Author | Chai Xuchen
Edit | Zhou Zhiyu
After waiting for a long time, Zeekr, which was personally led by Geely founder Li Shufu and carried Geely's new energy ambitions, finally knocked on the door of the capital market.
On May 10, Eastern time, ZEEKR rang the bell of the New York Stock Exchange and was officially listed. ZEEKR's share price rose 40% from the issue price during the session, and finally closed up 34.57% on the day. On May 13, the rally in ZEEKR's share price continued, closing up 2.76%, and the market value further approached Xpeng Motors.
This is a rare "super IPO" in the car manufacturing industry in the past four years.
Following Wei Xiaoli's gathering in the U.S. stock market in 2020, it has been four years since a new Chinese EV manufacturer successfully landed on the U.S. stock market; In 2022, Leapmotor briefly seized the listing window of Hong Kong stocks, and the amount of financing was less than expected; Including GAC Aion, VOYANT, AVATR and other "second generation" are still trying to break through in order to achieve a leap forward through listing.
The listing of ZEEKR has seized a good opportunity, and market sentiment is picking up. JPMorgan Chase pointed out in the research report that it is expected that the demand or sales of passenger cars will return to trend levels in May and June, and auto stocks may have a positive performance.
Li Shufu also once again demonstrated his superb capital operation ability in the ZEEKR IPO.
At the time of ZEEKR's listing, the proportion of outstanding shares was extremely low, only 7.2%, far lower than the 60% level of Xpeng and NIO when they were listed. The large subscription by shareholders further led to a further decline in the outstanding share ratio, but it was conducive to its stock price management, and its turnover rate in the first two trading days of listing reached 55.47% and 25.35% respectively, which was much higher than the level of Wei Xiaoli's initial listing (up to 3.6%).
In addition, the valuation of ZEEKR IPO has been lowered, which is more attractive than the previous round of "four discounts" (valued at $13 billion in Series A financing in February last year), as well as the "green shoe mechanism" escort. A set of combination punches down, so that ZEEKR can have a good trend in the early stage of listing.
Valuation discounts, reduced fundraising, and reduced outstanding shares cannot stop ZEEKR from entering the secondary market.
As Geely's No. 1 project, ZEEKR was originally just a pure electric division under Lynk & Co, but after the brand became independent, Li Shufu and An Conghui personally led the team, and Geely's resources were rapidly tilted, until it was now listed, which took just 37 months, making it the new force with the fastest IPO at present. And this is also a choice made after several trade-offs.
At present, China's new energy vehicle industry has entered a period of great reshuffle and integration, and if you want to "survive" in the fierce competition of technology and price, players in the field need to further invest and strengthen their competitiveness.
However, the attitude of the capital market towards new energy vehicle companies is not as warm as two or three years ago, and financing in the primary market is no longer easy, and the "second generation of car companies" has caused financial pressure on the parent company.
Some institutions pointed out that the automotive industry environment in 2023 will no longer support a valuation of more than $10 billion. For reference, Wei Xiaoli, who was the first to land on the U.S. stock market, has fallen 50-90% from its peak position last year.
Obviously, the valuation logic of new energy vehicle companies has changed dramatically, and even high-quality companies in the industry have to bear the price of "bleeding listing".
An Conghui, CEO of ZEEKR, said frankly, "The scale of this issuance is indeed a little smaller, but it has been the largest among global auto companies in the past few years." According to people familiar with the matter, the final IPO pricing and valuation of ZEEKR have been better than when communicating with investors during the Spring Festival.
ZEEKR's listing at this time is also based on the overall strategic planning of Geely Holdings, and Li Shufu does not want to wait any longer.
According to the prospectus, from 2021 to 2023, ZEEKR's net loss will expand from 4.514 billion to 8.264 billion, and the asset-liability ratio in fiscal 2023 has reached 132%, which is significantly higher than Wei Xiaoli (57% for Xiaopeng, 58% for ideal, and 75% for Weilai) in the same period. The investment in R&D has grown rapidly, soaring from 3.16 billion yuan to 8.369 billion yuan last year, with a cumulative consumption of nearly 17 billion yuan.
The R&D investment has increased year by year, projecting the extreme krypton that is trying its best in the market. With Xiaomi, Wenjie, Ideal and other new power brands in the market of more than 200,000 yuan, accelerate the capture of the city, the same price segment of the extreme krypton needs to come up with more lethal and crack the homogenization of the product to deal with the battle, this year and next year it will also challenge the sales target of 230,000 and 650,000 units, which will undoubtedly consume more grain and grass.
From the perspective of cash flow, from 2021 to 2023, ZEEKR's cash on hand has been hovering around 4 billion yuan, and its main source of funds, in addition to business operations, comes from the financial support, bank lending and equity financing activities of the controlling shareholder.
Last year, Geely Holding also repeatedly reduced its stake in Volvo Cars, saying that the proceeds from the transaction would be used to support the development of the company's brands.
ZEEKR must be more "self-reliant" and open new financing channels to reduce Geely's burden. Between continuing to endure and "self-lowering value", ZEEKR chose the latter and decided to use capital power to accelerate development. An Conghui also bluntly said that this IPO is strategic.
ZEEKR said in the prospectus that about 45% of the funds raised by the IPO will be used to develop pure electric vehicle technology and expand product portfolio; About 45% will be used for sales and marketing, as well as the expansion of service and charging networks; The remaining 10% will be used for daily operations.
Of course, getting Li Shufu's preferred extreme krypton foundation is not bad. Last year's sales reached 119,000 units, driving Geely Automobile's NEV sales to exceed 480,000 units last year, accounting for 28.7% of total sales. In the context of the price war, its gross profit margin still reached 15% last year, second only to Tesla and Ideal.
After being listed on the New York Stock Exchange, with Geely's layout from sales channels, overseas R&D centers to intelligence, ZEEKR stands on the global market resources and accumulation of the parent company's many years of operation, and hopes to continue to open up a new situation and improve its popularity in the global market, which is also the highlight of its next stage of releasing sales and turning losses into profits.
The IPO is just a footnote on the road to the growth of ZEEKR, but for Geely, it is a key card to become a "Volkswagen Group" in the new energy era and regain the "independent first brother".
As a listed public company, it is responsible for shareholders and users, relying on its own products to grow into Geely's "Audi" or "Porsche", and at the same time compete with Tesla and other industry giants on the global stage with a more independent attitude.
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