Extreme krypton plans to go public independently, official response： 009 may disclose relevant information after listing

The first electric Zhao Jie, Wang Yingping

At noon on October 31st, Geely Automobile Holdings (00175.HK) announced in the Hong Kong Stock Exchange that the company has submitted a proposal to the Hong Kong Stock Exchange in accordance with the 15th application guideline, the content of which is related to the proposed spin-off of ZEEKR Intelligent Technology Holding Limited (ZEEKR) and its independent listing.

First Electric then contacted Geely Holding Group and Extreme Krypton Automobile. Geely said it had noticed the matter and was learning about the relevant information, but the specifics were subject to Extreme Krypton’s reply. Extreme Krypton said that there is no information that can be made public for the time being about the listing. In the media interview session after the listing of Extreme Krypton 009 today, relevant content may be involved.

According to the announcement, Extreme Krypton is a non-wholly-owned subsidiary of the company, which is mainly engaged in the research and development and sales of electric vehicles, new energy vehicle batteries and other components under the Extreme Krypton brand, and the provision of related services. The Stock Exchange has confirmed that the company can proceed with the proposed spin-off.

Geely Automobile Holdings said that the terms of the proposed spin-off (including the listing location, offering size, price range and the guaranteed quota for the company’s shareholders to obtain JK securities) have not yet been determined. The company will issue a further announcement on the proposed spin-off in due course.

Extreme Krypton previously said in response to other media, "We will disclose relevant information in a timely manner in accordance with relevant laws and regulations. Extreme Krypton’s management team will put business first to ensure the completion of the delivery target of 70,000 vehicles in 2022. The recent turmoil in the capital markets will not shake our confidence in the new energy market, and the short-term fluctuations in the market will not affect the company’s medium- and long-term development."

According to the data, since the first round of external financing in March 2021, after several rounds of financing, its investors include Intel Capital, Ningde Times, Bilibili, Hongshang Group, Boyu Investment, etc. In September this year, according to Bloomberg News, Extreme Krypton is considering plans to list in the United States or Hong Kong, China. According to people familiar with the matter, Extreme Krypton has solicited suggestions from investment banks, but has not yet decided on the size of the IPO.

Some analysts believe that according to the current external market environment and Geely Automobile’s previously conceived A + H strategy, the Science and Technology Innovation Board may be the preferred choice for Extreme Krypton.

According to Geely’s semi-annual report released in August, as of June 30, Geely Automobile owned 58.31% of the shares of polar krypton, and the income of polar krypton in the first half of 2022 was 8.828 billion yuan, and the net loss was 759 million yuan.

As a brand of Geely Automobile, Krypton positioning price 250,000 – 500,000 yuan of high-end intelligent electric vehicles, established in March 2021, a month later released the first product Krypton 001, currently on sale 4 configuration models, price range 299,000 yuan – 386,000 yuan.

As the "second growth curve" of Geely’s electrification, Extreme Krypton is becoming a new force in Geely’s high-end new energy market. From January to September this year, Extreme Krypton has accumulated sales of 39,500 vehicles. At Geely Automobile’s mid-term results conference, An Conghui, CEO of Extreme Krypton Intelligent Technology, said that the goal of delivering 70,000 units in 2022 remains unchanged. The first reason is that the order volume is abundant, and the second is the recovery of the supply chain, which has improved the supply of key components. He expects "the monthly delivery volume in the fourth quarter will reach 10,000 units, or more than 10,000 units." An Conghui is also the president of Geely Holding Group and the chairperson of Geely Automobile Group According to the annual target of 70,000 vehicles, in the fourth quarter, JK needs to complete the sales task of 30,500 vehicles, with a monthly average of 10,000 vehicles.

However, the market environment facing extreme krypton is further severe. On October 24, Tesla announced that from now on, the price of domestic Tesla’s Model 3 and Model Y will be reduced by 14,000 yuan – 37,000 yuan. Lantu, Q Jie, Xiaopeng P7 and other preferential information were then released.

Soochow Securities believes that Tesla’s move will bring about a passive shift in the pricing strategies of various car companies from top to bottom, and new energy products in the price range of 200,000-400,000 yuan will be directly affected. At the same time, Tesla still has room for price exploration, and the next 3-6 months may start a new round of industry price cuts.

Polar Krypton 001

Tonight (November 1st), Krypton’s first high-end pure electric luxury MPV Krypton 009 will be officially listed to announce the price. According to previous analysis, its price may be more than 350,000 yuan, benchmarking D9 and Landscape Dreamer. Krypton 009 is the world’s first mass-produced model of Kirin battery in Ningde era, and the Kirin battery version will be delivered in the first quarter of next year. According to the plan, Krypton will launch 6 new models in the next 3 years, with the goal of global annual sales reaching 650,000 by 2025, and the market share of high-end electric vehicles will reach the top three in the world.

In the eyes of the industry, after the listing of Extreme Krypton 009, it will further drive the improvement of the brand’s gross profit margin. An Conghui previously said, "The gross profit margin reached in the first half of this year was 5%. I believe that on the basis of the delivery of 50,000 units in the second half of the year, the gross profit level will be further improved. The upcoming listing of Extreme Krypton 009 will also be conducive to the improvement of the gross profit level."

In an interview, Lin Shi, deputy secretary-general of the Intelligent Networking Professional Committee of the China Communications Industry Association, believes that in terms of capital markets, it is easier for companies to raise proceeds by positioning themselves as technology companies rather than traditional manufacturing industries. At the market value level, as an independent new energy brand in the future, JK can obtain relatively high valuations and premiums. At the same time, despite sitting on many automobile brands, Geely Automobile’s valuation in Hong Kong is still low, and the price-to-earnings ratio is lower than NIO and ideal.

Geely Automobile Group has been under pressure this year. According to the semi-annual report data, the revenue in the first half of the year was 58.184 billion yuan, an increase of 29% year-on-year. But the net profit in the same period was 1.552 billion yuan, a decrease of 35% year-on-year. Geely Automobile Group’s sales target this year is 1.65 million vehicles, but as of September, the cumulative sales were less than 1 million vehicles.