After ten years, Nezha Automobile finally submitted a listing application to the Hong Kong Stock Exchange.
On June 26, Hezhong New Energy Automobile Co., Ltd., the main company of Nezha Automobile, officially submitted a prospectus to the Hong Kong Stock Exchange, with CICC, Morgan Stanley, and CITIC Securities as its joint sponsors. If it is successfully listed, then Nezha will become the fifth new power car company to IPO in Hong Kong after Weilai, Xiaopeng, Li and Leap.
Bleeding is on the market, and it is difficult to tell a story
As early as 2020, Nezha Automobile had a plan to go public. In 2020, Hezhong New Energy launched the application for listing on the Science and Technology Innovation Board, and plans to complete the listing in 2021. In the end, the dream did not come true. Subsequently, in 2022 and 2023, the market has successively reported the news of Nezha Automobile's IPO in Hong Kong, but it has been officially denied.
After entering 2024, in addition to shareholder Zhou Hongyi's frequent platforms, Nezha Automobile is also actively seeking financing and releasing new cars. In April this year, Nezha announced that it would receive an investment of no less than 5 billion yuan from Tongxiang State-owned Capital Investment and Operation Co., Ltd. and Yichun Jinhe Equity Investment Co., Ltd., and coordinate relevant resources to be listed as soon as possible.
Obviously, Nezha has made full preparations for listing.
However, what really prompted Nezha Automobile to go public was the increasingly tight cash flow. Interestingly, Daniel Zhang said in an interview in 2023: "At present, there are more than 10 billion funds on the account, and there is no rush for an IPO." ”
According to the data, in 2021, 2022, and 2023, Nezha Automobile's net loss will be 4.84 billion yuan, 6.666 billion yuan, and 6.87 billion yuan respectively, with a cumulative net loss of more than 18.3 billion yuan.
Losses have long been commonplace for new power car companies, even if they are at the head of Weilai, Xiaopeng, etc., also have losses. However, there are few new forces like Nezha, and the book cash flow is extremely tight. According to the prospectus, by the end of 2023, Nezha Automobile's cash and cash equivalents on its account were only 2.84 billion yuan.
For reference, the cash reserves of Ideal, NIO, Xpeng, and Leap are 103.67 billion yuan, 45.7 billion yuan, 57.3 billion yuan, and 19.4 billion yuan. In contrast, Nezha's embarrassment is on paper.
In addition to the tight cash flow, Nezha's situation is also not ideal. Nezha's sales sources mainly rely on five models, including Nezha AYA, Nezha X, Nezha L, Nezha S, and Nezha GT, and the product price is generally less than 200,000 yuan. This means that Nezha's main models are concentrated in the low-end market.
As we all know, Nezha's early strategy of "big cars and small cars" has indeed laid the foundation for the brand to open up the market pattern. As BYD, Wuling and other car companies have successively launched low-end products with low prices and high cost performance, Nezha has gradually lost its competitive advantage.
Or in order to change the predicament, Nezha once hit the high-end market and launched Nezha S, Nezha GT, etc. It's a pity that after a short period of hot sales, the product finally fell silent, indirectly announcing the failure of the high-end impact.
Aside from the funds required for product strategic change, under the influence of the price war, Nezha only needs a large amount of capital to maintain its existing market share. Specifically, in 2023, Nezha's annual sales will be 127,500 units, with a net loss of 6.867 billion yuan, and almost every car sold, it will lose more than 50,000 yuan.
For this reason, Nezha's IPO in Hong Kong is not only to raise funds for follow-up business, but also to be helpless under operating pressure.
Escape involution and bet on overseas
According to the disclosure information in the prospectus, Nezha's current valuation reaches 42.4 billion yuan. As for the use of the raised funds, Nezha Automobile officially responded that it will be used for strategic expansion in overseas markets, so as to improve the global influence of the Nezha brand and enrich the company's product portfolio.
It is undeniable that Nezha does have obvious laggards in the competition in the domestic market, but there are signs of rising in the overseas market.
In recent years, the proportion of overseas business revenue has increased significantly. In 2022 and 2023, Hezhong's overseas business revenue will be 241 million yuan and 1.620 billion yuan respectively, accounting for 1.8% and 12% of operating income respectively.
In addition, 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 of car companies.
In order to break through in the overseas market, Nezha not only exports its products, but also invests in overseas markets to build factories. This series of behaviors undoubtedly increases the financial pressure on the brand.
For Nezha, the parallel domestic and overseas lines are indeed a feasible strategy, which can effectively avoid the impact of involution. However, the dispersion of domestic resources and the transfer of overseas investment and construction of factories have also weakened the competitiveness of the brand in the domestic market to a certain extent.
Combined with the product layout of various new power car companies this year, new power car companies such as Weilai and Xiaopeng are accelerating the layout of the market within 200,000 or even 150,000, such as Weilai Ledao and Xiaopeng MONA. On the other hand, Nezha's domestic new energy vehicle market share is only 1.2%. This means that Nezha's only remaining market may face further encroachment by rivals.
It is foreseeable that the listing can bring a "buffer period" for Nezha, but the development prospects are still full of uncertainty. After all, the overseas market is also the direction that other car companies are concerned about, and it is not excluded that Nezha will be sniped by opponents in the future.