Nezha Automobile's IPO in Hong Kong: A loss of more than 18 billion in three years, can it tell a new story of going to sea?

Sino-Singapore warp and weft

2024-07-01 16:41China-Singapore Jingwei official account

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01Hezhong New Energy, the parent company of Nezha Automobile, submitted a listing application to the Hong Kong Stock Exchange, which is expected to become the fifth new Chinese car-making force to be listed in Hong Kong.

02 Although the delivery volume of Nezha Automobile in 2023 will decline by 18.29% year-on-year, the delivery volume from January to May this year will only complete 14.52% of the annual target of 300,000 units.

03Due to the increase in production and delivery to achieve economies of scale, Nezha Automobile's gross profit margin from 2021 to 2023 will be -34.4%, -22.5%, and -14.9% respectively, and the gross profit margin has not yet turned positive.

04However, Nezha Automobile relied on 10 rounds of financing, with a total financing of 22.844 billion yuan, and its shareholders include private equity funds, government funds, professional investment companies and strategic investors.

Technical support is provided by Tencent Hybrid Model

　　China-Singapore Jingwei, July 1 (Zhou Yihang) Recently, Nezha Automobile's parent company, Hezhong New Energy Automobile Co., Ltd. (hereinafter referred to as Hezhong New Energy), submitted a listing application to the Hong Kong Stock Exchange, with CICC and Morgan Stanley as joint sponsors.

　　Prior to this, NIO, XPeng, Li and Leap had been successfully listed in Hong Kong. If Nezha Automobile's IPO is successful, it will become the fifth new Chinese car-making force to be listed in Hong Kong.

The loss in three years was 18.3 billion

　　This submission to the Hong Kong Stock Exchange means that Nezha Automobile's four-year listing road has ushered in substantial progress. In July 2020, Nezha Automobile announced the launch of the listing application on the Science and Technology Innovation Board, and planned to complete the listing in 2021, but the IPO failed; In February 2022, Nezha Automobile was exposed to IPO in Hong Kong, and then the company denied it; In June 2023, it was reported that Nezha Automobile was considering submitting a US$1 billion Hong Kong IPO application; Until June 2024, Hezhong New Energy submitted to the Hong Kong Stock Exchange and launched an impact on the IPO.

　　According to the prospectus, Hezhong New Energy was established in 2014 and is a global technology-based new energy vehicle company, which has launched a total of five intelligent new energy vehicles, including Nezha AYA series, Nezha X series, Nezha L, Nezha S, and Nezha GT.

　　It is mentioned in the prospectus that in the two years of 2021 and 2022, Nezha Automobile will deliver 64,230 and 152073 vehicles respectively. In 2022, the delivery volume surpassed that of Wei Xiaoli, becoming the first new EV manufacturer to exceed 150,000 units in delivery.

　　However, in 2023, Nezha Automobile's deliveries will decline from 152,000 in 2022 to 124,200 in 2023, a year-on-year decrease of 18.29%. In 2024, the situation has not improved, and the number of deliveries from January to May this year will be 43,000 units, which is only 14.52% of the annual target of 300,000 units.

　　It is worth mentioning that although after the launch of mid-to-high-end models such as Nezha S and Nezha GT, the average selling price of Nezha cars has increased from about 71,000 yuan in 2021 to about 109,000 yuan in 2023, and further increased to 113,000 yuan in the first four months of 2024, but the company's overall operating situation has not improved. According to the prospectus, from 2021 to 2023, Hezhong New Energy's operating income will be 5.087 billion yuan, 13.05 billion yuan, and 13.555 billion yuan respectively; The net loss in the same period was 4.84 billion yuan, 6.666 billion yuan and 6.867 billion yuan respectively, with a total loss of 18.373 billion yuan in three years.

　　Source: Hezhong New Energy Prospectus

　　From 2021 to 2023, Nezha Automobile's gross profit margin will be -34.4%, -22.5%, and -14.9% respectively. In this regard, Hezhong New Energy said in the prospectus that the negative gross profit margin is because the company is increasing production and delivery to achieve economies of scale. Over the past few years, the Company's overall gross margin has improved, mainly due to product portfolio optimization, focusing on smart new energy vehicle models with increased average selling prices, increased international sales, and improved cost-effectiveness through cost control measures.

　　As of the end of 2023, the gross profit margins of NIO, XPeng, and Li Li are 5.5%, 1.5%, and 22.2%, respectively. With a gross profit margin of 0.5%, Leapmotor achieved the first positive gross profit margin since its manufacture. In horizontal comparison, Nezha Automobile's gross profit margin in 2023 will be -14.9%, which is the only car company that has not yet achieved a positive gross profit margin among the new car-making forces that have achieved large-scale sales.

Relying on financing "blood transfusion"

　　After years of losses, Nezha Automobile had to rely on external financing to "transfuse" it.

　　According to the prospectus, since 2017, Hezhong New Energy has completed 10 rounds of financing, with a total financing of 22.844 billion yuan, and the shareholder lineup includes private equity funds, government funds, professional investment companies and strategic investors, including CATL, 360 Group, Huading Capital and other well-known enterprises.

　　From the perspective of the financing process, Tianyancha shows that from 2017 to 2024, Hezhong New Energy has a total of 14 financing events. Among them, in 2017, it completed 2 billion yuan of angel round financing and 1.25 billion yuan of A round of financing; In 2019, it completed 3 billion yuan in Series B financing and B+ round financing (the financing amount was not disclosed); In 2020, the company completed the B++ round of financing and the 2 billion yuan C round of financing; In 2021, the company completed 4 billion yuan of Series D financing and Series D+ financing (the financing amount was not disclosed); In 2022, it will complete strategic financing of more than 2 billion yuan and D++ round of financing; In 2023 and 2024, a total of 12 billion yuan of financing and 200 million Hong Kong dollars of government subsidies will be completed.

　　Source: Tianyancha

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