Source: Manager Media’s "Business News. Family Office" magazine
Last year, due to the "user trust" stalled Hong Kong IPO, yesterday NIO successfully listed on the Hong Kong Stock Exchange with "introduction listing".
On March 10, it was an exciting day for "NIO" automobile company. Under the pressure of delisting the US stock market, after two difficult IPO applications in Hong Kong, it finally officially listed on the Hong Kong Stock Exchange, with the stock code "9866" and the opening price on the first day was 160 Hong Kong dollars. As of press time, the market value exceeded 270 billion Hong Kong dollars.
Compare with the 8 major automakers
This time, NIO listed on the Hong Kong Stock Exchange in the form of "introduction", without raising funds. The company’s share price rose to 169.5 Hong Kong dollars on the first day of listing, and then fell sharply.
If we compare the stock price and market value of NIO’s listing with those of the top 8 domestic automakers that will be listed:
1, NIO, share price 163 yuan, market value 272.20 billion
2, XPeng Motors, stock price 111 yuan, market value 190.80 billion
3. Li Auto, share price 109 yuan, market value 225.20 billion
4, Geely Automobile, share price 11.8 yuan, market value 118.80 billion
5, GAC Group, share price of 6.6 yuan, market value 69.30 billion
6, Great Wall Motor, share price 12.5 yuan, market value 115.30 billion
7, BYD, share price 201 yuan, market value 586.30 billion
8, millet group, share price of 13.6 yuan, market value 341.60 billion, (including the Great Wall Motor, BYD, GAC Group, are Hong Kong shares)
We can find that the opening price of NIO’s listing is a few streets away from many domestic car companies that have already listed. NIO’s market value is 2.36 times that of Great Wall Motor, 4 times that of GAC Group, and 2.33 times that of Geely Automobile. NIO’s share price is close to BYD. Why are Hong Kong capital markets optimistic about NIO?
In 2019, NIO was still on the verge of bankruptcy because it could not get financing. Fortunately, it finally obtained the Hefei Municipal Government’s 7 billion investment fund to gradually get out of the predicament. In 2021, NIO delivered 91,429 new cars throughout the year, an increase of 109.1% year-on-year. In February 2022, 6,131 smart electric vehicles were delivered, an increase of 9.9% year-on-year. In 2022, NIO plans to deliver three new models, and the number of models on sale will increase from three to six. In just three years, NIO has become a leader in the field of domestic high-end smart electric vehicles in mainland China, gaining recognition from the market and investors.
Since this year, NIO’s performance in US stocks has been falling to the bottom. Experts believe that the overall valuation of new energy vehicles in the Hong Kong stock market is relatively high, so NIO’s performance in Hong Kong stocks is expected to be better than that of US stocks. But experts point out that whether NIO, which continues to lose money, can continue to gain market favor in the future depends on when it can turn losses into profits.
It is worth noting that NIO’s listing in Hong Kong coincides with the Russian-Ukrainian war, which has led to the rise in oil prices, which has brought unlimited potential to new energy vehicles, which also heralds a window for the surge in new energy vehicles.
Why "introduce listing"?
Morgan Stanley, Credit Suisse and CICC are joint sponsors of NIO’s IPO, which uses an "introductory listing" approach.
The special thing about the listing is that there is no public offering process, only shareholders apply for listing of old shares. According to the prospectus, Li Bin, founder and chairperson of NIO, holds 10.6% of the shares and has 39% of the voting rights; Tencent holds 9.8% of the shares and has 17.4% of the voting rights; Baillie Gifford & Co shareholding ratio is 6.5% and the voting rights are 3.5%.
NIO is the first Chinese concept stock to return to Hong Kong from the US in the form of an introduction in recent years. Since the introduction listing does not issue new shares to shareholders in the new market, there is no issue price set in advance. The price at the beginning of the listing of the company is determined by the market, and the opening price will be used as a benchmark for calculating the rise and fall of the stock price after that.
Why use the "introductory form" for listing? In fact, according to previous media reports, NIO submitted a listing application in Hong Kong in March 2021, but failed to obtain approval from the Hong Kong Stock Exchange, mainly due to its involvement in user trust shareholdings.
According to the announcement issued by NIO in 2019, Li Bin, founder, chairperson and CEO of NIO, established 50 million shares in his name as NIO User Trust. In the public document introducing the listing in Hong Kong, NIO stated that the main company of its user trust is NIO Users Limited, which owns 1.1% of the issued Class A ordinary shares and voting rights, and will own 22.2% of the Class C ordinary shares and voting rights. Li Bin is the founder, regulator, investment advisor and sole actual beneficiary of the company. However, the establishment of user trust has attracted attention and inquiries from the Hong Kong Stock Exchange, which has stalled NIO’s listing on the Hong Kong Stock Exchange in 2021. As a last resort, NIO had to use the "introduction listing" method to list on the Hong Kong Stock Exchange for the second time, without raising funds, to be able to list successfully.
The successful listing in Hong Kong not only reduces the impact of geopolitical factors for NIO, but also provides investors with a clearer perspective on the Chinese company. Two people close to capital markets told Caixin that NIO’s introduction to Hong Kong stocks has stimulated the "nerves" of the market, and more Chinese stocks are expected to land in Hong Kong in this way in the short term. It is reported that the second echelon of new car-making forces, such as Zero Sports Car, Nezha Automobile and WM Automobile, will also go public in Hong Kong in 2022.
It is worth mentioning that in addition to Hong Kong capital markets, NIO is also exploring the possibility of listing in Singapore. It mentioned in its prospectus recently that NIO has applied for a secondary listing by introduction on the main board of the Singapore Exchange, and the Singapore Exchange is currently reviewing NIO’s application. NIO expects that the Class A common shares will be listed on the Singapore Exchange after listing on the Hong Kong Stock Exchange, subject to obtaining all necessary regulatory approvals and complying with all applicable listing requirements.