Geely Automobile spins off Jikrypton to go public in the United States. The primary market valuation may reach hundreds of billions? “Geometry” may also be incorporated in the future
“The purpose of the spin-off and listing: first, to seek greater financing channels for Jikrypton, and secondly, the high-quality assets that have been injected will help Jikrypton to increase its valuation.”
Author: Eric
Edit: tuya
Produced by: Financial Graffiti (ID: caijingtuya)
Who will get the Jikrypton IPO, Hong Kong stocks or U.S. stocks? Finally the truth came to light.
According to the company’s intelligence expert “Financial Graffiti”, on December 13, Geely Automobile (00175. HK) issued an announcement saying that Jikr submitted a draft registration statement for a possible IPO to the US Securities and Exchange Commission on December 7 on a confidential basis. It is also proposed that after the completion of the spin-off, Jikrypton is expected to continue to be a non-wholly owned subsidiary of Geely Automobile.
Source: Company Announcement
As the first domestic private enterprise with car manufacturing qualifications, Geely Automobile has also joined the new energy transformation.Jikrypton and Geometry are the two major brands of Geely Automobilepure electric vehiclebrand.
Jikrypton was established in March 2021 and is jointly invested by Geely Automobile and its parent company Geely Group, which hold 51% and 49% of the shares respectively. Then in December, Geely Automobile acquired 220 million Jikr shares from Geely Group, increasing its shareholding to 54.47%, and remains the controlling shareholder.
Why does Geely want to split Jikrypton into the market? There are two main reasons. One is to seek greater financing channels for Jikrypton, and the other is that the high-quality assets that have been injected help Jikrypton to achieve a higher valuation.
Building cars and burning money to broaden financing channels
makeelectric carIt is a money-burning business, especially if you want to build high-end smart pure electric vehicles. Li Bin, the founder of Weilai, once estimated that an electric vehicle company needs to invest at least 20 billion yuan from research and development to mass production.
At present, Jikrypton, like other new car-making forces, is in a state of loss. In 2021, Jikrypton’s revenue will be 2.868 billion yuan, with a net loss of 1.010 billion yuan, and the loss in the first half of this year will reach 759 million yuan. Even a traditional car manufacturer like Geely needs to rely on more external funds to ensure the iteration and upgrade of Jikr auto products.
In fact, five months after the establishment of Jikrypton (August 2021), it conducted a Pre-A round of financing with a total scale of 500 million US dollars, introducing strategic shareholders Intel,CATL, Hongshang Group, Boyu Investment, and bilibili, with a post-investment valuation of approximately US$9 billion.But this is far from enough. According to the plan disclosed by Geely, Jikrypton will launch 6 models by 2025, becoming the top three in the world in the market share of high-end electric vehicles.Salesreached 650,000.
You must know that on November 1st, Jikrypton’s second mass-produced pure electric MPV 009 has just been launched, and the starting price is close to 500,000 yuan. And in the first three quarters of 2022, the cumulative sales of Jikrypton will only be 39,500 vehicles. On November 1, Jikr announced the latest delivery data. In October, 10,119 units were delivered in a single month, and a total of 55,600 units were delivered. There are only two months left for Liji Krypton to achieve its sales target of 70,000 vehicles this year.
To realize the auspicious grand plan, Jikrypton obviously needs more capital support.
In addition, the spin-off of Jikrypton, which burns money, is also a good thing for Geely itself, which can greatly ease the financial burden of Geely Automobile. Geely Automobile believes that the proposed spin-off is in the interests of shareholders as a whole. The proposed spin-off will, among other things, allow investors to better evaluate the Group and focus on preserving the business, while providing Jikrypto with continued direct and independent access to equity and debt capital markets should the need arise.
Inject high-quality assets to help higher valuation
For Geely, the spin-off and listing of Jikrypton is not just for financing.
Another goal of Geely is to use the high-quality assets that have been installed in Jikrypton to help its higher valuation, so as to realize Geely’sNew Energy VehicleThe strategic map of the field.
At present, Jikrypton holds 51% of the equity of Ningbo Wei Rui, holds 100% of the equity of CEVT, and holds 30% of the equity of Haohan Energy. CEVT is the European R&D center of Geely Automobile, with the developmentnew energy vehiclesThe well-known CMA architecture was born from this technology center, which can greatly improve the R&D strength and efficiency of Jikrypton.
Haohan Energy Technology is mainly engaged in automotiveChargeThe research and development of facilities and technologies, the provision of car charging services, and the operation of car charging outlets and networks will provide Jikrypton with basic energy supply services for electric vehicles.Ningbo Wei Rui is a three-electric system company within the Geely system, engaged in research and development, production and salesPower BatteryAnd electric drive system and related components and provide after-sales service.
R&D centers, charging facilities, and three-electric systems, there is no doubt that Geely has installed its highest-quality assets on power batteries and charging services in Jikrypton.
Moreover, the incorporation of these assets can directly generate income. For example, CEVT has been providing R&D services to Geely Holdings and its subsidiaries and charging fees. It should also be included in the financial statements of listed companies. In addition, the auto parts sales agreements between Haohan Energy and Ningbo Weirui, Geely Automobile, Geely Holdings, and Lynk & Co, which were acquired at the beginning, have also been updated. For the three years from the effective date of the sales agreement to December 31, 2023, under the auto parts sales agreement, Geely Automobile has proposed annual sales caps of 1.398 billion yuan, 13.751 billion yuan, and 24.645 billion yuan. In addition, Geometry, another pure electric vehicle brand under Geely, does not rule out that Geometry will be merged into Jikrypton in the future. In addition, last year, Geely executives said that due to the company’s new energy transformation needs, Geometry may be merged into Jikrypton.
Once it is spun off and listed, Jikrypton, which has many high-quality assets, has a huge room for imagination. Yang Zhao, a senior auto industry analyst, once said that if Jikrypton goes public separately, the primary market may give it a valuation of hundreds of billions. As a listed electric vehicle company with a valuation of hundreds of billions, Geely’s valuation will surely rise.
But can it really get his wish? Not long ago, Leapmotor (09863. HK) officially went public in Hong Kong, but suffered frequent setbacks in the capital market and the sales market. The stock price plummeted, and the sales volume in October was almost cut in half.
Whether Jikrypton’s valuation in the primary market can meet industry expectations remains to be seen.
This article was originally written by the public account Financial Graffiti.
Original title: Geely Automobile spins off Jikrypton to go public in the United States. The primary market valuation may reach hundreds of billions? “Geometry” may also be incorporated in the future