Behind Geely'S Withdrawal Of IPO Application Of Kechuangboard: Who Can Become The First Stock Of Kechuangboard?

On June 25, Geely Automobile (0175. HK) announced the withdrawal of its application for listing on the science and technology innovation board.

On June 17, 2020, Geely Automobile announced for the first time that the board of directors approved the preliminary proposal of issuing RMB shares and listing on the science and Technology Innovation Board of Shanghai Stock Exchange. On September 1 of that year, Geely Automobile Science and technology innovation board listing application was accepted by Shanghai Stock Exchange, at the same time, it disclosed the detailed prospectus. If the project is carried out smoothly, Geely Automobile hopes to become the first Chinese vehicle enterprise listed on the science and technology innovation board.

However, at the end of last year, the pace of Geely Auto's Sci tech Innovation Board IPO slowed down as the CSRC strengthened its listing review. Now, a year after the first announcement, Geely has decided to withdraw its application for listing on the science and technology innovation board. So far, Geely has not disclosed the details of withdrawing the listing application of the science and technology innovation board.

"Canceling the listing of Geely Auto's science and technology innovation board is a major setback for Geely Holding, because Geely holdings can only rely on equity financing of other subsidiaries such as Volvo cars and the new electric vehicle brand" krypton "to significantly reduce leverage." On June 28, S & P pointed out in a research paper.

S & P said that the withdrawal of its application for listing on the Shanghai Science and Technology Innovation Board will make the prospects of deleveraging of Geely Automobile parent company Zhejiang Geely Holding Group Co., Ltd. uncertain. Other equity financing under preparation by Geely holdings, especially the IPO of its subsidiary Volvo AB, is expected to ease the leverage pressure, but the timing and amount of IPO are still highly uncertain.

On June 25, Geely Automobile announced that it had decided to withdraw its proposal to issue RMB shares on the science and technology innovation board. Figure IC Photo

How does Geely reduce leverage?

Geely Automobile has suffered setbacks in the capital market.

Geely Automobile originally hoped to raise 20 billion yuan through the IPO of the science and technology innovation board, which would be used for new model product research and development projects, forward-looking technology research and development projects, industrial acquisition projects and supplementary working capital.

Through the science and technology innovation board, opening A-share fund-raising channel, Geely Automobile originally hoped to accumulate strength for the company's next four modernizations. At the same time, Geely's capital expenditure caused by a series of investment and acquisition plans is too high, and then the leverage pressure can be alleviated.

As for the reasons behind Geely's IPO termination, senior securities analysts in the automotive industry reported to the 21st century economy that it was related to the CSRC's strengthening the listing review and the changes in the pace of listing on the science and technology innovation board.

"The main reason for Geely to apply for science and technology innovation board quickly is to grab the runway. However, in fact, it does not quite meet the requirements of the science and technology innovation board. " These analysts pointed out.

Geely Automobile stressed in the prospectus that one of the important reasons for its IPO on the science and technology innovation board is its leading position and development potential in the field of new energy vehicles.

It is worth noting that the Shanghai Stock Exchange has also paid special attention to Geely's development in the field of new energy and electrification in the audit inquiry letter, and focused on whether it has greater development space and development potential in the field of new energy.

Geely Automobile, in reply to the Shanghai Stock Exchange's inquiry, mentioned that in Geely's current product matrix, energy-saving and new energy vehicles occupy a dominant position. In 2019, Geely and geometry brands have 14 models on sale, of which 13 are energy-saving and new energy models. Geely's 1.6L and below fuel vehicles, new energy and electrified vehicle sales accounted for more than 70% of the total sales. In terms of new energy technology layout, through efforts in recent years, Geely has comprehensively deployed 48V, hybrid power, pure electric, fuel cell and other technologies, and has certain advantages in the core of new energy vehicles, three electric fields.

However, according to the financial report of Geely in 2020, Geely's sales volume will reach 1.32 million in 2020, of which the total sales of new energy and electric vehicles (including EV, HEV, mhev and PHEV) is 68000, which is nearly 40% lower than that in 2019.

Geely's sales of new energy vehicles accounted for only 5.2%. In a sense, traditional fuel vehicles are still the main business of Geely, and Geely's performance in the electric vehicle market is not in the forefront of the industry.

However, Geely is indeed making efforts in the new energy vehicle business, and has made frequent moves since this year. Geely Automobile has reached cooperation with Baidu, Foxconn and other enterprises, and also launched a new high-end pure electric vehicle brand, polar krypton.

Although Geely Automobile has terminated the IPO plan of science and technology innovation board, Geely is also looking for new solutions for the large amount of funds needed to develop electric vehicles.

It is worth noting that on June 25, Geely Automobile also announced that the board of directors of its joint venture, krypton Intelligent Technology Holding Co., Ltd., has decided to explore different external financing schemes for the sustainable development of krypton intelligent technology.

Jikrypton is jointly invested by Geely Automobile and Geely Holding Group, in which Geely Automobile holds 51% shares and Geely Holding Group holds 49% shares. The first model of krypton is the krypton 001, which was planned to be built under the Lingke brand based on the vast structure of sea. It was unveiled at the Shanghai auto show in April and is scheduled to be delivered in October this year.

Some analysts pointed out that compared with Geely, the independent pure electric brand jikrypton is benchmarked by new automobile manufacturing forces such as Weilai, Xiaopeng automobile and ideal automobile. From the development trend of the industry, intelligent electric vehicles are the trend of the times and are more favored by investors than traditional automobile business.

In addition, since its birth, Geely and krypton have been asked about the financing direction of the company for many times. The company also said that it plans to seek independent listing of krypton.

In addition, another support for Geely's deleveraging is Volvo's listing plan, which is full of twists and turns.

On February 10 last year, Volvo and Geely announced that they planned to integrate their businesses to form a stronger global enterprise group. The restructured new business group will connect with the global capital market through the listing entity of Geely Automobile in Hong Kong, and will consider listing in Stockholm in the next step.

This plan is shelved due to Geely Auto's IPO plan of sci tech Innovation Board half a year later. At the same time, Geely and Volvo continue to discuss the specific details of the merger and reorganization. In February, Geely announced that it had reached the "best" plan for the merger and reorganization of its business with Volvo car company. Both parties will carry out a series of business merger and cooperation on the basis of maintaining their existing independent company structure.

However, the new merger and reorganization plan does not involve equity and assets. In other words, the original plan that "after the complete merger and reorganization of Volvo and Geely Automobile, the listed company of Volvo, will be incorporated into the Hong Kong listed company of Geely Automobile, and the future listing in Sweden" will be considered.

After abandoning a merger with a Hong Kong listed company, Volvo said in May that it would seek an IPO in Stockholm, Sweden.

"Volvo's plan to list in Stockholm in the second half of 2021 can raise a lot of cash for Geely Holding, which is expected to make up for the gap caused by Geely's cancellation of listing." S & P said.

Going public is the next step in line with Volvo's development logic and will also help Geely to deleverage. However, for Volvo car listing plan, Geely holdings needs to overcome valuation problems.

Who can become the first stock of sci tech innovation board?

Since the opening of the science and technology innovation board in June 2019, many automobile industry enterprises are eager to try. At present, there have been power battery company Funeng technology, hydrogen fuel cell vehicle company yihuatong and several electric vehicle industry upstream equipment companies have successfully landed on the science and technology innovation board, but no vehicle enterprise has been successfully listed on the science and technology innovation board.

Although Geely Automobile has terminated the listing plan of the science and technology innovation board, in fact, in addition to Geely Automobile, a number of automobile enterprises have also announced their plans to land on the science and technology innovation board on different occasions, including Evergrande automobile, Weima automobile, Nezha automobile, zero running automobile, etc.

Among these enterprises, Evergrande motor is a Hong Kong listed company, but it has not entered the market yet. Weima automobile, Nezha automobile and zero running automobile are the second echelon of new automobile manufacturing forces, which are slightly different from Weilai automobile, Xiaopeng automobile and ideal automobile, which are the "three brothers" of new car making in America, such as sales volume and brand influence.

Among several companies, the most favored one is Weima. In October last year, Weima automobile completed the d-round financing of 10 billion yuan, and soon began the work of listing guidance on the science and technology innovation board, which impacted on the science and technology innovation board. According to Weima's plan at that time, it will officially land on the science and technology innovation board in 2021.

At present, lack of money and "hematopoietic capacity" are still the shackles that hinder the further development of new car manufacturing enterprises. Seeking listing has also become an important way for new forces to solve the financing problem. The popularity of Weilai, Xiaopeng and idealism in the capital market has also set a benchmark for the valuation of the whole new automobile manufacturing force industry. On the whole, in the new car industry, Weima has the smallest gap with the three.

From the current valuation and operating income of Weima, Weima has met the listing conditions of the science and technology innovation board. After completing the D round of 10 billion financing on September 22 last year, Weima has obtained nearly 33 billion yuan of financing since its establishment, and its valuation has also been further improved.

"Now Weima is also difficult to go on, mainly because of the changes in the rhythm of the listing of the science and technology innovation board." Some people in the automobile industry told reporters of the 21st century economic report.

From the perspective of the industry, in terms of enterprise development, it is of great significance to become the first stock of new energy vehicles on the science and technology innovation board, and be able to pay higher attention and higher valuation in the capital market. This is extremely important for Weima automobile, which is in urgent need of catching up with the first echelon. Whether the landing of the scientific and technological innovation board can proceed smoothly will also determine how far the company can go in the future.

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