It sells 2.6 million vehicles a year, marking the countdown to the IPO of Chery Automobile, the largest unlisted car company in China.

On February 28, Chery Automobile, a China self-owned brand car company, officially submitted a prospectus to the Hong Kong Stock Exchange, planning to list on the main board of Hong Kong.Industry insiders believe that Chery Automobile currently owns five major brands: Chery, Jetto, Xingtu, iCAR and Zhijie. This listing in Hong Kong is expected to become the largest IPO of a car company in recent years.

Quick overview of performance: net profit exceeded 10 billion, and the growth rate surpassed the industry

According to Frost Sullivan, as of September 30, 2024, Chery Automobile is the only passenger car company among the world's top 20 passenger car companies with sales in the China market, sales in overseas markets, and new energy. Vehicle sales and fuel vehicle sales increased by more than 30.0% compared with the same period in 2023.Chery Automobile's passenger car sales increased by 51.8% compared with the same period in 2023, ranking first among the world's top 20 passenger car companies.

In 2022, 2023 and the first nine months of 2024, Chery Automobile's total gross profit was RMB 12.805 billion, 26.09 billion and 27.004 billion respectively, and the overall gross profit margin was 13.8%, 16.0% and 14.8% respectively.

Business dismantling: Fuel vehicles support the bottom, new energy becomes the second engine

Although traditional fuel vehicles are still the basics-contributing 143.3 billion yuan in revenue in 2023, accounting for 87.8%-new energy is rapidly advancing.In the first nine months of 2024, new energy business revenue was 29.104 billion yuan, accounting for 16%, an increase of more than 11 percentage points from the 4.9% proportion in 2023.

Chery, which is fighting on two fronts, has formed a unique pattern: fuel vehicles support cash flow and economies of scale, and new energy achieves a technology premium.The average selling price of its hybrid models reaches 172,000 yuan, 42% higher than that of fuel vehicles; the average price of pure tram models exceeds 200,000 yuan, directly benchmarking against the mid-to-high-end market.

Fundraising plan: HK$15 billion bet on technological revolution and globalization

According to the prospectus, the IPO raised approximately HK$15 billion (approximately RMB 13.8 billion), and the use of funds clearly focuses on two major strategies:

1. Technical challenges: 53% of the funds (HK$7.95 billion) are invested in the research and development of solid-state batteries, 800V high-voltage platforms, and smart cockpits;

2. Global layout: 30% of the funds (HK$4.5 billion) will be used for the construction of bases in Southeast Asia (Thailand/Malaysia factories) and Europe;

3. Capacity upgrade: 17% of funds will supplement operations and intelligent transformation of production lines.

The IPO was jointly sponsored by the three major Chinese-funded securities firms, China International Capital Corporation, Huatai International, and Guangfa Securities (Hong Kong), and no foreign investment bank appeared.Given its scarcity, growth and market environment compatibility, it deserves the attention of new Hong Kong stocks players.

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