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The subscription premium is over 69%! Zero-running car gets HK $659 million strategic investment

2024-04-24 Update From: AutoBeta NAV: AutoBeta > News >

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Recently, Zero Run Automobile announced that it had received more than 600 million Hong Kong dollars in strategic investment, which mainly came from Jinhua City Industrial Fund and Wuyi County Gold Investment.

According to the official announcement, Zero Run Automobile has conditionally agreed to allot and issue the relevant number of H shares available for subscription with a total amount of no more than 200 million yuan. The subscription price is HK $43.8 per H share subscription share, among which Jinhua City Industrial Fund will subscribe for about 5.0175 million shares, accounting for 0.37% of the issued shares of Zero Run Automobile after subscription. A subscription agreement for domestic shares was entered into with Wuyi County Financial Investment to allot and issue 10.035 million domestic shares to Wuyi County Financial Investment at a subscription price of 39.86 yuan per share. After the subscription, Wuyi County Gold accounted for 0.74% of the issued shares of Zero Run Automobile. The total proceeds from the subscription with Jinhua City Industrial Fund and Wuyi County Gold totaled HK $659 million.

For the follow-up use of the funds obtained this time, the official said that 40% will be used for technology development. Marketing and sales services, overseas market expansion accounted for 25%. 15% is used to enhance the company's productivity and automation capabilities, enhance vertical integration and operational efficiency, and 20% is used for working capital and general corporate purposes.

Officials said the subscription was a strategic investment made by investors and was of the same nature as other strategic investments recently introduced by the company. It said that the subscription is to show the support of Jinhua City Industrial Fund and Wuyi County Jintou to the new energy and intelligent electric vehicle business of zero-running vehicles, as well as confidence in the long-term development and prospect of zero-running vehicles. In addition to establishing and strengthening commercial and industrial cooperation between zero-run cars in Wuyi County and Jinhua, subscription matters can also benefit zero-run cars and the local economy of Wuyi County and Jinhua.

This time, although obtained huge investment, but zero run car secondary market has appeared decline. As of the close of January 19, zero-run cars closed at HK $25.8 per share, down 4.8%. However, compared with the official subscription price of HK $43.8, the subscription premium is 69.76%.

It is worth noting that on October 26 last year, Maserati parent company Stellantis invested 1.5 billion euros (about 11.5 billion yuan) to acquire about 20% of the shares of zero-run cars and two seats on the board of directors of zero-run cars. After the zero-run car and Jinhua City Industrial Fund and Wuyi County gold transaction, the shareholding ratio of the largest shareholder group of zero-run car will be reduced from 23.47% to 23.21%. In addition, Zhu Jiangming, founder of zero-run car, diluted his shareholding from 6.93% to 6.85%. Stellantis 'stake changed from 21.26% to 21.02%.

Of course, for zero-run cars, getting an investment of up to HK $600 million at this stage is a good thing. After all, zero-run cars, like most new car-building forces, are still in a state of loss. Relevant data show that from 2019 to 2022, the operating losses of zero-running vehicles were 730 million yuan, 869 million yuan, 2.868 billion yuan and 5.109 billion yuan respectively, with a total loss of 9.576 billion yuan in four years. The latest data, zero-run cars in the third quarter of last year, net loss of 986 million yuan. At the same time, entering 2024, the price war of automobile enterprises has not stopped, but the competition is getting more and more intense.

Under such background, it is a good strategy for zero-running cars to choose group cooperation and strengthen competitiveness. At the end of last year, Zero-Run Automobile cooperated with Maserati parent company Stellantis, and this time it obtained more than HK $600 million strategic investment through subscription matters to solve the urgent need for funds. With these supports, it is natural that zero-run cars will be able to walk more smoothly in 2024. However, as CEO Zhu Jiangming said, sales volume is the most important thing for zero-run cars, hoping to balance the relationship between gross profit and sales volume. This year, we will strive to sell 30,000 vehicles per month, and the target gross profit margin will be maintained between 5% and 10%. For reference, the latest December sales of zero-run cars last year were 18618.

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