For a new car-maker, there are two things that matter between life and death: one is sales, and the other is IPO. Nezha Automobile, which chose to IPO in Hong Kong at this time, even if there are "shareholders" behind it, it is really sweating for it.
On June 26, 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. If all goes well, Nezha Automobile will become the fifth Chinese new power car company to be listed in Hong Kong after Li Auto, NIO, Xpeng Motors and Leapmotor.
In fact, before this, Nezha Automobile had many rumors of IPO plans. As early as July 2020, Nezha Automobile started the listing application of the science and technology innovation version, and plans to complete the listing in 2021; In February 2023, June 2023 and September 2023, Nezha Automobile was successively rumored to have IPO plans, but they were quickly denied by Nezha Automobile. Even in October last year, Daniel Zhang, co-founder and CEO of Nezha Automobile, said when talking about the progress of the company's IPO that Nezha Auto is not in a hurry to IPO, Nezha Auto will raise 10 billion yuan in 2022, and there will be billions of yuan in financing in 2023, and there are currently 10 billion funds on the account, so there is not so much impulse to rush to go public, and there is enough money to come step by step. However, in the prospectus, the book cash by the end of 2023 is only 2.836 billion yuan. In just a few months, there is not much money on Nezha Automobile's books, and with an average annual loss of 6 billion yuan, this money is only enough for Nezha Auto to "support" for half a year. Making cars is "too expensive", and the local government behind Nezha Automobile is "in a hurry". In order to complete the IPO, on April 15 this year, Nezha Automobile signed the "Joint Agreement on the High-quality Development of Hezhong Automobile" with Tongxiang State-owned Capital Investment and Operation Co., Ltd., Yichun Jinhe Equity Investment Co., Ltd. and Nanning Minsheng New Energy Industry Investment Partnership (Limited Partnership). It is mentioned in the agreement that the signatories will jointly provide a total investment of no less than 5 billion yuan to Nezha Automobile, coordinate relevant resources, support the realization of the IPO as soon as possible, and promote the expansion of Nezha Automobile's export scale. The situation waits for no one, and Nezha Automobile's IPO in Hong Kong this time is reasonable.
Nezha Auto missed the best IPO opportunity?
Now, since Nezha Automobile has submitted a prospectus, it is likely to make full preparations for listing. However, the difficult problem in front of Nezha Automobile is how to gain the confidence of the capital market in car manufacturers. In the early stage of the sprint IPO, Nezha Automobile adjusted its organizational structure, and Daniel Zhang personally focused on research and development; As one of the investors, Zhou Hongyi, the founder, chairman and CEO of 360 Company, has repeatedly stood for Nezha Automobile in public, and has repeatedly criticized Nezha Automobile and Daniel Zhang, which has allowed Nezha Automobile and Daniel Zhang to harvest waves of "traffic".
Despite this, there are still many "uncontrollable" factors in the attitude of the capital markets, and they may be more concerned about sales figures and profitability. In the domestic auto market, Nezha Automobile has also had a bright performance, delivering about 152,000 vehicles in 2022, surpassing "Wei Xiaoli" to become the annual champion of the new car-making force. However, after 2023, Nezha's sales will continue to decline, with annual sales falling by 16% year-on-year to only 127,500 units, and in June this year, Nezha Automobile delivered 10,200 units, lower than competitors such as NIO, Ideal, Xpeng, and Leap. According to the prospectus, Nezha Automobile will lose 4.840 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. In addition, Nezha Automobile is also facing challenges such as fierce market competition, tight capital chain, product market positioning, internal management and policy environment. According to the analysis of industry insiders, Nezha Automobile's sales performance in the past few years is not bad, and it is a new force in the car manufacturing in addition to "Wei Xiaoli", the performance is more prominent, but it has been a little unable to keep up in the past two years, and the competition pressure in the field is very great. In terms of products, after the discontinuation of Nezha you and Nezha V, the newly launched Nezha X and Nezha AYA have not performed well in many aspects; Although the Nezha L launched this year has received good market feedback, today's car market is so "volume". In the long run, Nezha Automobile is still facing a big dilemma. Li Auto and Xpeng completed their Hong Kong IPOs in 2021, while NIO and Leapmotor completed their Hong Kong IPOs in 2022. Nezha Automobile is the only company in the top five sales of new forces that has not yet been successfully listed, it has not received investment and strategic cooperation from multinational auto giants like Xiaopeng and Leap, nor is it like VOYAH, Denza, ZEEKR, Aion and other traditional car companies that are backed by traditional car companies, and it is not like the deep binding between Cialis and Huawei. In contrast, the listing process of Nezha Automobile's Hong Kong stock market seems to be lagging behind, and even misses the market's high enthusiasm for new energy vehicle companies, which will also lead to its relatively passive position in the capital market.
Can it be turned around with the help of going overseas?
Under the situation that the domestic market is facing greater competitive pressure, Nezha Automobile will put more energy into the overseas market. In the prospectus, Nezha Automobile emphasized that the overseas new energy vehicle market has significant growth potential, and the purpose of the IPO is to strengthen the overseas layout, further invest in the Southeast Asian market, and will rapidly expand Latin America, Africa and the Middle East and other markets, enhance global operating capabilities, further localize the overseas supply chain, open more stores overseas, and expand service and sales networks. According to the data released by Nezha Automobile, by the end of 2023, Nezha Auto has established cooperative relations with 100 local dealers in 28 overseas countries and regions. At present, Nezha Automobile's factories in Thailand and Indonesia have started production in March and May this year, respectively, and the Malaysian plant has started construction in January 2024. At the same time, on June 26, Nezha Automobile's flagship store in Kenya was officially opened, as the largest automobile market in East Africa, Kenya is also one of the countries with great development potential. At the same time, Nezha Automobile plans to deploy in 20 African countries in the next two years, and will build 100 stores in the next three years, with an annual sales capacity of more than 20,000 vehicles.
The overseas market has become one of the main business growth points of Nezha Automobile in the next stage. However, Nezha Automobile's "going to sea" is not to export products, but to establish assembly plants overseas, which will undoubtedly increase financial pressure. Previously, Changan Automobile invested 9.8 billion baht (about 1.938 billion yuan) in building an electric vehicle plant in Thailand, and GAC Aion invested 2.3 billion baht (about 450 million yuan) to build a plant in Thailand. The expansion of overseas business urgently requires a lot of financial support, and for Nezha Automobile, there seems to be no better financing path than IPO. So after the successful completion of the IPO, will Nezha Automobile's road to the sea be smooth? In fact, this is not necessarily the case, and it seems that it has become the norm for new energy vehicle companies to IPO in Hong Kong. According to the analysis of industry insiders: "When Leapmotor was listed in Hong Kong, it broke at the opening and closed down 30% on the first day, and now the stock price has not exceeded the issue price." In addition, judging from the stock price performance of 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. Despite this, the industry is still optimistic about the successful IPO of Nezha Automobile. According to the prospectus, Hezhong New Energy has received 10 rounds of financing since its establishment. Among the investors, there are many well-known enterprises such as CATL and 360 Security, as well as state-owned funds from Zhejiang, Jiangxi, Sichuan, Anhui and other places. With the blessing of such a background, Nezha's IPO is still worth looking forward to. However, the track of going to sea is also crowded with competitors, and it is not "easy" for Nezha Automobile to go to sea in the future.
Image: From the Internet
Article: Car Vertical
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