With a valuation exceeding 50 billion yuan, planning for a Hong Kong IPO, Chery Automobile has once again been the subject of listing-related news.

Recently, it has been reported that Chery Holding Co., Ltd. is considering an initial public offering (IPO) for its automotive subsidiary in Hong Kong, with the business valued at approximately $7.1 billion (equivalent to 50.2 billion yuan). Currently, Chery is seeking support from banks to assist with the company's IPO, and the relevant deliberations are ongoing, with the scale and other details of the IPO potentially subject to change.

The phrase "Chery's IPO push" first surfaced in 2004, and looking back on the rather bumpy 20-year journey to listing, it seems to have become a hurdle for Chery. Whether the renewed attempt at an IPO is just a "Cry Wolf" story or a substantive advancement remains to be seen, and Chery has not made a clear response to this.

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However, looking back at the goal set by Yin Tongyao, the chairman of Chery Holding Group two years ago, to broaden financing channels, he hoped that Chery would complete its IPO plan before 2025, thereby facilitating a new round of transformation for the company.

From a temporal perspective, as 2025 approaches, this planned information also adds a bit of credibility to Chery's current listing rumors. Can Chery's twists and turns in the "listing" dream finally come to fruition in Hong Kong?

A 20-year IPO Marathon

Despite multiple initiations, Chery has repeatedly encountered difficulties in going public, and its 20-year long journey to listing has never reached fruition.

As early as 2004, the Anhui Provincial Government had promoted Chery's listing, and the group began to carry out shareholding system reforms internally, but the listing plan was ultimately shelved by the end of the year; in 2007, Yin Tongyao publicly stated that Chery would soon initiate a listing financing plan; in 2008, Chery completed the shareholding reform and restarted the listing plan, but with the outbreak of the financial crisis, the domestic stock market plummeted, and Chery's own poor management, the listing process was interrupted once again.

In the following years, Chery never gave up on going public. In 2015, its joint venture Chery Huayin failed in its attempts to list on the Hong Kong and A-share markets; in 2016, it tried to promote the listing of Chery New Energy through the "shell listing" method via Conch Building Materials, but was also unsuccessful.

After that, Chery initiated a mixed-ownership reform, and at the beginning of the reform, Yin Tongyao stated: "After the mixed-ownership reform, Chery's listing process will be advanced. Chery should have gone public ten years ago but missed the opportunity." Until the completion of the mixed-ownership reform in 2022, Yin Tongyao looked towards the A-share market and set a goal for Chery to "strive for an IPO by 2025."The last time an IPO was rumored was at the end of 2023, when informed sources revealed that IDG Capital was considering acquiring a stake in Chery Holding Group from existing shareholders at a price of $978 million (approximately 6.9 billion yuan). Chery Automobile planned to submit its initial public offering (IPO) application as soon as 2024.

At that time, the company's valuation was around 150 billion yuan. Ten months later, when the listing news was exposed again, the rumored valuation had shrunk by two-thirds. Industry insiders analyzed that the shrinkage of the new round of valuation stemmed from the significant uncertainty facing the global automotive market, intensified competition in the new energy vehicle industry, and fluctuations in the Hong Kong stock market. These multifaceted factors have made investors more cautious.

Chery's target is no longer the A-share market but has turned to knock on the door of the Hong Kong stock market.

In comparison, since the China Securities Regulatory Commission proposed a "phased tightening of the IPO pace" on August 27 last year, it has become increasingly difficult to list on the A-share market. There are stricter requirements for companies' profitability, innovation capabilities, governance structure, and other aspects. "Changing course" to Hong Kong, the listing cycle is relatively short, the listing threshold is lower, and as the Hong Kong capital market continues to release policy dividends, the Hong Kong IPO market is active.

At this stage, looking at the gradually warming Hong Kong stock market, Chery also faces an ideal listing opportunity. The 20-year-long IPO is expected to officially land in Hong Kong.

Is everything ready, just waiting for the east wind?

As a traditional mainstream automotive group, Chery is one of the few car companies in China that have not gone public. Over the past 20 years, domestic traditional mainstream automotive groups have gone public one after another. In the new energy era, new forces and new car manufacturing companies have successively stepped onto the capital stage to tell their stories. However, Chery seems to always lack a bit of "luck" in the capital market, with capital operations, economic environment, and related companies, among other factors, repeatedly blocking the way.

However, in terms of the company's own performance, Chery's progress cannot be ignored. In the past two years, Chery's scale has continued to increase, and its sales have surged to the forefront of the industry, with significant progress. In 2023, Chery Automobile Group's cumulative sales were approximately 1.881 million vehicles, a year-on-year increase of 52.6%, ranking in the top three among independent brands. In the first half of this year, the group's sales exceeded one million vehicles, becoming the "second independent" only after BYD. From January to September, the group's cumulative sales had reached 93% of the 2023 annual sales, and the annual sales are expected to break through further.

Among them, overseas sales have supported half of Chery's business. From 2021 to 2023, Chery's export sales were 269,200, 451,300, and 937,100 vehicles, respectively. In 2023, the export volume increased by 248% compared to 2021, more than tripling. Relying on the dual drive of domestic and overseas markets, the "second curve" has driven Chery to gain advantages in sales base, profit growth, and other aspects. The multi-layout and high-profit overseas market can provide strong support and risk resistance capabilities for Chery. Today, as domestic car companies accelerate "going overseas," Chery has already stood on the arena with one foot.

Thanks to the surge in sales, the company's financial level has also continued to show a growth trend. From 2021 to 2023, the annual revenue increased by 100 billion yuan each year, with last year's revenue breaking through 300 billion yuan, achieving a high growth trend of 50.4% year-on-year. The high growth in the financial aspect has also smoothly won Chery the title of the 2024 Fortune Global 500.In terms of its own performance, Chery has shown a rapid increase in scale, sales, revenue, and overseas markets, with very noticeable progress and an increasingly strong presence in the market.

However, in today's Chinese automotive market, whoever is the leader in the field of new energy will have the power to influence the market. At present, it seems that new energy is a subject that Chery needs to accelerate to catch up on.

"The capital market wants to hear about new things, and relying on the concept of fuel vehicles is a dead end. The capital market is not optimistic about it. Chery's delay in going public for such a long time is also waiting for an opportunity to introduce a new round of new energy products, so as to tell a good story in the capital market." Auto analyst Zhong Shi once told a reporter from the 21st Century Economic Report that the transformation and development of Chery's new energy will have a positive impact on its impact on the capital market.

Since this year, Chery's "shortboard" new energy has begun to focus on the efforts of multiple sub-brands, ushering in a "doubling" growth. In the first three quarters of 2024, the group's new energy sales exceeded 330,000, a year-on-year increase of 186.4%. Among them, the new energy sales in September alone exceeded 50,000, gradually stepping into the forefront of independent new energy in terms of scale.

The rapid rise of new energy scale undoubtedly provides favorable conditions for Chery to impact the capital market. On the basis of quantity, how to impact the new energy mid-to-high-end field, achieve brand leap and upward, and create a representative new energy brand or product is also the key to whether Chery can tell a good story in the capital market.

After successfully landing in the capital market, it will also provide a guarantee for Chery to participate in more intense new energy competition. In the new energy era, the development and iteration of technology and models require more funds to be continuously invested. After going public and obtaining financing channels, it will bring more resources and financial support.