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Nezha Automobile is determined to "go to sea" and seek a broad capital world. On June 26, Hezhong New Energy Automobile Co., Ltd. submitted a listing application to the Hong Kong Stock Exchange to be listed on the main board of the Hong Kong Stock Exchange, with CICC, Morgan Stanley, CITIC Securities, ABCI and CMB International as the joint sponsors. It is worth mentioning that Nezha Automobile is the car brand of Hezhong New Energy Vehicle, and if it can be successfully listed, it will become the fifth "new car-making force" to land on the Hong Kong Stock Exchange after Weilai Automobile, Li Auto, Xiaopeng Motors, and Leapmotor.
Nezha car dealers are stocked with mainstream models.
Losses intensified
Nezha Automobile seeks to go public, and the market has long heard of it. As early as July 2020, Nezha Automobile announced in a high-profile manner that it would start the listing application of the Science and Technology Innovation Board, and planned to go public in 2021, but in the end, it did not happen. Since then, in 2022 and 2023, Nezha Automobile has been exposed many times to plan to switch to Hong Kong stocks, but it has denied it. With the submission of the listing application of Hezhong New Energy Automobile to the Hong Kong Stock Exchange, Nezha Automobile started its listing journey in the eyes of the public. According to the prospectus, Nezha Automobile's revenue from 2021 to 2023 will be 5.087 billion yuan, 13.05 billion yuan, and 13.555 billion yuan respectively. In the past three years, the business revenue of this segment was 4.75 billion yuan, 12.778 billion yuan and 13.253 billion yuan respectively, accounting for 93.4%, 97.9% and 97.8% of the total revenue. The reporter of the Financial Investment News noticed that although the revenue was rising, the increasing losses had become a dark cloud on Nezha's head. According to the prospectus, Nezha Automobile will lose 4.84 billion yuan, 6.666 billion yuan, and 6.867 billion yuan respectively from 2021 to 2023, with a cumulative loss of 18.373 billion yuan in three years.
According to the prospectus
As for how to get rid of losses and achieve profits, Nezha Automobile said in the prospectus that it plans to take the following measures: continue to launch new models and implement rapid product iteration, focusing on products with higher prices; Further expand overseas markets and customize products according to the characteristics of each market and customer needs to improve profitability; provide more value-added services, such as leasing services, battery cascade utilization services and software subscription services, to increase revenue streams; We will continue to develop our core parts and purchase non-core components from suppliers to improve overall cost-effectiveness. For Nezha Automobile, the IPO in Hong Kong may only be the first step, and whether it can be listed at a more ideal valuation to raise funds and obtain good secondary market liquidity is a difficult problem in front of the company. Shen Meng, executive director of Xiangsong Capital, said in an interview with a reporter from the Financial Investment News that the current competition in the new energy vehicle market is intensifying, and even if Nezha Automobile is successfully listed, it does not rule out the possibility of breaking in the short term.
Overseas factories were built
In the context of intensified competition, how does Nezha Automobile break the game? It has set its sights on overseas markets with broader prospects. According to the prospectus, Nezha Automobile will export 17,000 units in 2023, accounting for 13.7% of total sales in 2023 and 12.0% of sales revenue, and the vehicles will be mainly exported to the Southeast Asian market. According to the CIC report, in terms of retail sales in overseas markets, the overseas sales of Chinese NEV vehicles will reach 600,000 units in 2023, accounting for 11.9% of the total NEV passenger vehicle sales in overseas markets. It is estimated that by 2028, the overseas sales of Chinese NEV OEMs are expected to grow rapidly to 4.5 million units, accounting for 33.0% of the total NEV passenger vehicle sales in overseas markets. "We will continue to focus on the Southeast Asian market, continue to develop the Latin America, Middle East and Africa markets, and expand into the European market in due course. We believe that our presence in overseas markets will help us further diversify our revenue streams, strengthen our economies of scale and improve our profitability." Nezha Automobile said so in the prospectus. Since the beginning of this year, Nezha Automobile's overseas layout has gained strong momentum. According to data released by the China Association of Automobile Manufacturers, in the first five months of this year, 519,000 new energy vehicles were exported, a year-on-year increase of 13.7%. Among them, Nezha Automobile exported 16,458 vehicles, ranking fifth in the export volume of new energy vehicle companies and first in the export volume of "new car-making forces". At the same time, Nezha Automobile has established three overseas factories in Thailand, Indonesia and Malaysia. According to public data, as of the end of May this year, it had more than 420,000 users around the world, covering 30 countries and regions.
Poor sales From the perspective of the price range, Nezha Automobile's products are positioned between $15,000 and $45,000. In the low-end new energy vehicle market that it is deeply cultivated, there are not a few car companies that are eager to "exchange price for volume" and seek sales growth. With BYD, Changan, Geely and other car companies entering the market one after another, this market segment may become the next battleground. From a long-term perspective, from 2020 to 2022, Nezha Automobile's annual sales will be 15,100, 69,700, and 152,100 respectively. In 2023, its annual sales fell by 16.16% year-on-year to 127,500 units. Since the beginning of this year, the decline in Nezha automobile sales has become more obvious. According to public data, Nezha Automobile's cumulative sales in the first five months of this year were about 43,600 units, less than 20% of the annual target. As early as the beginning of this year, Nezha Automobile CEO Daniel Zhang revealed that the sales target for 2024 is 300,000 units. As the "lifeline" of car companies, sales volume is a key factor to measure whether car companies are developing well, and its importance is self-evident to ensure the cash flow on which they depend. In this regard, some industry insiders said that with the increasingly fierce competition in the new energy vehicle market, "monthly sales of 10,000 vehicles" is the passing line that the head car companies must meet the standard. The reporter of the Financial Investment News noticed that if the monthly sales in May this year are taken as an example, Nezha Automobile, which has just stepped on the passing line, is by no means a "top student" and still lags behind other "new car-making forces". According to public data, in May this year, Li Auto delivered more than 35,000 vehicles, a year-on-year increase of 23.8%; NIO delivered about 20,500 vehicles, a year-on-year increase of 233.8%; Xpeng delivered 10,146 vehicles, a year-on-year increase of 35.2%. In comparison, Nezha delivered 10,113 vehicles in the month, slightly less than Xpeng. Some industry insiders pointed out that the current acceleration of the elimination of new car-making forces, coupled with the impact of the price war, the survival situation faced by car companies is becoming more and more severe. Nezha Automobile urgently needs to increase the scale of sales and form a "hematopoietic" ability in order to have a certain voice in the market.
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