Nezha Auto is also aiming for a listing.

It is reported that Hezhong New Energy Automotive Co., Ltd., the parent company of Nezha Auto, submitted a listing application to the Hong Kong Stock Exchange on June 26th.

If it can successfully list in the end, Nezha Auto will become the fifth Chinese new force auto company to list in Hong Kong after XPeng, Lixiang, NIO, and Leapmotor.

For Nezha Auto, it is not the best time to go public right now, but it is also one of the best choices.

Entering 2024, Nezha Auto's sales have been sluggish. According to data disclosed by the auto company, in May, the company delivered 10,113 units, a year-on-year decline of 22.4%; from January to May, it delivered 43,564 units, only achieving 14.5% of its annual sales target of 300,000 units.

Even if Nezha Auto successfully lists, the pressure on it in the capital market will not be small due to sluggish sales.

Currently, besides listing, Nezha Auto actually has no more choices.

According to the prospectus, as of the end of 2023, Nezha Auto only had 2.837 billion yuan in cash on its books, a year-on-year decrease of 3.921 billion yuan. Combined with the frequent news of "delayed bonuses" for Nezha Auto this year, it can be judged that the cash flow of Nezha Auto may be somewhat tight this year.

No Other Choice

In fact, this is not the first time Nezha Auto has aimed for a listing.

According to relevant reports, as early as 2020, Nezha Auto started the relevant application process for listing on the STAR Market, but due to special reasons, the application was ultimately forced to terminate. After failing on the STAR Market, Nezha Auto shifted its target to the Hong Kong stock market.

In 2021, there were market rumors that Nezha Auto would list on the Hong Kong Stock Exchange and raise about 1 billion US dollars, but it did not happen.

By 2023, there were multiple rumors in the market that Nezha Auto would go public in Hong Kong. It can be said that the news about Nezha Auto's listing has never stopped.

However, after submitting the listing application to the Hong Kong Stock Exchange this time, the news of Nezha Auto aiming for a listing has also come to an end.

For Nezha Auto, 2021 and 2022 were actually good times for listing. In terms of sales, Nezha Auto sold 69,674 units in 2021, a year-on-year increase of 362%; in 2022, Nezha Auto's sales exceeded 150,000 units, a year-on-year increase of 118%. With this sales performance, Nezha Auto became the top-selling new force in the industry that year.

However, unfortunately, Nezha Auto did not seize the opportunity. As sales continued to rise, Nezha Auto actively slowed down its listing process after consecutive failures in its listing attempts. In 2023, Zhang Yong clearly stated, "Nezha doesn't lack money. We raised more than 10 billion yuan last year and are also running investments this year, raising several billion yuan. We have 10 billion yuan on our books, so Nezha doesn't have that much urge to go public now."

But times have changed, and now Zhang Yong probably can't say "we don't lack money" anymore. According to the prospectus, as of the end of 2023, Nezha Auto only had 2.837 billion yuan in cash on its books, a year-on-year decrease of 3.921 billion yuan.

In addition, Nezha Motors is still in a loss making state at present.

According to the prospectus, Nezha Automobile suffered losses of 4.84 billion yuan, 6.666 billion yuan, and 6.867 billion yuan respectively from 2021 to 2023, with a total loss of over 18.3 billion yuan over the past three years. Last year, Nezha Automobile sold a total of 127500 vehicles the following year. If calculated at a loss of 6.867 billion yuan, selling one vehicle would result in a loss of approximately 54000 yuan.

As mentioned in the beginning, now is not actually a good time for Nezha Automobile to go public - after all, since entering 2024, Nezha Automobile's sales have not significantly rebounded, and there will not be a good market performance when it goes public now. However, facing increasingly tight cash flow and expanding losses, Nezha Motors actually has no other choice but to go public.

Save sales

It is undeniable that going public can indeed solve Nezha Motors' urgent need.

However, for Nezha Motors, besides going public, increasing sales is the top priority.

According to sales data, after reaching the top spot in sales in 2022, Nezha Motors saw a rapid decline in sales in 2023, with a total annual sales of only 120000 units, a year-on-year decrease of 16%. It is worth mentioning that Nezha Automobile is still the only brand among the top five new forces in 2023 with declining sales, while the other four new forces have achieved double-digit growth in sales.

After entering 2024, the situation of Nezha Motors has not improved. According to the latest data, in May, Nezha Automobile delivered 10113 units across its entire lineup. Although the delivery volume once again exceeded 10000 units, it decreased by 22.4% year-on-year; Moreover, from January to May, the entire series delivered 43564 units, only 14.5% of the annual sales target of 300000 units.

Faced with sales pressure, Nezha Automobile has to once again take the "cost performance" route. On April 22nd, Nezha L, a subsidiary of Nezha Motors, was officially launched. It is a family oriented intelligent super extended range SUV, with a total of four models available in pure electric and extended range power versions, with a price range of 129900 yuan to 159900 yuan. However, the sales of Nezha L were not outstanding. In May 2024, the sales of Nezha L were 3732 units, while the higher priced competitor, Ideal L6, sold 12965 units in May 2024, which is more than three times the difference between the two.

Of course, Nezha Automobile's return to the "cost performance" route is undoubtedly correct. After all, in the past three years, Nezha Automobile's R&D investment was 541 million yuan, 906 million yuan, and 1.598 billion yuan, respectively, accounting for 10.63%, 6.94%, and 11.79% of the R&D ratio. Compared to "Weixiaoli", Nezha Automobile's R&D investment in the past three years is not as high as others' in one year. Such R&D investment is not realistic to compete with the high-end, and its defeat in the Nezha S and Nezha GT is the best proof - in 2023, Nezha GT only sold 9010 units, while Nezha S sold 24200 units.

However, the "cost-effectiveness" route is not as easy to follow. Since the beginning of this year, with the outbreak of price wars and major car companies taking turns to lower prices, Nezha Automobile's price advantage has become increasingly unclear. In addition, due to the lack of sales support, Nezha Motors does not have an advantage in product costs. According to the prospectus, from 2021 to 2023, the procurement amounts of Nezha Automobile's top five suppliers were 2.797 billion yuan, 6.233 billion yuan, and 5.739 billion yuan, all accounting for more than 30% of the total procurement amount. Among them, the purchase amount of Nezha Automobile batteries in 2023 was 5.285 billion yuan, accounting for approximately 39% of its total annual revenue.

From the current perspective, if Nezha Motors can successfully go public on the Hong Kong stock market, there is still time for them to catch their breath. However, with the intensification of competition for new energy vehicles, going public is no more than a temporary solution, and ultimately, the sales problem still needs to be solved.