IPO in Hong Kong, Zero Run is about to lead？

Among the new forces of making cars, they are divided into two levels, one is the first echelon composed of Wei Xiaoli, and the other is the second echelon headed by Nezha and Zero Run. Nowadays, the second echelon has great potential to catch up with the first echelon. In the past August, Nezha and Zero Run beat Wei Xiaoli with monthly sales of 16,017 vehicles and 12,525 vehicles respectively.

In fact, this is not the first time this year. In July, the sales volume of Nezha and Zero Run Month were equally pressing "Wei Xiaoli". In order to further pursue victory, recently, the news of IPO in Hong Kong came from Zero Run.

On September 20th, Zero Run Auto announced that it would offer shares from September 20th to September 23rd. The number of shares sold worldwide was 130,819,100, the number of shares sold internationally was 117,737,100, and the number of shares sold in Hong Kong was 13,082,000, with 10% sold in Hong Kong, 90% sold internationally, and up to 15% over-allotment. The par value is RMB 1 yuan per H share, and the highest offering price is HK$ 62 per share, which is expected to be no less than HK$ 48 per share.

At the same time, the expected release time of Zero Run is 9: 00 a.m. on Thursday, September 29th, and H shares will be bought and sold for every 100 shares with the trading code of 9863. This also means that after Wei Lai, Tucki and Ideality, Zero Run Auto took the lead in winning the fourth IPO ticket of the new car-making force.

Why are the new forces making cars eager for IPO?

In September, 2018, Weilai Automobile, a new vehicle-making force, was officially listed on the NYSE, which sounded the first bell of China New Energy Vehicle NYSE, and was also the first stock of new vehicle-making force. For a time, IPO is almost the dream of every new car-making force.

In fact, three months before Zero Run announced its IPO, Weimar Automobile, which is also the second echelon of the new car-making force, also submitted a prospectus to the Hong Kong Stock Exchange. At that time, some insiders predicted that Weimar Automobile would be listed and traded in the third quarter if all goes well, but at present, the listing process of Weimar Automobile has obviously lagged behind Zero Run Automobile.

Then, why are the new forces making cars eager for IPO?

In fact, the reason is simple, lack of money. How expensive it is to build a car. I believe everyone knows that throwing tens of billions into it may not necessarily produce a car. At one time, CCTV criticized Baiteng by name and burned 8.4 billion financing funds, but even a car was not built. Li Bin, CEO of Weilai Automobile, once said that if there is no 20 billion, don’t build a car; He Xiaopeng also shouted after Xpeng Motors completed the A+ round of financing, "In the past, I thought that 10 billion was too exaggerated to watch others build cars, but now I think that 20 billion is not enough."

As a heavy asset business, there is no doubt that cars burn money. In addition to the technical barriers that the car itself has to pass, financing wars and burning money and blood transfusion are the only ways for new car makers.

Under the new round of capital turmoil, whether it can be listed has become a watershed for the new car camp. In recent years, new car-making enterprises have successfully landed in the capital market, and even achieved "double-board" listing, which has been given a high valuation by the market. This not only stimulates the listing desire of other car-making enterprises, but also intensifies the industry competition.

Can the zero run of IPO in Hong Kong lead successfully?

I still remember that in 2021, at the launch conference of the Zero Run Car 2.0 strategy, Zhu Jiangming shouted the slogans of "surpassing Tesla in three years", "pushing eight new cars in four years" and "selling 800,000 vehicles in 2025", and it is necessary to realize the overtaking and leading of Tesla in intelligent driving technology.

As a corporate slogan, it is not a problem to increase the team’s sense of unity and inspire everyone to work hard. It is only three years to surpass Tesla. Is this possible? I’m afraid Zhu Jiangming has no bottom in his heart.

It is hard to say whether it can surpass Tesla, but the sales of zero-running cars have indeed surpassed "Wei Xiaoli", and the recent momentum is really fierce.

From July to August this year, the sales volume of zero-running cars exceeded 10,000 for two consecutive months, with 12,044 vehicles and 12,525 vehicles respectively. From January to August, a total of 76,556 vehicles were delivered by zero-run vehicles, which is one of the fastest-growing enterprises in the sales of new car-making forces, and has now been firmly in the lineup of the first echelon.

Sales are increasing, but profit is still a problem.

In 2019, 2020 and 2021, the revenue of zero-running cars was 116.9 million yuan, 631.3 million yuan and 3.132 billion yuan respectively, while the operating losses were 730 million yuan, 870 million yuan and 2.868 billion yuan respectively. The losses during the year were 900 million yuan, 1.1 billion yuan and 2.846 billion yuan respectively.

The loss in three years was 4.846 billion yuan. According to the prospectus, the company’s net loss in the first quarter of this year was 1.042 billion yuan. That is to say, from 2019 to the first quarter of this year, the zero-running car has accumulated losses of more than 5.8 billion yuan. The more you sell, the more you lose.

From the perspective of gross profit margin, from 2019 to 2021, the gross profit margin of zero-running cars was -95.7%, -50.6% and -44.3% respectively. Although the gross profit margin is increasing year by year, the gap is still large compared with "Wei Xiaoli".

Therefore, the actual situation of the seemingly scenic zero-running car is not optimistic, and it will be listed as soon as possible or the only chance to get a break.

Of course, even if it is successfully listed, Zero Run still cannot escape the market competition. From the product point of view, at present, there are three models of zero-run cars, namely coupe zero-run S01, mini-car zero-run T03 and medium-sized SUV zero-run C11. Although it is positioned as a mid-to high-end market with a price range of 100,000-300,000 yuan, its retail T03, which focuses on the low-end market, has become the main sales force. However, the profit margin brought by mini-cars is extremely limited.

Nowadays, the price of raw materials has skyrocketed, which makes the advantages of mini-cars no longer obvious, and ultimately affects the sales and profits of car companies. Not only zero-run cars, but also Weimar cars, which have been wandering in the low-end market, are also facing difficulties.

Of course, Zero Run is also trying to change the current product layout. It is mentioned in the prospectus that by the end of 2025, Zero Run plans to launch eight new models, including three cars, four SUV models and one MPV model, to expand its product matrix. And this requires a lot of financial support, so IPO has become the quickest way.

At present, the competition in the new energy automobile industry is becoming increasingly fierce. Traditional car companies, new forces and internet companies have joined the army of car makers. Specifically, BYD’s sales are far ahead; Although the sales volume of "Wei Xiaoli" is not good this year, its layout is complete and its advantages are still there. Although the zero-run car took the lead in becoming the fourth listed new force in China, there are still too many unknowns to achieve the lead.