AutoBeta(AutoBeta.net)08/31 Report--

On August 30th, ideal Motor released its semi-annual report for 2021, showing revenue of 8.614 billion yuan in the first half of 2021, an increase of 207.8% over the same period last year. The net loss was 595 million yuan, an increase of 291.0% over the same period last year. According to the financial report, the operating cash flow in the second quarter was 1.4076 billion yuan, and the free cash flow increased by 72.2% to 982.1 million yuan compared with the same period last year. As of June 30, 2021, the total amount of ideal car cash and cash equivalents, restricted cash, time deposits and short-term investments is 36.53 billion yuan.

The growth of ideal automobile revenue is inseparable from the growth of new car delivery. According to the financial report, the ideal car delivery volume in the first half of 2021 is 30154, an increase of 217.4% over the same period last year, and vehicle sales revenue is 8.37 billion yuan, an increase of 203.1% over the same period last year. For future development, ideal expects delivery of between 25000 and 26000 vehicles in the third quarter of 2021, an increase of 188.7% to 200.2% over the same period last year in the third quarter of 2020; and total revenue will be between 6.98 billion yuan and 7.25 billion yuan, an increase of 177.8% to 188.9%.

Although the operating income of ideal car has increased, the net profit has expanded greatly. In this regard, ideal Automobile said that because of the increase in R & D costs and sales, general and management costs. According to the financial report, the main R & D work of ideal car in the first half of 2021 is to develop the X platform, which inherits the existing add-on electric vehicle platform of ideal ONE and is equipped with the next generation added-program electric power system. In addition, ideal Automobile also said that it will continue to invest heavily in self-developed self-driving and intelligent car technology.

On August 12, ideal Motor was officially listed for trading on the main board of the Hong Kong Stock Exchange at an offering price of HK $116 per share. The financial report shows that the ideal net proceeds (after deducting underwriting discounts, commissions and estimated offering expenses) is approximately HK $11.6 billion or US $1.5 billion (assuming the over-allotment option has not been exercised). According to the prospectus, 45 per cent of the HK $11.6 billion raised will be used to develop high-voltage pure electric vehicle technology, platforms and future models, smart and self-driving technologies, and future incremental electric vehicles; 45 per cent will be used to expand production capacity, expand retail stores and distribution service centers, launch high-power charging networks, and marketing. 10% is used for working capital and other general corporate purposes.

In the short term, it is hard for ideal cars to get rid of losses. According to the prospectus, the ideal net losses from 2018 to 2020 are 1.532 billion yuan, 2.438 billion yuan and 152 million yuan respectively, with a cumulative loss of 4.122 billion yuan. In the first half of 2020, the net loss of ideal car reached 595 million yuan, exceeding the total loss for the whole of last year. In response to the loss, ideal said it was mainly due to investment in research and development and self-driving programmes, as well as by self-built factories and sharply increased marketing spending. As for the loss as to when to get out of the loss and how to make a profit, ideal Motor said in its prospectus that "it has recorded a net loss in the past, its net cash flow from operating activities is negative, and it has not yet made a profit, which is likely to continue in the future."

In addition, the performance of ideal cars in the secondary market is not optimistic. It has been listed on the Hong Kong Stock Exchange for half a month, but the share price is still in a broken state. As of the close of the day, ideal Motor closed at HK $114.6, with a total market capitalization of HK $235.1 billion. It is understood that in February this year, Li Xiang announced the 2025 strategy in his internal letter, with the goal of gaining 20 per cent market share by 2025, that is, selling 1.6 million cars by 2025. However, from the current point of view, the ideal car product is single, only the ideal ONE model is on sale, and the market sales are OK, but with the changes in the market, relying solely on the ideal ONE model obviously has many variables. Ideal Motors has said that it will launch a new "X" platform in 2022 and develop a full-size luxury add-on electric SUV. Two high-voltage pure electric vehicles will be launched in 2023, and at least two new pure electric vehicles will be launched every year. Some people in the industry believe that in the increasingly competitive Chinese market, car companies need to constantly update models and put in more models in order to ensure long-term market competitiveness.

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