How Much More Investment Is Needed To Build A Car?

Evergrande automobile, which has always been rich, has also begun to seek external financing.

On September 18, China Evergrande New Energy Automobile Group Co., Ltd. (hereinafter referred to as "Evergrande motor") announced that the board of directors of the company decided to issue RMB shares and list on the science and Technology Innovation Board of Shanghai Stock Exchange.

Evergrande's announcement did not disclose more information, such as the size of the new shares issued. In the announcement, the company also specifically said that the issuance of RMB shares may or may not be conducted due to the necessary regulatory approval.

However, the company's "announcement of the next step of the 21st century" is only too close to that of Hengda.

As a matter of fact, Evergrande has made frequent actions recently. Just three days ago, on September 15, Evergrande motor also announced a new financing with a scale of HK $4 billion. The investors include Tencent, Sequoia Capital, Yunfeng fund, Didi travel and other well-known institutions.

In spite of the fact that China Securities Regulatory Commission (CSRC) has relaxed the conditions for enterprises to return to a, automobile enterprises including Geely Automobile and Dongfeng Group Co., Ltd. have launched plans to re list on the science and technology innovation board or gem, but Evergrande's move has been given more interpretation by the market.

Some analysts believe that Evergrande's "buy and buy" spirit before the reform and frequent external financing, to a certain extent, implies that China Evergrande, the major shareholder, is "out of food". Affected by the tightening of real estate financing, Evergrande may have to find its own milk.

As a company with 70% shares of China Evergrande, Evergrande automobile introduces more equity investment, which is also conducive to reducing the liabilities of China Evergrande, so as to meet the requirements of the new regulations on real estate financing.

However, from the perspective of enterprise management, it is normal to introduce new investors. The above people close to Evergrande explained to the reporter that Evergrande is ready to expand its financing channels to better use in product and technology research and development, and enhance the overall competitiveness of the new energy vehicle industry.

Market reaction is relatively dominant. On September 18, the shares of Evergrande Motor Co., Ltd. rose briefly in the morning, but then fell quickly. Finally, it closed at HK $24 per share, down 4%.

Listing on the science and Technology Innovation Board

Landing on the science and technology innovation board is a new trend in the automobile industry. Prior to that, in the field of vehicle manufacturing, Weima motor, Geely Automobile and Dongfeng Group released or disclosed plans to land on the science and technology innovation board or gem. Geely Automobile's progress is relatively ahead, and relevant materials have been accepted and inquired by Shanghai Stock Exchange.

Although Evergrande automobile, like Weima automobile, belongs to a new force in the automobile manufacturing enterprises, it is obviously called by the loose policy as Geely Automobile and Dongfeng Group in terms of landing on the science and technology innovation board.

At the end of April this year, China Securities Regulatory Commission (CSRC) issued the announcement on relevant arrangements for innovative pilot red chip enterprises to be listed in China, lowering the market value threshold of overseas listed red chip enterprises to return to A-share listing from 200 billion yuan to 20 billion yuan (RMB), but it requires independent research and development, international leading technology, and is in a relatively dominant position in the same industry competition, which is obviously for these automobile enterprises to return to a shares Favorable conditions have been created.

This may also explain why Evergrande automobile, which has been relying on Evergrande group, suddenly introduces external investors, and its lineup can be described as luxurious, including Ma Yun and Ma Huateng. "Capital is very rational, and most of the time only when the company has a clear intention to go public will they choose to enter the stock market," an investment institution told the 21st century economic report

In terms of magnitude, the recently announced refinancing scale of HK $4 billion is not very large. According to the analysis of the existing layout of Tencent Ali and other enterprises in the field of new energy vehicles, it is considered that the above-mentioned capital support business attribute is not strong, "more support from acquaintances". However, judging from the purchase price and the subsequent re listing plan of Evergrande, the investment can still be guaranteed.

Evergrande has already hinted that it will support the development of new energy vehicle business through certain external financing. At the mid-term performance conference held on August 27 this year, the planning data provided by Pan Darong, chief financial officer of the company, showed that from this year on, external financing income will be successively invested.

According to the planning data, in the whole year of this year, Evergrande automobile will have a cash inflow of 60.8 billion yuan in the new energy vehicle business, of which only 5.7 billion yuan will be invested by the group. In addition, there will be 22.1 billion yuan of sales revenue, 30.2 billion yuan of financing income and 2.8 billion yuan of other inflow. By contrast, in the previous year of 2019, of the 14.9 billion yuan of cash inflow, 14.7 billion yuan came from group investment.

However, objectively speaking, the difficulty of group financing this year has also made Evergrande automobile more helpless to actively introduce external investors. After all, as a key project promoted by Evergrande, Evergrande motor has always shown itself as a good deal of money.

A person in the automobile industry close to Evergrande automobile told the reporter of the 21st century economic report that as far as he knew, Evergrande had no intention of listing again before. However, with the real estate financing blocked, it was only necessary to let the automobile "self reliant" to introduce war investment and IPO Financing.

However, some people who have been in contact with Evergrande said that for Evergrande, the new energy vehicle itself is a relatively good financing project. Under the current background, Evergrande has launched several rounds of equity financing, which is of special significance to the group.

In order to meet the regulatory financing requirements for real estate enterprises, reducing debt has become the main task of Hengda and other real estate enterprises in the near future. The introduction of new equity investors into Evergrande will help to reduce the debt ratio of Evergrande. Previously, Evergrande also announced the split property listing for independent financing, which is the same intention.

The effective integration of industrial chain companies can reduce a lot of vehicle manufacturing costs for Evergrande. Picture vision China

How much more investment does Evergrande need to invest?

Behind the huge capital demand, Evergrande automobile has entered the final sprint stage of car manufacturing. According to the plan, Evergrande will start mass production at the end of 2021. According to the latest statement of the company's top management, Hengda's brand hengchi will be trial produced in the first half of next year and mass production in the second half of next year.

Not long ago, hengchi released six new cars at one time, which not only included cars, SUVs, MPV and other commonly used passenger cars, but also covered all levels from a to D, showing Evergrande's "ambition" in the field of new energy vehicles. However, the six new cars only announced the styling, without details such as interior decoration and performance parameters. Some automobile dealers who have worked for many years believe that there is "no news (mass production) of these vehicles for at least half a year".

Such voices are not rare, but Evergrande also released a lot of progress information to show that the mass production plan is progressing in an orderly manner. At the mid-term performance meeting, senior executives of Evergrande also outlined the map of mass production of cars - R & D, construction, sales and so on, which may become the destination of the huge cash inflow of 60 billion yuan this year.

The scale of the fund raised by Evergrande on the science and technology innovation board is unknown, but judging from the requirements of developing a model and promoting its mass production and listing, it is at least 10 billion level. By comparison, according to incomplete statistics, the accumulated financing of Weilai automobile, Xiaopeng automobile and ideal automobile before and after listing has reached 50 billion yuan, 23 billion yuan and 26 billion yuan respectively.

Li Bin, the founder of Weilai automobile, once said that there was no need to talk about making cars without 20 billion yuan. He Xiaopeng, the founder of Xiaopeng automobile, thought that 20 billion yuan was far from enough. In comparison, Li Xiang, the founder of ideal automobile, who is famous for saving, thinks that more than 6 billion yuan can be profitable.

Another reference data is that Xu Jiayin, chairman of the board of directors of China Evergrande, talked about the future investment plan at the previous press conference: 45 billion investment in three years. Among them, 20 billion in 2019, 15 billion in 2020 and 10 billion in 2021. Although the amount of investment in the past two years will gradually decrease, it is still quite large in absolute terms.

The above figures are obviously not the same concept as the "cash inflow" of the auto business at the mid-term performance meeting, but they can all show that Evergrande's money burning road is far from over. The above-mentioned investors told the reporter of 21st century economic report that although Evergrande acquired Sweden Guoneng, from the perspective of Evergrande's investment in R & D field in the later stage, Guoneng's vehicle technology is limited, which makes it difficult for Evergrande to promote the listing of new models significantly less than that of other newly established automobile enterprises.

However, he also said that on the whole, the industrial chain companies acquired by Evergrande are not bad, and effective integration can indeed reduce a lot of vehicle manufacturing costs for Evergrande. In addition, Evergrande's management style is based on expenditure. With the expansion of financing channels, Evergrande has the ability to build models that can be listed on the market with a certain amount of investment.

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