Image source: Cao Cao's official website
Although the stock prices of more than half of the listed companies under his name have fallen, if Cao Cao is successfully listed, 61-year-old Li Shufu will win his 10th IPO.
Chu Xiaoqiang | wen
When it comes to Li Shufu, it can always be associated with Geely Automobile, which he holds.
But recently, the name of the "first person in private cars" in the year of the sixtieth year has frequently appeared in the newspapers along with the online car-hailing platform Cao Cao Travel.
On April 29, Cao Cao submitted an IPO prospectus to the Hong Kong Stock Exchange, intending to be listed on the main board of the Hong Kong stock market. According to the prospectus, the actual controller of Cao Cao Travel is Li Shufu, the founder and chairman of Geely Automobile, with a shareholding ratio of nearly 84%.
In the 2023 Hurun Report, Li Shufu ranks 9th on the list with a wealth of 175 billion yuan, and owns 9 listed companies including Geely Automobile, Volvo Cars, Polestar, ECARX Technology, Qianjiang Motorcycle, Hanma Technology, Lifan Technology, Lotus, and Zeekr. Among them, 7 are newly listed companies in the past four years.
On May 10, Geely Group's high-end electric vehicle brand Zeekr was listed on the New York Stock Exchange.
If Cao Cao is successfully listed, the 61-year-old Li Shufu will win his 10th IPO.
However, while Li Shufu's listing territory continues to expand, more than half of his listed companies have unsatisfactory performance and stock prices.
01
Holding Cao Cao Travel
Cao Cao Travel was established in 2015, and one of its predecessors and operating entities is Hangzhou Youxing. As of the submission of the statement, Li Shufu holds 83.9% of the equity of Cao Cao Travel through Ugo Investment Limited and is the controlling shareholder of the company.
But Li Shufu did not hold any position in Cao Cao's travel. At present, the executive director and chief executive officer of the company is Gong Xin; The director and chairman of the board of directors is Yang Jian; The Chief Executive Officer and Chief Financial Officer is Liu Sensen; The chief technology officer is Qiang Qi; The general manager of Cao Cao Automobile Center is Liu Liqun.
As an online car-hailing platform incubated by Geely Group, Li Shufu has high hopes for Cao Cao's travel, and once gave huge financial support. According to the prospectus, Cao Cao Travel mainly provides funds for the company's business expansion and customized car fleet through debt instruments and shareholder contributions.
From 2021 to 2023, Cao Cao's net cash flow through financing activities will be 1.929 billion yuan, 1.52 billion yuan, and 1.565 billion yuan, respectively. In 2021, the cash flow from financing activities contributed by shareholders was 2.4 billion yuan, and the loans from related parties were 2.2 billion yuan, which alone amounted to 4.6 billion yuan.
At first, Li Shufu mainly provided loan financing for Cao Cao Mobility through Geely Holdings, Zhejiang Yizhen Automobile Co., Ltd. and Zhejiang Yizhen Automobile Research and Development Co., Ltd., but in the past two years, as Cao Cao's performance continued to lose money, the financial support from shareholders and related parties has also decreased.
In 2022, Cao Cao's financing cash flow will be 1.1 billion yuan from related parties, a significant decrease from the previous year; Funds contributed by shareholders fell to 90 million yuan, a decrease of 96%. In this context, in order to maintain the stability of the company's cash flow, Cao Cao Travel can only rely on asset-backed securities (and notes) and borrowings to obtain financing cash flow, which were 3.3 billion yuan and 1.581 billion yuan respectively that year.
In 2023, Cao Cao's financing funds from shareholders and related parties will shrink further, and almost all of its cash flow from financing activities will rely on asset-backed securities (and notes) and borrowings, which will reach 3.83 billion yuan and 2.368 billion yuan, respectively.
However, the dependence on financing instruments other than related parties has increased the debt pressure of Cao Caoxing, and the scale of debt has risen.
From the end of 2021 to the end of 2023, Cao Cao's total borrowings were 3.789 billion yuan, 5.579 billion yuan, and 7.53 billion yuan, respectively. At the end of February this year, the total loan rose again to 7.969 billion yuan, and more importantly, the debt due within a year reached 5.176 billion yuan, accounting for 65% of the total debt. However, from 2021 to 2023, Cao Cao's net operating cash flow will be -1.49 billion yuan, -1.127 billion yuan, and 136 million yuan respectively, and the balance of cash flow and cash equivalents at the end of February this year will be less than 900 million yuan.
Compared with the scale of short-term debt maturing within the previous year, the funding gap is close to 4.3 billion yuan. The company's operating liquidity is already facing significant challenges.
02
The loss in three years was nearly 7 billion yuan
While liquidity has been tested, Cao Cao's performance has been in a state of "blood loss".
From 2021 to 2023, Cao Cao's total revenue will be 7.153 billion yuan, 7.631 billion yuan and 10.668 billion yuan respectively, and its losses will be 3.007 billion yuan, 2.007 billion yuan and 1.981 billion yuan respectively. The cumulative loss in three years is nearly 7 billion yuan.
Compared with peers such as Dida Travel and Ruqi Travel, which also submitted statements to the Hong Kong Stock Exchange in March, Cao Cao's loss scale is also quite huge.
From 2021 to 2023, the net loss of Ruqi Travel will be 685 million yuan, 627 million yuan, and 693 million yuan respectively, with a cumulative loss of 2.005 billion yuan in three years, and the net profit of Dida Travel in the same period will be 1.731 billion yuan, -188 million yuan, and 300 million yuan respectively, with a loss in 2022 alone. Both performed better than Cao Cao's travel.
Stretching the timeline, Cao Cao's loss is far more than 7 billion yuan. "Since our incorporation, we have reported a net loss in each financial year...... We may not be able to achieve or maintain profitability in the future. Our ability to achieve profitability will depend on our ability to manage our costs and expenses. Cao Cao said.
When exactly will the company turn a profit? Will the continued losses affect the IPO? In the face of these questions, the reporter called Cao Cao Travel to understand the situation, but as of press time, the other party has not responded.
Continuing to fall into the quagmire of losses, Cao Cao Travel began to "manage costs".
In 2021 and 2022, Cao Cao's cost of sales will be 8.899 billion yuan and 7.97 billion yuan respectively, both exceeding the company's current operating income, which also led to the company's gross profit margin being negative for a time, with gross profit margins of -24.4% and -4.4% respectively in the same period.
In 2023, after some "thrift", Cao Cao will reduce its sales cost to 10.052 billion yuan, although it is still rising from the previous year, this is the first time in the past three years that its sales cost is lower than the company's revenue. In this year, Cao Cao's gross profit margin began to "turn positive", at 5.8%.
03
More than half of the stock prices fell
In fact, aside from Cao Cao's travel, Li Shufu, who has been in the automotive industry for more than 30 years, has long had a rather "luxurious" listing territory.
Up to now, there are 9 listed companies under Li Shufu's name, including Geely Automobile, Volvo Cars, Polestar, ECARX Technology, Qianjiang Motorcycle, Hanma Technology (which has become "*ST Hanma"), Lifan Technology, Lotus, and Zeekr.
Tracing Li Shufu's automobile entrepreneurship process, he entered the automotive industry in 1997, and in 2001, Geely Automobile became the first private enterprise in China to obtain the qualification of car production. Since then, Geely Automobile has been making great progress and successfully listed on the Hong Kong stock market in 2005. In 2010, he spent $1.8 billion to acquire Volvo Cars, a long-established European car company with a history of nearly 100 years, and successfully created a case of "snake swallowing elephant".
Subsequently, Geely Automobile began to transform into new energy vehicles, and in 2017, it established a joint venture with Volvo Cars to establish a mid-to-high-end brand Lynk & Co, focusing on the high-end hybrid market. In the same year, Geely Group acquired Malaysia's Proton Motors, British luxury sports car brand Lotus, and American flying car company Terrafugia.
In 2020, Geely Commercial Vehicle acquired Valin Xingma, which was later renamed as the current Hanma Technology. At the end of the year, Geely Group once again acquired Lifan Automobile, China's first listed private car company, and renamed it Lifan Technology.
In March 2021, Geely Automobile invested in the establishment of Zeekr, which is positioned as a luxury intelligent pure electric vehicle. In October of the same year, Volvo Cars was listed on the Stockholm Stock Exchange in Sweden. In June of the following year, Li Shufu's Polestar, a high-performance electrified car brand, was listed on the NASDAQ. Half a year later, ECARX, an automotive intelligent technology company founded by Li Shufu, was listed on NASDAQ as a SPAC.
In February 2024, Lotus will be listed on the NASDAQ as a SPAC; ZEEKR, which has been established for just 3 years, officially landed on the New York Stock Exchange on May 10.
Of Li Shufu's 9 listed companies, 7 are newly added after 2020.
In just over 4 years, Li Shufu has incubated 7 listed companies, which is rare in the entire capital market. This "Zhejiang businessman" in the year of the sixtieth year can be called the "harvester" of listed companies.
However, when Cao Cao submitted the form to the Hong Kong Stock Exchange to sprint for IPO, the outside world was also quite curious, what is the current situation of the listed companies in Li Shufu's hands?
First, let's take a look at the stock price (as of the close of trading on May 10).
Geely Automobile: The share price is HK$9.89, a cumulative increase of 3.51% in the past year, with a total market capitalization of HK$99.5 billion.
Polestar: The stock price is $1.27, down -61.63% over the past year, with a total market capitalization of $2.7 billion.
ECARX: The stock price is $1.61, down -67.67% over the past year, with a total market capitalization of $544 million.
Qianjiang Motorcycle: The share price is 22 yuan, with a cumulative increase of 16.21% in the past year, and the total market value is 11.6 billion yuan.
Hanma Technology (*ST Hanma): The share price is 4.53 yuan, a cumulative decline of -40% in the past year, and a total market value of 2.964 billion yuan.
Lifan Technology: The share price is 3.28 yuan, down -8.12% in the past year, with a total market value of 14.97 billion yuan.
Lotus: The stock price is $7.5, with a cumulative increase of -44.49% since its listing (less than a year after listing), with a total market value of $5.076 billion.
ZEEKR: The stock price is $28.26, with a cumulative increase of 34.57% since its listing (less than a year after listing), with a total market value of $6.997 billion.
It is not difficult to find that the stock prices of four listed companies under Li Shufu's name have fallen in the past year (or since listing), among which Polestar and ECARX Technology, which have fallen by more than 6%.
In terms of performance, the net profit (net of non-recurring gains and losses) of Polestar, ECARX, Hanma Technology, Lifan Technology, Lotus, and Zeekr in 2023 will also be in the red.
Although the stock price of ZEEKR, which has just been listed, rose by more than 34% on the first day of trading, its net losses from 2021 to 2023 will be 4.514 billion yuan, 7.655 billion yuan and 8.264 billion yuan respectively.
ZEEKR has suffered a cumulative loss of more than 20 billion yuan in 3 years, which has far surpassed Cao Caoxing, which is currently sprinting for IPO.