If it is not listed, Nezha will not be able to live happily

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2024-06-27 21:39Tiger Sniff APP official account

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01Hezhong New Energy, the parent company of Nezha Automobile, submitted an IPO application to the Hong Kong Stock Exchange, seeking to go public to solve the funding problem.

02However, Nezha Automobile's losses have continued to expand in recent years, and as of December 31, 2023, cash and equivalents were 2.836 billion yuan.

03In order to cope with the financial pressure, Nezha Automobile has accelerated its layout in overseas markets and is currently building factories in Thailand, Indonesia, Malaysia and other places.

04 Despite this, Nezha Automobile is gradually falling behind in the competition in the domestic market, and its sales volume in 2023 will decline by 16.16% year-on-year.

05 On the other hand, Nezha Automobile performed well in overseas markets, with exports of new energy vehicles reaching 16,458 in the first five months of this year, ranking first in the export volume of new car companies.

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Although Nezha Automobile still has tens of billions of funds lying on its books in 2022 and is not in a hurry to go public, the current situation is that if it cannot be successfully listed, Nezha's next step will become slim.

On June 26, Hezhong New Energy, the parent company of Nezha Automobile, submitted an IPO application to the Hong Kong Stock Exchange.

"If you can get on the market, you can solve the financial problem, and if you can't get on it, the pressure will be greater." An industry insider said to Tiger Sniff Auto.

According to the prospectus, as of December 31, 2023, Nezha Automobile's cash and equivalents were 2.836 billion yuan, and Nezha's losses are still expanding.

Only by going public can you continue your life.

There are already plans to go public

Nezha Automobile has long planned to go public. In July 2020, it launched the listing application of the Science and Technology Innovation Board, and planned to complete the listing in 2021, but the listing was not achieved in the end. Then in 2022 and 2023, there was market news that Nezha Automobile was preparing to IPO in Hong Kong, but officials denied it.

A clear signal is that Nezha Auto completed a 7 billion yuan crossover round of financing in August 2023 (similar to the pre-IPO round of financing, an equity investment in order to make a company IPO faster).

In April this year, Nezha won another financing of no less than 5 billion yuan, and one of the contents of the agreement mentioned that this fund will support Hezhong Automobile to achieve an IPO as soon as possible.

Combined with the prerequisites for Hong Kong stock IPOs, it puts forward financial requirements, business records, management stability and public shareholding ratio for pre-listed companies, among which the financial requirements of the GEM are at least HK$150 million at the time of listing.

It is not difficult to understand Nezha's series of capital moves before listing. However, whether the money can arrive depends on whether Nezha can be successfully listed. A person in the consulting industry told Tiger Sniff Auto, "If you don't wait for the IPO, the cornerstone investment will not be possible, and you may never get it." ”

Of course, since Nezha Automobile has submitted its prospectus, it is likely to make full preparations for listing.

However, the difficult problem in front of Nezha is how to gain the confidence of the capital market in new car manufacturers. Judging from the stock price performance of the new power car companies that have been listed on the Hong Kong stock market, the stock prices of Xiaopeng, Ideal, Weilai, Leap and other companies have declined to varying degrees compared with the beginning of this year, and the enthusiasm of the capital market is fading.

"In the current market environment, it is difficult to have confidence in new car manufacturers, and the sales volume is not very good, which is very difficult." An investor told Tiger Sniff Auto that it also gave an estimate that Hezhong New Energy would not issue too many shares, about 5%.

The attitude of the capital market is uncontrollable, but in the early stage of the sprint IPO, Nezha Auto is trying to prove itself to the capital market, including adjusting the organizational structure, and CEO Daniel Zhang personally leads the marketing work; Zhou Hongyi, one of the investors of Nezha Automobile, has frequently stood for Nezha Automobile in the recent past and guided the work.

It is not difficult to see that Nezha Automobile is working hard to brush up on its presence.

There is not much money left on the account

After all, if it is not listed, Nezha Automobile will run out of money to spend.

Since 2017, Nezha Automobile has completed 10 rounds of financing, with a total amount of 22.25 billion yuan (excluding undisclosed financing amounts), but the speed of burning money has always been ahead of financing.

According to the prospectus, from 2021 to 2023, Hezhong Automobile's revenue will be 5.086 billion yuan, 13.040 billion yuan and 13.555 billion yuan respectively, but the corresponding annual losses will reach 4.840 billion yuan, 6.666 billion yuan and 6.867 billion yuan respectively, with a cumulative loss of more than 18.3 billion yuan.

During the same period, the company's gross loss was 1.748 billion yuan, 2.939 billion yuan and 2.014 billion yuan respectively, and the gross profit margin was -34.4%, -22.5% and -14.9% respectively, which is still far from turning positive.

As of December 31, 2023, Nezha Automobile's cash and equivalents were RMB2.836 billion, but its short-term borrowings had a balance of RMB4.317 billion. According to Nezha Automobile's loss trend, the current cash position is difficult to support it to enter the next round of cycle competition.

Nezha Automobile's growth dilemma lies in the fact that its core business "automobiles and parts" has difficult profits to improve, and sales have declined seriously. Nezha Automobile currently launches five intelligent new energy vehicles, including Nezha AYA series, Nezha X series, Nezha L, Nezha S, and Nezha GT, with prices below 200,000 yuan.

Nezha Automobile once sold 152073 units in 2022 and became the "sales champion" of new power car companies, but the gross loss of this year was also the most serious.

The highlights come and go quickly, and its sales in 2023 will decline significantly, with annual sales of 127496 units, a year-on-year decrease of 16.16%,

"(Nezha) when the old and new products are not connected, the rhythm is chaotic; The price of new products on the market is too high, and although the adjustment is in place in the second half of the year, it has lost the opportunity. Daniel Zhang has publicly pointed out the problem of Nezha Automobile.

Nezha is still struggling with growth problems. In the first five months of this year, Nezha Automobile delivered a total of 43,564 new vehicles, only 14.5% of the annual sales target of 300,000 units.

Nezha Automobile has three vehicle plants in China, which are located in Tongxiang, Zhejiang, Yichun, Jiangxi and Nanning, Guangxi. Daniel Zhang has revealed that the production capacity of the Tongxiang production base in Zhejiang will reach more than 200,000 vehicles in May, and the planned annual production capacity of Yichun in Jiangxi and Nanning in Guangxi is 100,000 units per year.

However, judging from the current delivery situation of Nezha, under the basis of sitting on three factories and still expanding production capacity, the possibility of idle capacity cannot be ruled out, which will also increase Nezha's operating pressure.

There is an urgent need for funds to go to sea

Although Nezha Automobile is gradually falling behind in the competition in the domestic market, it has ushered in a "new variable" in the overseas market.

From 2022 to 2023, the company's overseas business revenue will be 241 million yuan and 1.620 billion yuan respectively, accounting for 1.8% and 12.0% of operating income respectively.

In the first five months of this year, Nezha Automobile's new energy vehicle exports reached 16,458 units, ranking first in the export volume of new power car companies and fifth in the export volume of new energy vehicles by car companies.

It is reported that since 2022, Nezha Automobile has started overseas expansion with Thailand as its first destination. As of December 31, 2023, Nezha Auto has cooperated with about 80 overseas dealers in 23 countries and regions.

Nezha Automobile started production in Thailand in March this year, started local mass production at its Indonesian plant in May, and started construction of its Malaysian plant at the beginning of this year. According to Nezha Automobile's plan, it will also expand to Latin America, the Middle East and Africa, and then expand to Europe in due course.

The breakthrough of the overseas market has become a new business growth point for Nezha Automobile, but it can be seen that Nezha Automobile's overseas expansion is not "product export", but the establishment of assembly business and direct investment in overseas factories, which will undoubtedly increase the financial pressure.

For reference, Changan Automobile will invest 9.8 billion baht (about 2 billion yuan) to build an electric vehicle factory in Thailand; GAC Aion plans to invest 6.4 billion baht (about 1.3 billion yuan) to build a local plant in Thailand.

This is only a country's factory construction expenditure, according to Nezha's planning, as well as the expenditure required for subsequent production, its financial pressure is enough to imagine.

Inside, Nezha Automobile's cash flow is not very abundant; Externally, the expansion of business at home and abroad urgently needs a lot of financial support, and for Nezha Automobile at this time, there seems to be no better financing path than going public.

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