not forget to participate in the subscription of ZEEKR's new shares.

Compared with three years ago, the U.S. stock market's attitude towards automobiles has become colder. Either to arouse everyone's attention to ZEEKR, or to support the market value of ZEEKR, Geely Automobile has subscribed for 12900952 ADSs in this offering, and ZEEKR issued 21,000,000 ADSs this time. In other words, Li Shufu's Geely Automobile accounted for nearly 6% of the subscription.

After the issuance, Li Shufu owns 1951009520 ordinary shares, with 78.8% of the voting rights, and the voting rights are highly concentrated. As a result of the oversubscription, ZEEKR issued a total of 21 million ADSs at a price of $21 per share, raising approximately $441 million. ZEEKR said that if the underwriters exercise their over-allotment rights, the size of the offering will be further expanded to 24.15 million ADSs, raising about $507 million.

As the leader of asset transfer, the person behind related party transactions, and the main force of American depositary shares, Li Shufu's attention and expectations for ZEEKR are self-evident.

However, the stock price performance and fundraising results after the listing of ZEEKR are not worthy of Li Shufu's early investment. In 2021, 2022 and 2023, ZEEKR recorded a net loss of RMB4.514 billion, RMB7.655 billion and RMB8.264 billion, with a cumulative loss of RMB20.433 billion in the past three years, with an average annual loss of RMB6.8 billion. As of the end of 2023, ZEEKR's book cash and cash equivalents are only 3.26 billion yuan, plus the US$441 million (about 3.187 billion yuan) raised from this listing, which is only enough for ZEEKR to burn for about another year.

But in the end, ZEEKR only gave Li Shufu a market value of $6.898 billion. After ZEEKR went public, according to Li Shufu's 78.8% shareholding ratio and market value of 6.898 billion US dollars, Li Shufu's "book wealth" increased by nearly 5.4 billion US dollars.

At the scene of the bell ringing of the extreme krypton, Li Shufu was not seen.

03 Neglected Ningbo State-owned Assets Department

When it comes to the biggest winner of ZEEKR's listing, everyone's first reaction is often Li Shufu and An Conghui, and ignoring the Ningbo state-owned assets behind ZEEKR.

According to Tianyancha data, ZEEKR experienced three rounds of equity changes before the IPO. In the A round of financing, the three major investors of Yuexiu Industrial Fund, Commerce Fund and Quzhou Financial Holdings all have state-owned backgrounds.

It is worth mentioning that the above-mentioned state-owned assets trust ZEEKR.

Specifically, in order to ensure the stability of the project, the state-owned assets system, which usually designs VAM and repurchase as the exit path at the time of investment, did not do so in this investment. According to the prospectus, as of December 31, 2021, 2022 and 2023, ZEEKR has no material contingencies, material reserves for long-term obligations, mandatory dividends or redemption requirements or guarantees for redeemable shares. In other words, the state-owned assets department did not design a mandatory redemption mechanism when investing in ZEEKR.

Second, the valuations of the two rounds are quite high. In the Pre A round of financing, ZEEKR's financing valuation was as high as $8.929 billion. In the A round of financing, the three major state-owned investors of Yuexiu Industrial Fund, Commerce Fund and Quzhou Financial Holdings pushed the financing valuation to US$13 billion.

One of the main reasons why state-owned investors trust ZEEKR so much is that ZEEKR met and cooperated with the state-owned assets department in the early years.

For example, Commerce Fund is affiliated to Ningbo Commerce Group, which is the only state-owned capital investment and operation platform in Ningbo and a member of Ningbo's state-owned assets department. In June 2021, the Ningbo Municipal People's Government signed a strategic cooperation agreement with Zhejiang Geely Holding Group Co., Ltd., and the global headquarters of Geely's Zeekr Intelligent Technology Co., Ltd. officially settled in Ningbo.

Shortly thereafter, the cooperation between ZEEKR and Ningbo was further promoted. Geely Holding Group, Ningbo Commerce Group and Beilun District Government officially signed an investment contract for the ZEEKR smart electric vehicle project, with a total investment of 100 billion yuan.

After ZEEKR headquarters landed in Ningbo, sales skyrocketed. From 2021 to 2023, the sales volume of ZEEKR will be 6,000, 72,000 and 118,000 respectively, the total revenue from automobile sales will be 1,544.3 million yuan, 19,671.2 million yuan and 33,911.8 million yuan respectively, and the company's overall operating income will be 6.5 billion yuan, 31.9 billion yuan and 51.7 billion yuan respectively. It is not difficult to imagine how much opportunity Ningbo has gained from ZEEKR production capacity and tax revenue.

Ningbo is also happy to see the listing of ZEEKR. In the 2022 "Ningbo State-owned Assets Help ZEEKR Build a Super "Unicorn"" released by "Ningbo Evening News", it was said that "Subsequently, the above two Ningbo state-owned assets funds (Ningbo State-owned Assets and State-owned Enterprises Reform and Development Fund and Free Trade Zone New Kinetic Energy Fund) will help Ningbo's largest 'unicorn' enterprise ZEEKR to go public." ”

In this listing, the valuation of ZEEKR is less than half of the original financing scale, and the investor Commerce Fund has a floating loss. Although Commerce Fund is now losing money, the Ningbo state-owned assets behind it have reaped the production capacity and taxes of ZEEKR a long time ago. Perhaps for the Ningbo state-owned assets department, no matter whether the market value of ZEEKR is high or not, it can make a lot of money.

Because, Ningbo's vision is not in the exchange, but in the ZEEKR factory.

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