Text |Zero state LT Yao Zhang
Editor | Hu Zhanjia
On the evening of July 15th, Xiaokang shares disclosed that 137 million ordinary shares had been issued, and the total amount of funds raised was 7.13 billion yuan. After deducting the issuance expenses, the net amount of funds raised by the company was 7.06 billion yuan. The number of new shares issued this time is equivalent to 1/10 of the original total share capital, and a total of 17 investors were allocated. The most allocated fund is Guangfa Fund, with the allocation amount of 1.47 billion yuan. The last round of fixed increase of Xiaokang shares was in June 2021. At that time, the company raised 2.57 billion yuan, and Guangfa Fund also participated in it, which was also the first issue target.
By cooperating with Huawei to build a car brand, Xiaokang shares are entering the new energy field in a big way. Going back to the middle of June, Xiaokang shares were pushed to the public because the new energy vehicle "Wenjie M5" jointly built with Huawei was suspected of "spontaneous combustion". As soon as the report came out, Xiaokang shares fell for many days.
Backed by the big tree of "Huawei", is Xiaokang shares really cool?
Huawei’s "M5" was caught in a storm of spontaneous combustion, and Xiaokang’s ability to build a car was questioned.
On the evening of June 13th, a Huawei mobile phone franchise store in Inner Mongolia caught fire, and another Huawei mobile phone M5 in the store was burnt down.
There are different opinions about the cause of the fire, and many people attribute it to the concerns of Celestial Automobile, a subsidiary of Xiaokang Co., Ltd., the "foundry" of M5. In response, Cyrus responded that the charging stop time of the vehicle in the store was later than the fire time, and it could be preliminarily judged that the fire source was not from the vehicle itself.
But even so, the trust of the outside world in the foundry has not been "stitched". After all, before Huawei intervened, Xiaokang shares focused on low-end new energy vehicles, and the Sailis brand, which has been polished for several years, has never improved. There has never been such experience in producing and manufacturing cars exceeding 300,000 yuan. Therefore, in the production process, the outside world has been in doubt about whether Xiaokang shares can build the high-end model M5.
Xiaokang Co., Ltd. was originally just a manufacturer of electrical appliances and automobile springs. It got on the express train of Dongfang Group and jointly launched the Oriental Xiaokang. In 2011, the sales volume of Dongfeng Xiaokang mini-car reached 1 million, which became a turning point in its transformation of vehicle manufacturing. Five years later, Xiaokang shares were successfully listed. In 2016, at the time of the new energy vehicles, Xiaokang shares launched the new energy brand Sailis in Silicon Valley, USA.
However, at the beginning of the transformation, Xiaokang invested the money earned in the fuel vehicle market and the capital market into the new energy sector, but Cyrus did not give a corresponding return, and the sales volume was bleak. In 2020, only 732 units were sold.
The first cooperation with Huawei opened the market for Celeste. At the beginning of 2019, Huawei and Xiaokang Co., Ltd. held a comprehensive cooperation signing ceremony. The two sides carried out comprehensive cooperation in the fields of industrial Internet, ICT infrastructure, intelligent new energy vehicles and networking. The share price of Xiaokang shares has also risen. After joining hands for the first time to build the first Celestial SF5 appeared in Huawei’s offline exhibition hall, sales began to pick up.
The M5, which was jointly built for the second time, was put into production and put on the market, and achieved good sales. The data shows that in May 2022, the monthly delivery volume of Huawei’s M5 reached 5,006 vehicles, and the sales volume of the same gear jumped to the top three, with a cumulative delivery of 11,296 vehicles. In the capital market, Xiaokang shares are also riding the east wind of Huawei and soaring. Wind data shows that in the last month (as of June 10th), the share price of Xiaokang shares rose as high as 96.8%, ranking first in the comprehensive passenger car sector.
However, both the market and capital are optimistic about Huawei, the big tree behind Xiaokang shares.
In this fire, the questioning of Xiaokang’s ability to build a car was intuitively reflected in its share price. On June 14th, Xiaokang’s share price fell as high as 5% in intraday trading. At present, the market value of Xiaokang shares has exceeded 100 billion. Inconsistent with the market value of 100 billion, Xiaokang shares are still at a loss. In the first quarter of 2022, the financial report of Xiaokang shares showed that the loss attributable to shareholders of listed companies reached 839 million yuan in the first quarter, compared with 533 million yuan in the same period last year; Operating income reached 5.131 billion yuan, a year-on-year increase of 56.03%.
The year-on-year narrowing of quarterly losses and revenue growth point come from the increase in sales of new energy vehicles in Xiaokang shares. According to public data, the production and sales of new energy vehicles in Xiaokang in the first quarter reached 17,400 and 14,200 respectively, with an increase of 296.87% and 207.43%.
In March this year, the first model of AITO brand jointly built with Huawei started delivery. According to the statistics of the Association, the sales data of the M5 in March was 3,045 vehicles, and it entered the top ten sales of new energy vehicles at the level of 200,000-300,000 yuan. Although the growth has achieved good results, in addition to traditional mini-cars and economy cars, the competitiveness of Xiaokang shares in the middle and high-end fields represented by Seles SF5 is still obviously weak.
With the blessing of Huawei’s sales channels, the annual total sales volume of Celestial SF5 is only over 8,100, which is equivalent to the monthly sales volume of the three new car-making forces "Wei Xiaoli".
Xiaokang’s own hematopoietic capacity is not comparable to that of the first echelon car companies. The loss of Xiaokang shares first appeared in 2020, with a loss of 1.729 billion yuan, down 2690.76% year-on-year; In 2021, the loss of Xiaokang shares reached 1.824 billion yuan, and the loss further expanded. The loss mainly comes from the soaring marketing expenses, research and development costs and team expansion after the transformation of the new energy automobile market. In 2021, Xiaokang’s R&D investment was 1.948 billion yuan, accounting for 11.66% of revenue, which was narrower than that in 2020.
Under the pressure of loss, Xiaokang shares tried to spend a tight life through "blood transfusion". At the beginning of this year, the company announced that the non-public offering of shares would raise no more than 7.13 billion yuan, and the funds raised would be invested in projects such as the development of electric vehicles, the intelligent upgrading of factories and the construction of user centers.
But whether it can turn losses into profits is still uncertain.
It is difficult to pick Huawei’s "OEM" hat.
Backed by Huawei, this big tree is good for enjoying the cool, but it also brings a lot of troubles to Xiaokang shares.
In the past, BMW Brilliance was changed to BMW and Beijing Benz was completely cut off. After many imported models were made in China, they fell into the fate of being cut off. For many car owners, it seems that the shadow of domestic production has been removed, and the car has instantly become taller.
A while ago, Xiaokang shares just experienced a round of public opinion. This time, it’s not for imported cars, but the first model of the high-end brand AITO series jointly developed by Huawei and Sellers-Wenjie M5. Because the popularity of Celeste is far less than that of a big brand like Huawei, some car owners chose to "change the logo" after purchasing Huawei’s M5, and removed the logo of Celeste and replaced it with the logo of Huawei Smart Choice.
Huawei has publicly stated that it will not build a car. This alliance with Selis is just cooperation. However, it is undeniable that the selling point of this car is that it is equipped with Huawei HarmonyOS cockpit, and the core power comes from Huawei Drive ONE pure electric drive range extension platform. Yu Chengdong, CEO of BU, a smart car solution, personally came off the stage to bring goods for the M5. He not only promoted this car on many occasions, but also drove it home and off the track during the New Year, and spoke for it crazily.
Netizens ridiculed that although "Huawei does not build cars, users will build cars for Huawei."
The bidding also reflects the user’s lack of confidence in the Celeste brand. Obviously, the light of Cyrus is covered by Huawei’s strength. Xiaokang shares are very concerned about being passively robbed of the title by Huawei.
Zhang Zhengping, chairman of Xiaokang Co., responded: "Whether the product is good or not, the market has the final say. If the product doesn’t work, no matter whose label is posted, no one will buy it. " In addition, Xiaokang shares are also very concerned about the outside world calling it Huawei’s "foundry". At the investors’ meeting at the beginning of the year, Xiaokang specifically emphasized that it was not a foundry before and now, let alone a foundry, and what Huawei initiated was a deep cross-border cooperation model of joint business.
In fact, this statement only applies to the cooperation of the previous model Celeste SF5. Xiaokang shares are responsible for supply chain links such as R&D, manufacturing and delivery, while Huawei is responsible for brand and channel sales. However, during the development of the M5, Huawei led the R&D and sales, and Cyrus was only responsible for providing relevant data support. According to Huawei Yu Chengdong, "In addition to providing key automotive hardware components, Huawei’s mobile phone industrial design team, software team and user experience team are also involved in the cooperation".
Subject to Huawei’s leadership, Huawei is the main beneficiary of the sales profit sharing of this M5. According to Caijing Weekly, a Cyrus 4S clerk said that after users placed orders in the experience store, although the order processing was the responsibility of their user center, most of the rebates from the manufacturers were sold to the experience store instead of Cyrus manufacturers. For Xiaokang shares, the initial intention of cooperating with Huawei was to improve the brand tonality and remove the label of only making low-end cars, but the result was to make wedding clothes for others.
Although the sales volume of M5 in the current world is very popular, Xiaokang shares can not get much benefit, and excessive dependence on Huawei’s manufacturing team brings great risks. Recently, it is reported in 36Kr that Huawei Smart Car Selection has been widely spread in the industry. Besides Jin Kang New Energy, it has successively finalized smart car selection business cooperation with Chery Automobile, Jianghuai Automobile and Extreme Fox Automobile.
If the cooperation between Huawei and other car companies deepens in the future, the status of Xiaokang shares will be in jeopardy. Perhaps Xiaokang shares can be completely transformed into a vehicle foundry and occupy the market with excellent manufacturing technology.
