Extreme krypton IPO: a valuation stop loss in the "reverse growth cycle"


Extreme krypton IPO: a valuation stop loss in the "reverse growth cycle"

Wen | Tan Qing said AI, author | Zheng Kaiche

In the matter of building a car, although everyone has different resource endowments, US stocks seem to be a common destination.

Less than three years after its establishment, Krypton is finally going public in the United States.

With capital technology and other resources, coupled with its strong brand-building ability, Geely has successfully created a valuation of nearly 100 billion yuan. The IPO road is obviously faster than Tesla and Wei Xiaoli. Although there is Geely’s support behind it, the speed of this IPO has surprised many investors.

The extremely krypton IPO was interpreted by the outside world as a powerful counterattack by the traditional car-making forces. It’s just,Look closely, although this hand counterattack is menacing, it still lacks some internal force.

This IPO, the planned amount of funds raised is not high, and the planned financing is 1 billion US dollars, compared with the expected valuation of 18 billion US dollars.This fundraising plan is still a bit conservative.Conservative fundraising plans often have a cause, either because the industry valuation is not ideal or because they are not confident in their own growth value.

In short, lowering the planned fundraising may make it easier for the IPO to succeed. After all, before the growth is really realized, the valuation will still be variable, and the current market valuation of new energy car companies is not the highest point, and it is more pragmatic to be conservative.

From an external perspective, this may be related to the financial demand for funds. After all, after two and a half years of operation, the accumulated loss of Krypton is as high as 16 billion yuan. According to the data of Tianyancha APP, in February this year, the A-round financing was 750 million US dollars, and the valuation reached 13 billion US dollars.

Under the continuous loss, the "second generation of cars" will be "independent" after all. It is also a road that needs to be taken after all to get out of the arm of the parent company and run its own profits and losses.

Geely’s plan to split Krypton and list it independently has been planned for a long time. In October 2022, Geely Automobile planned to split and go public. So, why wait until now to go public?

From the financial point of view, the conditions for split listing are also mature.

According to the data in the prospectus, the revenue from 2020 to 2023 was 3.185 billion yuan, 6.528 billion yuan and 31.899 billion yuan respectively, and the revenue growth rate in 2021 and 2022 was 104.94% and 388.69% respectively.

What is this concept?

Let’s look at Tucki. In the corresponding reporting period, Tucki’s revenue was 5.844 billion, 20.988 billion and 26.855 billion respectively, and the revenue growth rate in 2021 and 2022 was 259.12% and 27.95% respectively.

In other words, from 2021 to 2022,Krypton’s revenue scale and growth rate have surpassed that of Xpeng Motors.

Compared with Weilai and Ideality, the latter’s revenue in 2022 was 45.507 billion and 45.287 billion respectively, with growth rates of 37.19% and 67.67% respectively. If krypton can maintain a similar growth rate, then krypton is likely to come from behind in terms of revenue scale.

At least for now,Weilai revenue > ideal revenue > krypton revenue > Tucki revenue.

Let’s look at the net profit.

From 2020 to 2023, the net profit of Krypton was 104 million yuan,-4.514 billion yuan and-7.655 billion yuan respectively. In the same period, the figures in Tucki were-2.732 billion,-4.863 billion and-9.139 billion. Obviously, Krypton has more revenue, less losses and higher management quality than Tucki.

The other two companies had less ideal losses, with net profits of-166 million,-321 million and-2.032 billion respectively, and the net profits of Weilai were-5.304 billion,-4.017 billion and-14.437 billion respectively.

As far as losses are concerned, Weilai > Tucki > Extreme Krypton > Ideal.

Coincidentally, the current ideal market value of US stocks is US$ 44.8 billion, which is greater than US$ 16.3 billion in Tucki and US$ 13.8 billion in Weilai. That is to say, from the perspective of profit valuation, if Krypton is valued at $18 billion, it is just between the ideal and Tucki.

Overall,No matter from the revenue valuation or profit valuation, with the current scale and profitability, it has reached a node that can be an independent IPO.

Tan Qing said that AI believes that besides its mature operating conditions, the listing of Krypton may be more influenced by external environmental factors.At this time, it is extremely listed, which may be intended to stop loss.

The first is the stop loss on valuation.

Affected by the market cycle, the secondary market is experiencing a reverse growth cycle. At this time, the extremely listing means more "stop loss" in valuation for shareholders such as Geely.

From the external environment, whether it is a science and technology track or a new energy vehicle track, the growth valuation has been killed. Weilai’s market value has dropped from more than 60 billion US dollars to 13.8 billion US dollars, Tucki has dropped from more than 30 billion US dollars to more than 16 billion US dollars, and even Tesla has dropped from one trillion US dollars to more than 700 billion US dollars.

Even if Krypton waits any longer, it may not have a good valuation window. It is better to go public at this time, relying on its own experience quality and growth ability, and strive for a better valuation as much as possible, at least higher than that in Tucki.

Extreme krypton has this confidence.

On the one hand, the average bicycle price in Krypton is better than that in Tucki.

Taking the data in 2022 as an example, the sales revenue of vehicles (19.67 billion) and the sales volume of krypton in 2022 were 71,941 vehicles.

According to the accounting, the income of extremely krypton bicycles is about 270,000. In the same period, Weilai was 370,000, Tucki was 210,000 and Ideal was 330,000.

On the other hand, Krypton’s gross profit margin performed better.

In terms of gross profit margin, Krypton’s gross profit margin was 10.5% last year, while it was 21.22% in the same period. Tucki’s gross profit margin has not yet turned positive, and Weilai’s is only 1.28%.

The listing of MPV Extreme Krypton 009 raised the average selling price of bicycles in the first half of the year. The average selling price of bicycles in the first half of the year was 309,000 yuan, up 30,000 yuan year-on-year. In addition, with the increase in product sales and the support of Geely’s industrial chain, the cost of building a car is also declining. As these advantages are further revealed, the performance of Krypton may have more room for release.

Therefore, IPO may not be the best time at this time, but it is indeed a more suitable time for valuation.

Second, the financial stop loss.

Finance here does not mean extreme krypton, but Geely. Geely is not only a brand of extreme krypton, but it is indeed a one with more losses.

In August this year, Geely released its financial report for the first half of this year. The company’s total revenue increased by 25.8% year-on-year, slightly increased by 1% year-on-year, and its gross profit margin was 14.4%. Compared with the same period last year, it decreased by 0.2 percentage points. In this unsatisfactory net profit data, it is difficult to ignore the loss impact caused by extreme krypton and Lectra.

Next, the competition in the whole automobile industry will become more intense, not only in the new energy market, but also in the fuel market. Therefore, financially, Geely does have a lot of pressure.

In fact, if the losses continue, the impact of Krypton on Geely’s finance will be no less than a "bad asset". If Krypton’s independent listing is successful, then Geely’s pressure will be relatively less.

Maybe,The listing of krypton is not only a kind of "sizing up the situation", but also a kind of "having to do it".Even in the "reverse growth cycle" of the secondary market, the market will not give a satisfactory price.

For Krypton, IPO means to really "grow up" and decide your own destiny in terms of brand, product and manufacturing.

According to the prospectus, 90% of the fund-raising plan is related to further expansion of business, such as investing in research and development, increasing product portfolio, and further improving the service network and energy-supplementing facilities network.

In other words, before the product can truly achieve large-scale hematopoietic capacity, krypton still needs a considerable amount of fresh blood from the secondary market.

From the perspective of business structure,The main automobile sales business urgently needs to form a stronger positive cycle ability.

In krypton business, automobile sales accounted for 61.9%, battery and other parts sales accounted for 34.6%, and R&D services and other services accounted for 3.4%. Among the three major businesses, the gross profit margin of Krypton automobile sales business is actually not as high as expected.

In comparison, the gross profit margin of extremely krypton vehicle sales in 2022 was 4.69%, and Wei Xiaoli was 13.70%, 9.45% and 19.09% in the same period.

Gross profit margin is so low,It is because of the market strategy of exchanging price for quantity in the early stage of product launch.

One fact is that most of Krypton’s revenue is supported by 001. In terms of the sales proportion of the brand, before January 2023, there was only one product, 001, and after delivery began in October 2022, the sales volume was more than 10,000 vehicles for three consecutive months.

In February, 2023, after the new car was delivered, the sales volume of Krypton 001 dropped to 88%, and in July, it dropped to 51%, and in September, it returned to 71%.

From this point of view, the sales volume of Krypton 001 is still very large.

I understand that it is impossible to "eat all over the sky in one stroke" by changing the price with the price of Extreme Krypton 001, so I immediately launched Extreme Krypton 009 and Extreme Krypton X, which respectively correspond to hunting MPV and young personalized SUV market segments.

In addition to exchanging price for quantity, the big move released by Krypton is"product positioning and market segmentation win". At the end of October this year, Krypton 001FR, with a starting price of 769,000 yuan, went on the market, which is the ultimate performance of Krypton’s consistent market strategy.

Can this strategy succeed? It remains to be seen.

After the launch of new models such as Extreme Krypton X and Extreme Krypton 009, the brand has indeed gone up, and the price of bicycles has also gone up. Extreme Krypton has firmly established itself in the luxury market.Although the price has gone up, the sales volume of 001 is still very high.

Of course, this may also be related to the production side.

On the one hand, in the case of insufficient production capacity of its own factory, it may still be necessary to hand over some models to Geely for production, which means that even if it comes to IPO, it may still not have complete autonomy in production.

On the other hand, for Krypton, it also needs a climbing process from the release of new products to the release of production capacity. The production capacity of 001 is sufficient, but it is still unknown whether other product lines can successfully complete the capacity climbing.

Whatever the reason,A situation that cannot be ignored is that there is not much time left for krypton.

From the data point of view, the driving force of 001 sales growth is declining. The sales data show that from January to September 2023, the cumulative sales volume of Krypton 001 reached 52,998 vehicles, down 26.33% year-on-year.

Judging from the prospectus, a number of models have been launched.And further research and development of more models to put on the market and spread the product line is a road that has been selected.

According to the prospectus, in 2020-2022 and the first six months of 2023, the R&D expenses of Krypton were RMB 23 million, RMB 3.16 billion, RMB 5.446 billion and RMB 3.189 billion respectively. The expense rates are 1%, 48%, 17% and 15% respectively. We compare the R&D expenditure in 2022, and the ideal R&D expenditure rate is 15%, Weilai 22% and Tucki 19%.

Further, the prospectus shows that 50% of the expenses of Krypton during the reporting period are consulting fees, SEA (Geely Vast Architecture) licensing fees and verification and testing fees.

In other words, half of the research and development expenses are actually given to Geely for the development of new models on the vast architecture. Eager to develop new models and put them on the market,It also seems to explain from the side that the strategy of market segmentation and niche brand style can not support the growth of revenue scale.

Tesla, Ideal, Tucki and Zero Run have all proved that,The real success of building a car is not the success of the niche market, but the success of the mass market.

Why is the sales of Krypton 001 so good? Not because he is a hunting car, but because he can play Krypton 001 in the whole large market of medium and large cars. Therefore, even if we dig deeper into market segments such as MPV, we really can’t support real sales. What Krypton really lacks is to find another mass market product besides 001.

This product is Krypton 007, which appeared at Guangzhou Auto Show.

Extreme Krypton 007 brings an 800V platform and dual motors, with a starting price of 229,900 yuan. In addition, 007 is equipped with an 8295 chip, a 90-inch smart light screen and three laser radars, and its hardware configuration is full.

In the medium-sized car market, Krypton obviously put more chips on it.

Compared with the products of Krypton brand in the past, Krypton 007 faces a more rational market and more intense competition. This market not only includes Tesla Model3, but also Tucki P7 and BYD Han EV, which is the most competitive market for new energy. This also means that the former "car second generation" began to walk out of the comfort zone and walked into the most important main battlefield of new energy vehicles.

"This market is extremely awkward and does not have overwhelming product advantages." Xiao Guo, a brand salesman, said: "Judging from the newly released product information of Krypton 007, it seems that Krypton still emphasizes the hardware parameters of the product, but when users in this market make decisions, after the test drive experience, their intellectual driving ability will often become the key factor in the final transaction, and the advantages of Krypton in this respect are not obvious."

In 2022, Krypton once said that it would put into production L4 self-driving cars for the C-end consumer market in 2024, and Krypton also cooperated with Mobileye to pave the way for the intelligent driving ability of Krypton cars.

Once the rhetoric has gradually arrived at the moment of landing, what kind of answer sheet will Krypton hand over? Can this answer sheet satisfy the market? Perhaps the next secondary market will give the fairest judgment.

What will happen to the performance of krypton IPO? It is worth our common expectation.


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