Recently, there have been major rumors in the market that Chery Holding Group is considering spinning off its automotive business and listing it in Hong Kong with an estimated market value of approximately RMB 50 billion. This development not only brings new opportunities for Chery's path to going public but also attracts widespread attention from the entire automotive industry.

As one of the few domestic automotive groups that have not yet entered the capital market, Chery's journey to go public has been tumultuous. So, can this spin-off and listing become the key leap for Chery to realize its dream of going public?

A rocky road to listing

Since its inception in 1997, Chery Holdings has evolved from a single automaker into a comprehensive enterprise with operations spanning automobiles, finance, real estate, services, intelligent technology, and component manufacturing across more than 80 countries and regions worldwide. However, despite significant achievements in business scale and market share, Chery's path to listing has been particularly challenging.

Since the first rumors of an IPO emerged in 2004, Chery Automobile has been preparing for an IPO for nearly two decades. At that time, Anhui Province actively promoted Chery's listing and implemented share reforms. However, despite strong performance, Chery's first attempt at listing ultimately failed due to unclear equity relationships with SAIC Motor and other factors.

Around 2006, JAC Motor was in distress. As two major automakers in Anhui Province, rumors circulated that Chery and JAC might merge and cross-hold shares, giving JAC hope of overcoming its difficulties. Unfortunately, Chery did not become JAC's savior. As JAC's sedan project was approved, it successfully rescued itself, and rumors of a merger with Chery dissipated.

Since then, Chery has encountered numerous setbacks on its path to listing. In 2015, its joint venture, Chery Huiyin, failed in its attempts to list on both the Hong Kong Stock Exchange and the A-share market. In 2016, Chery New Energy attempted to backdoor list through Hailuo Profiles, but this also fell through. As an established domestic automaker, Chery's repeated failures are undoubtedly disappointing. However, Chery has not given up and has been actively preparing for a listing.

In 2020, Chery introduced Qingdao Wudaokou Capital; in 2022, Luxshare Precision became Chery's new strategic investor. According to the latest plan, Chery aims to complete its A-share IPO by 2025. Two years ago, Yin Tongyue, the Party Secretary and Chairman of Chery Holding, clearly stated the goal: to broaden financing channels and successfully list Chery Automobile before 2025, thereby driving the company's new round of transformation.

The primary purpose of a company going public is to raise funds. Chery's capital needs are well-known in the industry. Yin Tongyue has admitted that Chery had limited early investments and has not been able to list, nor has it issued bonds in the capital market in recent years. Therefore, during its rapid development, Chery's capital needs have primarily relied on bank financing. Listing on the capital market will not only help Chery establish long-term capital replenishment channels but also activate its equity incentive mechanism.

From the initial rumors of an IPO in 2004 to the completion of a capital increase and share expansion project in 2019, Chery's path to listing has undergone multiple attempts, all of which failed due to various reasons. Now, with the news of a spin-off and listing of its automotive business, Chery has taken another solid step towards the capital market.

Multiple considerations behind the RMB 50 billion valuation

As early as the end of last year, rumors circulated that Chery Automobile was preparing to list this year, initially targeting the mainland with a valuation of up to RMB 150 billion. However, the current valuation for the Hong Kong IPO has been adjusted to RMB 50 billion, a significant reduction from previous rumors. Behind this change are the combined effects of global automotive market uncertainty, fierce competition in the new energy vehicle industry, and fluctuations in the Hong Kong stock market.

Amid global supply chain bottlenecks, rising raw material prices, and increasingly fierce market competition, automakers face significant challenges in profitability, and investors have become more cautious in their valuation expectations for automakers. Simultaneously, the intense competition in the new energy vehicle industry has made investors cautious about Chery Automobile's future growth potential. Additionally, the overall poor performance of the Hong Kong stock market, especially in the technology and new energy vehicle sectors, has also impacted Chery's valuation.

Nevertheless, a spin-off and listing remain significant for Chery. By directly raising funds in the capital market, Chery can obtain more capital for R&D and market expansion, particularly in frontier areas such as new energy vehicles and intelligent driving. Simultaneously, listing will attract strategic investors and partners, injecting more resources and support into the company's long-term development.

To gain a deeper understanding of Chery's prospects for a spin-off and listing, 'Auto Talk' interviewed multiple industry experts and analysts. They generally agreed that a spin-off and listing would help Chery focus more on its core automotive business, enhancing operational efficiency and market competitiveness. Through listing, Chery can more clearly define its strategic goals and market positioning for its automotive business, optimizing resource allocation and management systems.

However, analysts also cautioned that Chery needs to closely monitor changes in the market environment and competitive landscape, formulating practical strategic plans and market strategies. Additionally, before the spin-off and listing, Chery needs to strengthen internal management and enhance its brand image to ensure the company's long-term stable development.

According to Yin Tongyue, Chairman of Chery Holding Group Co., Ltd., Chery will achieve a spin-off and listing in the future and deploy in various sectors, including new energy, artificial intelligence, mobility services, and core components. Through a spin-off and listing, Chery can create a cluster of multi-sector listed companies, achieving business diversification and collaborative development, thereby enhancing the company's overall competitiveness and risk resistance.

In summary, the news of Chery's planned spin-off and listing of its automotive business brings new hope and opportunities for the company's future development. Despite facing numerous challenges and uncertainties, Chery has not given up on its dream of going public. Through a spin-off and listing, Chery aims to improve capital operation efficiency and financing capabilities, focus on its core automotive business, enhance brand value and market competitiveness, and seize market opportunities in line with industry trends.