Written by | Xu Yun
Edit | Yang Bocheng
题图 | IC Photo
Nezha Automobile, which is considered by many netizens to be the next new car-making force to go out of business, unexpectedly walked to the front of the listing.
On June 26, Hezhong New Energy Automobile Co., Ltd. (hereinafter referred to as "Hezhong Auto"), a subsidiary of Nezha Automobile, submitted a prospectus on the Hong Kong Stock Exchange and launched a sprint to the Hong Kong stock market.
Compared with Weimar and Gaohe, which are both traditional car companies and have now fallen into bankruptcy or shutdown, Nezha's development is undoubtedly much better. But compared with the new car-making forces such as "Wei Xiaoli", Nezha's pace is too slow.
Nezha's shareholders are gradually losing patience, Zhou Hongyi makes no secret of his dissatisfaction with Nezha in front of the public, and under the increasing pressure of competition, Nezha is also impatient for change. However, judging from the prospectus, the story told by Nezha is still not "sexy" enough.
And now, in the capital market, the concept of new energy vehicles boom has long passed, the belated Nezha has just knocked on the door of listing, whether it can be successfully listed is still unknown, whether it can overturn the "bankruptcy prediction" of netizens, it takes time and strength to verify.
First, shareholders are pressing
An IPO is a must for Nezha.
On April 15, Nezha Automobile announced on its official Weibo that it had received an investment of 5 billion yuan, and the investor will coordinate relevant resources to support the IPO as soon as possible.
Although at the same time, Nezha released the detailed rules of the "Joint Agreement on the High-quality Development of Hezhong Automobile", which listed the content of supporting the IPO as soon as possible, increasing investment in R&D and technological innovation, and promoting the expansion of export scale. However, the key sentence extracted by Nezha himself reveals that this investment may be premised on Nezha's IPO.
Source: Nezha Automobile's official Weibo
In fact, as early as 2020, Nezha Automobile launched its IPO plan, but unlike "Wei Xiaoli", which chose foreign capital markets and successfully listed, Nezha, like Weimar, chose the listing venue on the hot Science and Technology Innovation Board at that time, but in the end, it failed to achieve its wish. It is rumored that this is related to the fact that the new policy of the Science and Technology Innovation Board has strengthened the review of the scientific and technological content of listed companies.
At that time, the concept of new energy in the capital market was hot, and new energy vehicle companies were rubbing traditional car companies on the ground in the stock market. Tesla's market value surpassed Toyota for the first time to become the world's most valuable car company; BYD, which holds the two major businesses of new energy vehicles and power batteries and has a leading position in the industry, surpassed SAIC for the first time to become the "first brother" in the market value of Chinese car companies.
It can be said that Nezha Automobile's failure to break through the science and technology innovation board missed the "best era" of new energy vehicles in the capital market. Subsequently, although Nezha Automobile was rumored to be sprinting for IPO many times, there was no progress until it successfully submitted a prospectus to the Hong Kong Stock Exchange this time.
Seeing that in recent years, the concept of new energy in the capital market has been neglected from the boom to today's lack of interest, and Nezha itself has gradually become disadvantaged in the increasingly fierce competition for new energy vehicles, and Nezha shareholders who have not been able to see investment returns for a long time are anxious.
The most urgent thing is probably 360 Company, Nezha's performance is really presented in the financial statements of 360, and indirectly affects the stock price and shareholder sentiment of 360 as a listed company.
In 2021, 360 spent 2.9 billion yuan to lead Nezha's D1 round of financing, giving itself a new story to tell in the boom of cross-border car manufacturing.
However, 360 soon suffered. In 2022, 360 will lose money for the first time in 8 years, with a loss of more than 2.2 billion yuan, and its net profit will plummet by 344.23% year-on-year. 360 bluntly said that the loss caused by Nezha Automobile was the main reason for the overall loss of the group, and the loss was as high as 593 million yuan.
In June 2022, 360 announced that it would give up its capital increase in Nezha and transfer 3.53% of Nezha's equity at a price of 0 yuan, and the transferee would complete the remaining 1 billion yuan of investment that 360 originally promised to Nezha.
According to the prospectus of Hezhong Automobile, 360 holds 259 million shares, accounting for 9.12% of the shares.
In a hurry, Zhou Hongyi, founder, chairman and CEO of 360 Company, walked to the front of the stage, broadcast live with Nezha CEO Daniel Zhang, and personally helped Nezha stand on the platform.
"How to make consumers can't remember how to come, you are laughing at yourself from product planning to marketing, what's the use." Zhou Hongyi's words were sharp, pointing out a series of problems in the marketing system of Nezha Automobile, and even the naming was "weird", suggesting that Nezha learn from Xiaomi's Lei Jun.
In all fairness, Nezha is quite well-known as a mythical figure, and Nezha is indeed a little unknown as a car brand.
A car owner who bought Geely's new energy vehicles a few years ago told DoNews that although he was more conservative in buying new energy vehicles and chose cars from traditional car companies, he had a general impression of Tesla and the cars of new car-making brands such as Weilai, Ideal, Xiaopeng, Wenjie, and Zeekr, and knew the general characteristics, but he did not know where the characteristics of Nezha were.
"If it weren't for the special name, and the previous online upload of 'Nezha may be the next new car-making force to go out of business', I may have forgotten that there is this brand." The owner said bluntly.
At the Beijing Auto Show, Lei Jun appeared as the Xiaomi platform, and Zhou Hongyi also wore classic red clothes to help Nezha, sang and played a wave of advertisements for Nezha L with Daniel Zhang, and even did not hesitate to climb on the roof of the car to be jokingly called "the oldest car model", sparing no effort to attract traffic and exposure for Nezha.
2. Impatience and change
Zhou Hongyi taught Daniel Zhang to build a reputation and tell stories, and under Zhou Hongyi's instructions, Nezha was impatient and eager to change.
In the first half of this year, Nezha's various marketing methods emerged one after another, and Daniel Zhang personally went down to do live broadcasts. However, unlike friends such as NIO, who are good at marketing, from the previous company's employees proposing to invite bad artist Wu Yifan to be the spokesperson to Daniel Zhang's live broadcast of Erlang's legs causing dissatisfaction among netizens, it has verified that marketing is really Nezha's shortcoming.
It can be seen from Nezha's series of marketing operations that it really wants to attract the attention of the public, and even has the idea of changing its name. On April 27, Daniel Zhang posted a video on Douyin in response to Nezha's name change, saying that he was ready to launch a survey to listen to everyone's opinions, and mentioned that Zhou Hongyi had previously proposed that Nezha be renamed "Hezhong" at the Beijing Auto Show.
Nezha, who lacks marketing genes, accelerates the reform of the marketing system and urgently digs talents. On May 24, according to media reports, Chen Chaohua, a senior media person, was appointed vice president of Nezha Automobile, responsible for brand communication and media relations. Baidu Encyclopedia data shows that Chen Chaohua has more than 20 years of experience in media, brand promotion and other related experience, and it is worth noting that from January 2017 to February 2019, Chen Zhaohua served as vice president of 360 Company and co-president of Beijing Time.
Behind Nezha's eagerness to exert efforts in marketing, the industry competition is becoming more and more fierce, and compared with its competitors, Nezha's lack of popularity has further limited sales growth.
Judging from Nezha's prospectus, there is no reason for the outside world to worry about its collapse.
DoNews inquired about the prospectus and found that from 2021 to 2023, Hezhong Automobile's revenue will be 5.087 billion yuan, 13.05 billion yuan and 13.555 billion yuan respectively, while the revenue growth rate is slowing down, the loss is intensifying, with losses of 4.84 billion yuan, 6.666 billion yuan and 6.867 billion yuan respectively in the same period, with a total loss of 18.374 billion yuan in three years.
Source: Hezhong Automobile Prospectus
At a time when he was mired in huge losses, Nezha's cash flow was tight. From 2021 to 2023, Hezhong Automobile's operating cash flow continued to be negative, with net cash used in operating activities of -2.991 billion yuan, -5.408 billion yuan and -4.354 billion yuan respectively.
As of December 31, 2023, Hezhong Auto's cash and equivalents were 2.836 billion yuan, but short-term borrowings were 4.317 billion yuan. In the same period, the cash and equivalents of NIO, Ideal, Xpeng and Leap were 32.935 billion yuan, 91.329 billion yuan, 21.127 billion yuan and 11.731 billion yuan respectively.
Funds are stretched, so that Nezha is short of ammunition in the increasingly fierce price war of new energy vehicles.
At present, the competition in the new energy vehicle track is becoming more and more white, although there is no shortage of companies such as Weimar who have withdrawn from the field, but there is no shortage of competitors.
In addition to the competition between the new car-making forces that also lack a foundation in the automotive field, the traditional car companies that are working on the new energy vehicle track and the second-generation new energy brands they have incubated have become competitors that cannot be ignored by virtue of their profound experience in car manufacturing and the influence accumulated over the years in terms of brands, sales channels, and users.
Competitors with abundant funds have started a price war, exchanging price concessions for sales growth, but in this regard, Nezha Automobile has shown a lack of confidence. When reviewing the decline in sales in 2023, Daniel Zhang said, "In order to turn the gross profit margin positive, the price war in 2023, Nezha Automobile did not fight very hard." ”
From 2021 to 2023, the gross profit margin of Hezhong Automobile will be -34.4%, -22.5% and -14.9% respectively, which is still far from turning positive.
did not dare to vigorously fight the price war, and to a certain extent, it sent a signal to the outside world that "Nezha is short of money". In 2022, Nezha defeated "Wei Xiaoli" to win the delivery of 152,100 vehicles and won the sales championship of the new domestic car-making forces, which is far lower than the car prices of other new car-making forces.
It is worth noting that from the perspective of sales, Nezha's development situation has not improved. In 2023, Nezha Automobile's annual delivery volume will be 127,500 units, a year-on-year decrease of 16%, and only half of the annual sales target of 250,000 units will be completed.
In 2024, Nezha has set an annual sales target of 300,000 units, of which 200,000 units will be sold domestically and 100,000 units will be sold overseas. However, in the first quarter, Nezha Automobile's sales were only 24,400 vehicles, a year-on-year decrease of 6.87%; Deliveries in April and May were 9,017 and 10,113 units, respectively.
Zhou Hongyi and Nezha's impatience is understandable.
3. The story is not "sexy"
Let's not discuss how likely it is that Nezha will go public. Even if Nezha is successfully listed, in the current stock market, the pursuit of new energy concepts has changed over time, and the grand occasion of new energy concept stocks is no longer there.
Investors are becoming more and more rational, and the stories told by new energy vehicle companies have been disenchanted, but they pay more attention to the essence of the company's development. The failure of the MEGA car to be launched has evaporated about HK$209.2 billion in three months, which is an example. As for Nezha, the product has always been in line with the ideal and is regarded as an ideal "replacement".
However, for Nezha and its shareholders, although the external capital environment is not good, once it is listed, the financing means will be more abundant, and it will be more convenient for shareholders to exit. For Nezha, which lacks popularity and limited brand influence, 360's shareholding and Zhou Hongyi's platform are a kind of brand endorsement, and the identity of a listed company is not an endorsement that is conducive to impressing consumers?
Nezha needs a story, and 360 also needs a story, but it is difficult to tell Nezha's story well.
Like Weimar, Nezha's products have always been aimed at the low-end market, which is also the key reason why it can quickly produce in the early days, however, since 2022, Nezha has been interested in entering a more high-end market, and the Nezha U, Nezha S, and Nezha GT have been positioned in the price range of more than 100,000 yuan, more than 150,000 yuan, and 200,000 yuan respectively.
However, it is easy for the brand to go from high to low, but it is difficult to go from low to high, and the Nezha brand has been established for a short time, lacks brand precipitation and product premium, and the market will not necessarily recognize the launch of products with higher prices.
When Daniel Zhang reviewed the reasons for not doing well in 2023, he said frankly: "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." ”
On April 22, 2024, Nezha's family intelligent super extended range SUV Nezha L was officially launched, which claims to be the world's only pure electric range SUV with a range range of more than 300 kilometers, and the first model equipped with a 40-degree CATL battery flash charging battery, which is the fastest charging range model, with a comprehensive range of 1300km. However, the starting price of 129,900 yuan is not high, and it is still aimed at the low-end market.
However, just because the price is low doesn't mean it's easy to sell. Several car owners in small counties told DoNews that it is precisely because they don't have much budget to buy a car, so they don't dare to take risks, and pay more attention to brand, after-sales, and popularity when buying a car.
Competitors in the low-end track are actually more difficult, especially after a large number of low-priced new energy vehicles from traditional car companies have been launched, Nezha's car is even less competitive.
In the intensifying price war for new energy vehicles in 2024, Nezha's situation is even more embarrassing: price reductions will compress profits, and no price reductions will lose cost-effective advantages.
The domestic price war is not easy to fight, Nezha has shifted the incremental target to overseas markets, and has established three overseas factories in Thailand, Indonesia, and Malaysia, and has indeed achieved certain results.
In 2023, Nezha's export volume will exceed 20,000 units, ranking first in overseas sales of new car-making forces; From January to May 2024, Nezha exported 16,458 new energy vehicles, ranking fifth in the export volume of new energy vehicles and first in the export volume of new power car companies.
According to the prospectus of Hezhong Automobile, its overseas business revenue increased from 241 million yuan in 2022 to 1.62 billion yuan, accounting for 1.8% of revenue from 1.8% to 12%.
Source: Hezhong Automobile Prospectus
However, this does not mean that Nezha Auto can sit back and relax. The different standards, regulations, and consumption habits of overseas markets, as well as the EU's decision to launch a countervailing investigation into electric vehicles imported from China, are all obstacles to Nezha's export sales.
More importantly, the battle for new energy vehicles ultimately points to the battle of technology, which all car companies are aware of, and they dare not slack off in R&D investment, but Nezha's technology R&D is far inferior to that of its friends, and the lack of funds also makes it difficult to bear strong R&D investment.
In 2023, the R&D expenditures of BYD and Tesla, the leaders of new energy vehicles, will reach 39.918 billion yuan and 3.969 billion US dollars (about 28.39 billion yuan) respectively, and the new EV manufacturers of NIO, Ideal, Xpeng and Leap will be 13.431 billion yuan, 10.59 billion yuan, 5.277 billion yuan and 1.92 billion yuan respectively. Although Nezha's R&D expenditure is increasing year by year, it will only be 1.598 billion yuan in 2023.
With insufficient brand power, lack of product characteristics, poor marketing storytelling, and no technical strength to form core competitiveness, will Nezha, who went to Hong Kong for IPO, live better?