Li Shufu’s capital empire is about to expand again.
Jikrypton has just submitted an updated prospectus and is scheduled to be listed on the New York Stock Exchange as early as May 10.
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This makes Ji Krypton the fourth new Chinese car-making force to go public in the United States after Wei Xiaoli, and it also becomes Li Shufu’s ninth IPO.
The issuance range is US$18 to US$21 per share. Based on the upper limit, Ji Krypton’s valuation may reach US$5.13 billion.
You know, Ji Krypton is a brand that was only officially announced in April 2021. If it takes only 3 years to complete the market, it will become the fastest new energy vehicle company to go public. For comparison, Tesla took 7 years, Xpeng Motors and Li Auto took 6 years and 5 years respectively.
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Expected to be profitable this year
Backed by the big tree of Geely, Jikrypton has developed smoothly in the terminal market.
The prospectus shows that Jikrypton’s revenue in 2021, 2022, and 2023 will be 6.528 billion yuan, 31.9 billion yuan, and 51.67 billion yuan (about 7.278 billion U.S. dollars) respectively, and its gross profits will be 1.038 billion yuan, 2.47 billion yuan, and 6.85 billion yuan respectively. (approximately $965 million).
This means that in the first year after Jikrypton was founded, gross profit was positive. 1.8% in 2021, 4.7% in 2022, and 15% in 2023, an increase of more than 10 percentage points compared with 2022.
What is the concept of gross profit margin of 15%?
This result is second only to Tesla in the high-end pure electric market, and surpasses the leading domestic pure electric forces. For example, in the same year, Weilai’s was 10%, while Xiaopeng’s was 2%.
Dai Yong, deputy CFO of Geely Automobile Group, previously said that on the premise of increasing sales and gross profit, Ji Krypton will strive to turn losses into profits in 2024 (according to Hong Kong Financial Reporting Standards).
Once this goal is achieved, Ji Krypton will become the fastest new car-making force to break even.
From the perspective of the company's overall operations, Jikrypton is still at a loss in the past three years. Although Jikrypton's revenue has increased from RMB 6.5 billion in 2021 to RMB 51.7 billion in 2023, Jikrypton's net loss has also increased from RMB 6.5 billion in 2021 to RMB 51.7 billion in 2023. expanded from 4.5 billion yuan to 8.3 billion yuan in 2023.
The most important factor is the large investment in research and development. From 2021 to the end of 2023, Jikrypton’s cumulative R&D investment will be nearly 17 billion yuan. Jikrypton’s R&D investment in 2021, 2022 and 2023 will be 3.160 billion yuan, 5.446 billion yuan and 8.369 billion yuan respectively. Currently, JiKrypton has 6 R&D centers around the world, and its global R&D personnel have reached 7,000.
It is not difficult to see that its R&D investment continues to increase year by year, and its R&D investment that year roughly offsets its net loss that year. This also means that from a revenue perspective alone, Jikrypton has been able to break even.
Another information point worth paying attention to is Ji Krypton's revenue structure. Different from traditional car companies and new car-making forces, more than 90% of revenue depends on sales revenue from selling cars. Jikrypton also has good revenue capabilities in its three-power business, R&D and other services. Data shows that in the first half of 2023, Jikrypton’s revenue other than complete vehicles accounted for 38% of total revenue.
The diversified income model also makes Jikrypton more resistant to risks.
This is not the first time that Jikrypton has submitted a prospectus. In November last year, Jikrypton submitted an IPO prospectus document to the U.S. Securities and Exchange Commission. This time it is different from the previous ones, and is called the “red herring” version of the prospectus.
A red herring prospectus, also known as a quasi-prospectus, is a document required by the U.S. Securities and Exchange Commission for companies applying for listing. When the issuer makes a preliminary roadshow to the agency, it will provide a preliminary prospectus printed in red font, including preliminary Pricing recommendations to attract investors' attention are commonly referred to as “red herrings.”
The biggest adjustment after this update is the change in the underwriter lineup and the update of existing financial data. According to the prospectus, some existing shareholders and third-party investors of Jikry Auto have expressed interest in subscribing for ADSs totaling up to US$349.08 million in this issuance.
Among them, Geely Automobile subscribed up to US$320 million, while Mobileye subscribed for approximately US$10 million, and CATL subscribed for approximately US$19.08 million.
The funds raised will be used in three areas: approximately 45% (or US$138.9 million) will be used to develop more advanced pure electric vehicle technology and expand product portfolio; approximately 45% will be used for sales and marketing and expanding the company’s services and charging Network; approximately 10%, or $30.8 million, for general corporate purposes, including working capital needs to support Ji Krypton’s business operations and growth.
Market value is more pragmatic
In fact, judging from the market capitalization figures of this IPO, there is a big gap compared with the previous ones.
In August 2021, Jikrypton received a Pre-A round of financing of US$500 million, and its post-investment valuation at that time reached US$8.93 billion.
In December 2022, Jikrypton submitted IPO registration documents to the U.S. Securities and Exchange Commission for the first time. It planned to raise more than US$1 billion. At that time, sources said that the valuation to be sought exceeded US$10 billion.
At that time, Jikrypton was established less than two years ago. With the high-end pure electric vehicle brand label of Geely Automobile, its first product Jikrypton 001 has delivered more than 70,000 units of a single model, reaching the full-year sales target ahead of schedule.
According to Geely Automobile’s previous financial report, Jikrypton Automobile’s operating revenue in 2022 will reach RMB 31.79 billion, a year-on-year increase of more than 10 times, and the cumulative delivery volume for the year was 71,941 vehicles. Compared with the three car companies established around 2015, Wei Xiaoli is a veritable rising star.
In November 2023, news came again that Jikrypton was about to IPO. It submitted IPO application documents to the U.S. Securities and Exchange Commission and planned to be listed on the New York Stock Exchange under the stock code “ZK”.
Two years before its establishment, Jikrypton released three new cars: Jikrypton 001, Jikrypton 009, and Jikrypton X. As of the end of October 2023, monthly delivery volume has increased year-on-year for nine consecutive months. Only 24 months after delivery started, it became the fastest luxury pure electric brand to deliver 170,000 units. At that time, Ji Krypton was very proud and said frankly that he was expected to become the first and fastest profitable electric car company besides Tesla.
Jikrypton does have the confidence to say this. Among many Chinese new energy vehicle companies, Jikrypton is a rather special existence. It is backed by Geely Group and has been favored by capital since its birth. The circle of friends behind it can be called Luxurious lineup.
Before submitting the prospectus, Jikrypton completed two rounds of external financing, Pre-A and Series A. The first financing was in August 2021. Investors include Intel Capital, CATL, Bilibili, Hongshang Group and Boyu After completing the investment, the five companies accounted for approximately 5.6% of Jikrypton Automobile’s shares.
The second time was in February 2023, when Jikrypton announced the completion of Series A financing of US$750 million, with a post-investment valuation of US$13 billion. It is reported that this round of financing was participated by Mobileye founder and CEO Amnon Shashua, CATL, Yuexiu Industrial Fund, Commerce Fund, Quzhou Xin'an Intelligent Manufacturing Fund, etc.
It is not difficult to see from these capital institutions that they have covered a series of fields such as intelligent driving, power batteries, innovative technology, and vertical integration of raw materials. With abundant industrial resources, it is not easy to create a complete car-making ecology. A difficult thing.
Relying on the asset-heavy empowerment of Geely Group, the Jikrypton brand can achieve asset-light operations. The most important thing is that Ji Krypton has also made rapid progress in terms of technology. For example, SEA vast architecture, self-developed high-performance electric drive, one-piece die-casting, thermal spread and non-fire battery safety technology, etc. can all be used on a large scale.
Therefore, compared with other new forces, Jikrypton can not only maintain a relatively high brand tone, but also rely on its technological leadership to quickly occupy the market with less cost.
Although the valuation has dropped, in the long term, Jikrypton’s development model is also a typical case of China’s high-end pure electric breakthrough.
Li Shufu’s ninth IPO
There is no shortage of friends or skills, but funding is also critical to maintaining a company's long-term operations. Ji Krypton has always been regarded as the fulcrum for Geely Automobile to leverage the new energy vehicle market, and it also carries the important task of Geely Automobile's high-end strategy.
Since its establishment, Jikrypton has successively launched 001, 009, But car building is a bottomless pit. Although JiKrypton's cash flow, sales volume, and delivery volume are far ahead, it is still losing money selling cars.
Data shows that in the first three quarters of 2021, 2022, and 2023, Jikrypton’s net losses were 4.514 billion yuan, 7.655 billion yuan, and 5.228 billion yuan respectively. This means that Jikrypton has lost money on every car sold in the past three years. money.
It is not difficult to see that even if sales exceed expectations, it will still inevitably fall into the industry curse of “new energy vehicle manufacturing losing money year after year”.
Listing on the New York Stock Exchange can, on the one hand, enhance the brand's global influence and further consolidate the positioning of a global brand. On the other hand, it can also seek more financial support.
For Li Shufu, Jikrypton’s listing has also allowed his capital empire to grow again.
At present, Li Shufu owns Geely Automobile listed on the Hong Kong stock market, Qianjiang Motorcycle, Hanma Technology, and Lifan Motors listed on the A-share market, Ekatong, Polestar, and Lotus listed on the U.S. stock market, as well as Volvo listed in Sweden. Automobile, 8 listed companies.
Who would have thought that a rural kid who herded cattle, opened a photo studio, produced refrigerators, sold building materials, and built motorcycles would become a car maniac after entering the automobile industry in 1996?
In 1996, Li Shufu acquired 850 acres of land in Linhai and announced an investment of 500 million to build Geely's “Haoqing Automobile Industrial Park”.
At that time, the automobile industry had not yet opened up to private enterprises, and the domestic automobile industry was almost completely blank. But Li Shufu was not timid and left behind a “wise saying”:
What is a car? Isn’t it just four wheels, a steering wheel, an engine, a car shell, and two sofas inside?
In 1998, the first mass-produced Geely Haoqing rolled off the assembly line, marking the beginning of Geely Auto's take-off.
When China joined the WTO in 2001, Geely became the first private enterprise to obtain car production qualifications and was successfully listed in Hong Kong in 2005. Since then, Geely has embarked on a wild ride.
Everyone knows what happened later. The snake-like acquisition of Volvo made Geely a leading car manufacturer. Later, it acquired part of the shares of Daimler Group, the parent company of Mercedes-Benz, and began a “crazy purchase of luxury cars” Rhythm.
Today, Geely Holding Group has become the most globalized Chinese private car company, and its ambitions have gradually begun to emerge – to become the Volkswagen Group in the era of new energy vehicles.
Just a few days ago, Caocao Travel, an online ride-hailing company spun off from Geely Automobile’s parent company Geely Holdings, also submitted an IPO prospectus to Hong Kong.
If Cao Cao Travel and Ji Krypton successfully ring the bell this time, Geely Group will have 10 IPOs.