Geely Automobile spins off Jikrypton to list in the US Primary market valuation can reach hundreds of billions? The “geometry” may also be incorporated in the future
“The purpose of the spin-off and listing: First, to seek more funding channels for Jikrypton, and second, the high-quality assets that have been injected will help Jikrypton raise its valuation.”
Author: Eric
Edit: thuja
Manufactured by: Financial Graffiti (ID: caijingtuya)
Who will get the Jikrypton IPO, Hong Kong stock or US stock? Finally the truth has come to light.
According to the intelligence expert of the company “Financial Graffiti”, on December 13, Geely Automobile (00175. HK) released an announcement stating that Jikr has 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 should continue to be a wholly owned subsidiary of Geely Automobile.
Source: company announcement
As the first domestic private enterprise with qualifications in automobile manufacturing, Geely Automobile has also joined the new energy transformation. Jikrypton and Geometry are the two core brands of Geely Automobilepure electric vehiclebrand.
Jikrypton was founded in March 2021 and is jointly owned by Geely Automobile and parent company Geely Group, which own 51% and 49% of the shares, respectively. Then in December, Geely Automobile acquired 220 million Jikr shares from Geely Group, increasing its stake to 54.47% and remains the controlling shareholder.
Why Geely wants to split Jikrypton in the market? There are two main reasons: one is to look for more funding channels for Jikrypton and the other is that the high-quality assets that have been injected help Jikrypton get a higher valuation.
Build cars and burn money to expand funding channels
giveelectric machineIt’s 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 auto 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 automaker like Geely must rely on multiple external funds to ensure the iteration and update of Jikr auto products.
Indeed, five months after the establishment of Jikrypton (August 2021), it conducted a Pre-A financing round with a total scope of US $500 million, introducing strategic shareholders Intel,CATLHongshang Group, Boyu Investment and bilibili, with a post-investment valuation of about 9 billion dollars. But this is far from enough: according to the plan disclosed by Geely, Jikrypton will launch 6 models by 2025, becoming the first third in the world in market share of high-end electric vehicles.Salesreached 650,000 vehicles.
You need to know that Jikrypton’s second mass-produced pure electric MPV 009 has just been launched on November 1, and the starting price is close to 500,000 yuan. And in the first three quarters of 2022, Jikrypton’s cumulative sales will be just 39,500 vehicles. On November 1, Jikr announced the latest delivery figures: 10,119 units were delivered in just one month in October, and a total of 55,600 units were delivered. Liji Krypton is just two months away from reaching its sales goal of 70,000 vehicles this year.
To realize the grand auspicious plan, Jikrypton obviously needs more capital support.
In addition, the cash-burning Jikrypton spin-off is also a good thing for Geely itself, which can greatly ease the financial burden of Geely Automobile. Geely Automobile believes the proposed demerger is in the best interest of all shareholders. The proposed spin-off will allow, among other things, investors to better value the Group and focus on maintaining the business, while providing Jikrypto with direct and independent access to equity and debt capital markets should the need arise .
Inject high-quality assets to drive higher valuation
For Geely, the Jikrypton spin-off and listing isn’t just about funding.
Another goal of Geely is to use the high-quality resources that have been installed in Jikrypton to help its higher valuation, so as to realize the value of GeelyNew energy vehicleThe strategic map of the field.
Currently, Jikrypton holds 51% stake in Ningbo Wei Rui, holds 100% stake in CEVT, and holds 30% stake in Haohan Energy. CEVT is the European research and development center of Geely Automobile, with developmentnew energy vehiclesThe well-known CMA architecture was born from this technology center, which can greatly improve the strength and efficiency of Jikrypton’s R & D.
Haohan Energy Technology is mainly engaged in the automotive industryLoadThe research and development of facilities and technologies, the provision of car charging services, and the operation of car charging points and networks will provide Jikrypton with basic power supply services for electric vehicles.Ningbo Wei Rui is a company of three electrical systems within the Geely system, engaged in research and development, production and salesPower batteryAnd the electric drive system and related components and provide after-sales service.
Research and development centers, charging facilities and trielectric systems, there is no doubt that Geely has installed its best quality resources on power batteries and charging services in Jikrypton.
And the incorporation of these businesses can directly generate revenue. For example, CEVT provided R&D services to Geely Holdings and its subsidiaries and charged fees. After Jikrypton acquired CEVT, the R&D services fees and development will naturally enter the “pocket” of Jikrypton Holdings. At the same time 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, acquired at the beginning, were also 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. Also, Geometry, another pure electric vehicle brand under Geely, doesn’t rule out Geometry being merged into Jikrypton in the future. Also, last year, Geely executives said that due to the company’s new energy transformation needs, Geometry may be merged into Jikrypton.
Once unbundled and listed, Jikrypton, which has many high-quality resources, has a huge scope for imagination. Yang Zhao, a senior automotive industry analyst, once said that if Jikrypton goes public separately, the primary market could give it a valuation in the hundreds of billions. As a listed electric vehicle company with a valuation of hundreds of billions, Geely’s valuation is sure to rise.
But can she really grant her wish? Not long ago, Leapmotor (09863. HK) officially went public in Hong Kong, but suffered frequent setbacks in the capital market and sales market, the stock price plummeted, and the sales volume in October it was almost halved.
Whether Jikrypton’s valuation in the primary market can meet industry expectations remains to be seen.
This article was originally written by the Financial Graffiti public account.
Original title: Geely Automobile spins off Jikrypton to list in the United States. Can primary market valuation reach hundreds of billions? The “geometry” may also be incorporated in the future
