United Auto Hong Kong stock IPO doubts: 360, Catalonia era blessing can create a new car "dark horse"?

21st Century Business Herald reporter Zuo Maoxuan Beijing reported on February 16, some media reported that the new car-making force Nezha Automobile parent company United New Energy Automobile Co., Ltd. officially launched the Hong Kong stock listing plan, planning to raise 1 billion US dollars, sponsors are CITIC, CICC, Morgan Stanley. In this regard, on February 16, the 21st Century Business Herald reporter asked United Automobile for verification, "For this matter, it is not known, and the news will be released as soon as possible." A relevant person from United Automobile told the 21st Century Business Herald reporter.

Although United Automobile has not commented on the IPO, the listing of United Automobile is already on the string. As early as July 23, 2020, United Automobile officially said that it planned to IPO on the Science and Technology Innovation Board in 2021, and since then, there have been many news related to the company's listing.

Car manufacturing is a heavy asset industry, with large capital investment and long return cycle. For the new car-making forces, in the case of being unable to solve the problem of loss and forming self-"hematopoietic" ability, listing is an inevitable choice. According to the performance of Nezha Automobile revealed in the financial report of 360 Group, a shareholder of Hezhong Automobile, Nezha Automobile achieved revenue of 1.297 billion yuan and a net loss of 1.321 billion yuan in 2020, and achieved revenue of 1.632 billion yuan and a net loss of 693 million yuan in the first half of 2021. United Auto is still in the stage of high losses.

Since 2018, the head camp of the new car-making forces, Weilai Automobile, Xiaopeng Automobile and Ideal Automobile, have successively landed on the US stock market, in addition, Xiaopeng Automobile and Ideal Automobile will return to Hong Kong stocks in 2021.

The new energy automobile industry is the outlet, but the competition is equally fierce, and only a few companies can survive the knockout rounds. In addition to the new forces of the first echelon of car manufacturing, in order to develop for a long time, second-tier companies also have an urgent need for listing, and United Automobile, WM Automobile, and Zero Run Automobile have previously reported the news of planned IPOs.

"It is more difficult for vehicle companies to go to the science and technology innovation board, the number of United Automobile deliveries is good, there are 360 shareholders, and the Ningde era has also invested." Second-tier companies must wait to go public, otherwise the money will not be enough. On February 16, an executive of an automotive industry consulting agency told the 21st Century Business Herald reporter.

Received the blessing of 360 and Ningde era

According to public information, Hezhong New Energy Automobile Co., Ltd. was established in 2014, obtained the production qualification of new pure electric vehicles in April 2017, released its car brand Nezha Automobile in 2018, and launched the first mass production car Nezha N01 at the end of that year. Different from the new force of head car manufacturing "Wei Xiaoli", at present, several models launched by Nezha Automobile mainly focus on the low-end market below 100,000 yuan.

2021 is the feng shui ridge of United New Energy.

Before 2020, there is a big gap between its brand voice, financing, sales scale, etc., and the new forces of head car manufacturing.

In 2021, the scale of Nezha automobile market achieved rapid growth, with a total of 69,174 vehicles delivered throughout the year, an increase of 361.7% year-on-year. And repeatedly surpassed Weilai Automobile with the posture of "dark horse", breaking into the top three of the monthly sales of new car-making forces. In January this year, Nezha automobile delivery volume was 11,009 units, an increase of 402% year-on-year, once again entering the top three new car sales.

In addition to the increase in sales, United Automobile also introduced a strategic shareholder 360 in 2021 and reached an in-depth cooperation with CATL.

The pattern of China's new car-making forces is basically formed around 2020, Weilai Automobile, Xiaopeng Automobile, ideal automobile three enterprises stand out, and the second-tier enterprises gradually open up the gap, more capital flocked to the head of the track, and the attitude towards the second- and third-tier enterprises is cautious, the second-tier enterprises themselves do not have strong financing capabilities, and it is more difficult to solve the problem of "survival".

To a certain extent, 360 Group and 360 founder Zhou Hongyi have become the "white knights" of United Motors.

Since it does not have the strength of hardware, 360 hopes to quickly cut into the track of intelligent new energy vehicles through investment. Zhou Hongyi's options are not many, although at most there are hundreds of new car-making forces in China, but there are few companies that have completed mass production delivery. In the end, Zhou Hongyi set his sights on Nezha Automobile, the second echelon of the new car-making force.

In May 2021, Zhou Hongyi announced that 360 Group will make a strategic investment in Nezha Automobile, and after completing all the investments, it will become the second largest shareholder of Nezha Automobile.

Nezha Cars also needs external forces to help it survive. Previously, the financing of Nezha Automobile mainly came from the local government production and investment fund, and it did not have the "Internet aura" of Weilai, Ideal and Xiaopeng.

Fang Yunzhou, chairman of United Automobile, and Daniel Zhang, president of United Automobile, both come from traditional car companies, and the company's main team is mainly from traditional automobile companies. One of the advantages brought by this background is that Nezha Automobile can quickly build the car and bring it to the market. However, in the eyes of the outside world, such a company is too traditional.

Daniel Zhang also told the 21st Century Business Herald reporter that through cooperation with 360, Nezha Automobile will absorb the advantages of Internet genes and integrate and recombine with the car DNA. At the same time, in terms of intelligent interconnection, 360 will also provide all-round empowerment for Nezha Automobile.

At the end of October 2021, Nezha Automobile officially released the news that Nezha Automobile completed the D1 round of financing of 4 billion yuan, of which 360 Group led the investment of 2 billion yuan, and CCB International, CITIC Securities Investment, Shenwan Hongyuan Hong Kong New Energy Industry Fund, Jifu Venture Capital and other follow-up investment. So far, 360 has invested in Nezha Automobile for two consecutive rounds, with a total amount of 2.9 billion yuan, and will hold a total of 16.594% of the equity of Nezha Automobile, becoming the second largest shareholder of Nezha Automobile.

On November 8, 2021, Ningde Times, a leading chinese power battery company, and Nezha Automobile, a new car-making force, officially signed a strategic agreement. CATL will participate in the D2 round of financing, strategically invest in Nezha Automobile, and fully open strategic cooperation in the fields of technology research and development and supply chain assurance.

According to reports, in addition to providing core support for Nezha automobile power batteries, CATL will also jointly develop innovative integration technologies for new energy vehicles with Nezha Automobile. It is worth mentioning that this is the first time in the Ningde era that has increased investment in the upstream and downstream of the industrial chain in the past two years that it has publicly participated in the financing of new car-making forces.

Can the "dark horse" counterattack?

Up to now, the cumulative sales volume of Nezha Automobile has exceeded 100,000 vehicles, which is the fourth new Chinese car-making force to achieve this achievement after "Wei Xiaoli".

Although in the past three months, Nezha Automobile's monthly sales have exceeded 10,000 units, and have surpassed Weilai Automobile several times, the industry generally does not put it in the same position as the head enterprise.

This is mainly because the positioning of Nezha Automobile is obviously different from the other three enterprises, "Wei Xiaoli" is positioned in intelligent electric vehicles, with auxiliary driving function as one of the core competitiveness of the product, the price of the main sales products is more than 200,000 yuan, and Weilai is positioning itself as a high-end brand.

The model positioning of Nezha Automobile is low, and the three models currently on sale: Nezha V, Nezha U and Nezha N01, the guided price range after subsidy is 629-1208 million yuan, 1048-1798 million yuan and 668-1398 million yuan, respectively.

Among them, the main model is the cheapest Nezha V. According to the data of the Association, the sales volume of Nezha V in 2021 will be 49646 vehicles, accounting for more than 70% of the overall sales.

Due to the low price of products, there is a big gap between the profitability and ability of Nezha Automobile and enterprises such as Weilai.

The reason why Nezha V sells well is also related to the market structure of domestic new energy vehicles. At present, the mainland new energy vehicle market presents a "dumbbell" structure dominated by high-end and low-end markets. The market where Nezha Automobile is located is indeed the market with the greatest demand at present, and the most representative model is the domestic electric vehicle market sales champion Wuling Hongguang Mini EV.

At the same time, since the early entry into the market is mainly based on operating vehicles such as online ride-hailing vehicles, Nezha Automobile also needs to quickly develop the private car market. However, due to the low brand power and limited product competitiveness, Nezha Automobile is facing a lot of challenges if it wants to achieve certain results in the private car market.

In addition, with the decline of subsidies, from 2022, some of the models currently on sale of Nezha Automobile will adjust their prices, rising by about 2,000-5,000 yuan. Among them, the Nezha V standard endurance version upgrade, standard endurance entertainment version upgrade type and witch version were all raised by 2,000 yuan, and the adjusted prices were 62,900 yuan, 65,900 yuan, 72,900 yuan and 74,900 yuan, respectively. In the 60,000-80,000 yuan market, consumers are more sensitive to price, which may have a certain impact on the sales of Nezha cars.

In fact, although Nezha Automobile's existing products are positioned at the low end, it has repeatedly shouted out the slogan of "equal rights in science and technology", saying that the cars it builds are also "smart cars".

During the Guangzhou Auto Show in November 2021, Daniel Zhang said in an interview with the 21st Century Business Herald that Nezha Automobile plans to launch three models by 2025. Nezha Automobile also wants to export overseas, aiming to reach the scale of 100,000-200,000 units in 2025, while the sales target in China will exceed 500,000 units.

Nezha Automobile plans to officially launch Nezha S this year and enter the 200,000 yuan level market, hoping to pull up the brand. "We want to completely reverse everyone's impression of the original technology of Nezha Automobile through Nezha S, so that everyone thinks that Nezha is a company with technology." Daniel Zhang representation.

On the way to build intelligent electric vehicles, "Wei Xiaoli" has chosen the route of self-developed automatic driving, and Nezha Car has a certain difference from it. Daniel Zhang said that Nezha Automobile will put more energy into software and algorithms, and do some full-stack development on software, which is the direction of Nezha Automobile. However, in terms of hardware, professional hardware manufacturers will do better than automakers.