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Guangzhou-based electric vehicle maker Xpeng Motors announced Wednesday that it had raised $400 million from investors, including smartphone maker Xiaomi, and won “several billions” in Chinese yuan of unsecured credit lines from lenders including China Merchants Bank, China CITIC Bank, and HSBC.
It’s a rare show of confidence in a sector that has been hit hard by a nationwide slump in demand for cars, not to mention sharp reductions in government subsidies for electric ones.
Some history: China is the world’s largest auto market. In 2018, auto sales topped 28 million vehicles, compared to 17 million sold in the United States.
But this October, total vehicle sales in China declined for the 16th consecutive month, while sales of electric and hybrids cars tumbled to 75,000, down nearly half from a year earlier. Back in June, Beijing began scaling back subsidies for individual purchases of new energy vehicles.
Property conglomerate China Evergrande, which has spent nearly $2 billion on EV-related acquisitions, said Tuesday it plans to slow investment in electric vehicles. True, Chairman Hui Ka-yan, China’s third-richest person, vowed Evergrande will invest an additional $6 billion over the next three years to become China’s largest EV manufacturer and Tesla rival. But the company is scaling back the pace of that investment. It now says it will delay release of its first car until next June—a year later than planned.
Other Chinese EV makers are spinning their wheels:
• The current industry leader, Warren Buffet-backed BYD, has sold more than 185,000 vehicles so far this year. But BYD reported a 51% year-on-year decline in EV sales in September.
• Nio, whose founder styles himself as the “Elon Musk of China,” has burned through billions of dollars in venture funding and, despite a glitzy marketing campaign, reported a $1.4 billion loss last year, forcing the company to scrap plans to build a second factory in Shanghai.
• Nio’s share price, which surged to a high of $12 immediately following the company’s September 2018 debut on the NYSE, has since plummeted below $2.
Not yet I dont believe but I am keen to get over for it
Ahh I see.. thanks Wolfi.
Will anyone be attending the AGM?
Wolfi who is valuing at GBP 21M? Thats extremely low :O
Yeah for sure! Would love to hear that production starts off at higher then 17,500 tpa.
Whatever the news may be.. bring it on
Totally agree Si.
Would love to top up but might be better waiting until the equity raise :/
Couldn't agree more Si. Nice to see a post with a positive long-term view.. feels like there hasn't been too many of these recently! Anyone tempted to buy more at the min?
Yeah I couldnt see anything on the solely electric by 2021.. but if its true then thats great news!
You have a link Decisions?
MrCautious - i agree 5yrs is a long time to wait with nothing happening (frustrating more than anything) but we haven't started producing significantly so have no real income on the books - you cant expect the SP to be flying with no earnings - those who will be here when earnings come in will be well rewarded IMO
Completely agree degsie. A rough patch for a short-term investor.. but an opportunity for anyone who is in for the long-term.
I think this is too good of an asset not to reach production - it's just a patient mans game
I think this is a great opportunity. The physical asset has not changed, we will still be shipping the lithium come 2022, albeit probably only taking 50% of the profits. Millions will be coming onto the books at that time, the SP will only shoot up. Patience is needed IMO.
Do you really see £122.5m profit in the first year? I hope so, but just can't see it given the situation and financials
Even with admittedly very limited knowledge and experience that I have, I don't think it takes a genius to work out the opportunity here. And I've got to start somewhere I guess. So that is why I've invested Bandit.
Thanks for the assistance lads, feel like I've learnt a bit there already.
Yeah I agree that they wont be selling but I think the new shares still need issued. From the RNS it sounds like there will be dilution to me. Hopefully I'm missing something
"Application has been made for the 57,600,364 new ordinary shares to be admitted to trading on AIM. Admission is expected to occur on or around 18 October 2019. These new ordinary shares will rank pari passu with the existing ordinary shares in issue. Following admission of the new ordinary shares, there will be 192,065,236 ordinary shares in issue. This number may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company."
I hope you are right IG, apologies if i caused a bit of a panic there but i'm still pretty new to all this!
Has anyone been through this before where new shares have been issued?
Are we expecting a big drop when this happens on 18th?
If market cap stays the same i see us being back in the mid/high 20's for SP.. please someone tell me otherwise
Thanks for the reply Fuku. Fingers crossed you are right! Is everyone thinking it will spike at the announcement then drop back down slightly before production actually begins? Or remain high until 2021? I think my plan at the minute is to take advantage of the spike and sell, and then take it from there.
What are the general expectations for the share price in the days after funding is announced? Is 40p too high?