The first month of listing fell more than 60%, why can’t Leapmotor impress investors?

Editor’s introduction: It has been one month since Leap Motor went public in Hong Kong. It has dropped 62% from the then issue price of Leap Motor, and its market value has evaporated by as much as HK$34.2 billion.

The market value has evaporated by more than 34 billion Hong Kong dollars

On October 28, Leapmotor continued to fall. As of 13:00 Beijing time, it fell nearly 5% to 17.88 per share, with a total market value of 20.4 billion. A month ago, Leap Motor was officially listed on the Hong Kong Stock Exchange with the stock code “9863”, and the final IPO price was set at HK$48 per share. On the first day of listing, Leapmotor dropped 33.54%. Within a month of its listing, Leapmotor fell by more than 60%, and its market value evaporated by 34.2 billion Hong Kong dollars.

According to public information, Leap Motor was established in 2015, mainly focusing on the mid-to-high-end mainstream new energy vehicle market with prices ranging from 150,000 to 300,000 yuan, and has delivered three models in the past three years. Leap Motor has a single quarter. The delivery volume is also gradually increasing. Data show that in September this year, Leapmotor delivered a total of 11,039 units, a year-on-year increase of over 200%. The cumulative number of deliveries from January to September this year reached 87,602 units.

With the gradual increase in sales, Leapmotor’s revenue has increased year by year. Leapmotor’s total revenue in 2019, 2020 and 2021 is approximately RMB 117 million, RMB 631 million and RMB 3.132 billion, respectively.

However, according to Leap Motor’s 2022 interim report, the operating loss in the first half of this year was 2.494 billion yuan, a year-on-year increase of 144.5%. Based on the number of vehicles delivered in the first half of the year, it is equivalent to a loss of 48,000 yuan for buying a car. “The stock price of Leapmotor is still hovering at a low level, and the constantly bottoming stock price will further affect the ability of Leapmotor to raise funds from the securities market in the later stage.” said Shen Meng of Chanson Capital.

It is difficult to make profits by “exchanging price for quantity”

In the past, Leaprun was not well-known among consumers, but this year it suddenly exploded. Among the new car forces, Leapmotor sold 87,000 vehicles in the first nine months, second only to Nezha and Xiaopeng. In July and August, the sales volume of Leapmotor was second only to Nezha Auto. 

Zhu Jiangming, CEO of Leapmotor, once said, “If the current sales volume has not reached 5,000 units or 10,000 units per month, I think it will be more and more difficult to go up. But the monthly sales of 10,000 units has only ended the knockout round, which is equivalent to getting it. With one entry ticket, the subsequent competition will be more brutal.”

Previously, Leapmotor stated in its prospectus, “We mainly focus on China’s mid-to-high-end mainstream new energy vehicle market with prices ranging from RMB 150,000 to 300,000.” But in fact, the low-end models of 50,000-100,000 are currently propping up the facade of the zero-run, and they are taking the cost-effective route.

From the point of view of sales alone, Leapmotor seems to be able to compete with the first-tier brands, but it is not difficult to find out that the reason why Leapmotor sells and overtakes in the corner actually depends on the “Old Man Le” model such as T03. .

The data shows that Leapmotor will deliver 43,121 units in 2021, of which the “Old Man Le” model T03 with a guide price of 79,500 will reach 38,463 units, accounting for nearly 90%. Although the C11, a pure electric SUV model with a guide price of 179,800 since the beginning of this year, made up for the vacancy of Leapmotor in the mid-to-high-end market, the total delivery of the C11 in the first half of this year was 18,900, which was still far lower than the 3.31 of the T03. 10,000 vehicles.

“At a time when global commodity prices are high, it is still very difficult to rely on such a low-cost model to make profits.” Industry insiders admitted to CRRC.

Insufficient self-hematopoietic ability

In fact, the breakout of Leap Motor’s listing is also closely related to the more calm wait-and-see of new energy vehicles in the capital market. In the past year, new car-making forces have almost encountered a collective cold reception in Hong Kong stocks: Xiaopeng Motors, which took the lead in landing in Hong Kong stocks in July last year, broke for a while on the first day of opening; Li Auto, which followed closely, also broke on the first day of landing in Hong Kong stocks. At the close, it was down 0.85% at the close.

In addition to the downward capital market environment, Leap Motor’s breakout was also due to its lack of self-hematopoietic ability and continued losses. Leapmotor’s proudest global self-developed technology is listed as its core competitiveness in its prospectus. However, according to the prospectus data, from 2019 to March 2022, Leap Motor’s cumulative loss was 5.541 billion yuan, and the lowest gross profit margin was only -95.7%.

Compared with the “Weixiaoli” three companies’ R&D investment of more than one billion yuan in a single quarter, Leapmotor obviously does not have so much money to invest in R&D. With such financial strength and investment, it is even more difficult for Leap Motor to convince investors.

On June 28 this year, Leapmotor’s 100,000th production car officially rolled off the assembly line. At this historic moment, Leapmotor CEO Zhu Jiangming said in his thanks to users: “Standing at the new starting point of the first camp of the new car-making forces, we will continue to insist on breakthroughs and innovations in the field of core technologies.” In the seven years since Leaprun was established, the development situation was at its best. But this does not mean that Zero Run has no worries.

According to Leapmotor’s plan, it will launch 8 new models by the end of 2025 at the pace of 1-3 new cars per year, covering sedans, SUVs and MPVs of various sizes. At present, Leapmotor has a total of 4 models, leaving only a little more than three years for Leapmotor CEO Zhu Jiangming.