On Tuesday, Chinese electric vehicle maker Zeekr Intelligent Technology revealed details of its proposed U.S. IPO, with ambitions to raise between $315 million and $423 million. The offering includes 17.5 million American Depositary Shares (ADS), potentially increasing to 20.1 million if the over-allotment option is fully exercised, priced at $18 to $21 per share. This pricing strategy values Zeekr at $4.4 billion to $5.2 billion, marking a significant 60% discount from its $12.5 billion valuation in February 2023.
Currently, Geely Auto (OTC: GELYY) holds a 54.8% stake in Zeekr and is expected to maintain its majority ownership post-IPO. This follows an unsuccessful listing attempt in December 2023, which faltered due to lackluster interest. However, this time, Geely Auto, along with Mobileye and CATL, have expressed their intent to invest up to $349 million in the IPO.
Zeekr, established in 2021, has a diverse EV lineup, including the Zeekr 001 sedan and the Zeekr 009 MPV, with prices starting at RMB 269,000 and RMB 500,000 respectively. The compact SUV Zeekr X and the mid-sized sedan Zeekr 007 are priced from RMB 190,000 and RMB 210,000. The company also plans to introduce two new models within the year.
Despite stiff competition in the EV market, Zeekr has been making strides. In 2023, the company averaged monthly deliveries of 10,000 units, witnessing a sales boost following the launch of the Zeekr 007. Additionally, Zeekr improved its financials, achieving a 15% gross margin in 2023, up from 5% in 2022, and reducing its net loss margin to -16% in 2023 from -24% in the previous year. The company anticipates reaching profit breakeven in 2024.
InvestingPro Insights
As Zeekr Intelligent Technology gears up for its U.S. IPO, investors are closely watching its parent company, Geely Auto (OTC: GELYY), which holds a significant stake in the EV maker. According to InvestingPro data, Geely Auto boasts a robust market cap of $12.71B and a P/E ratio of 17.45, indicating a solid valuation in the market. Moreover, the company has demonstrated impressive revenue growth of 21.11% over the last twelve months as of Q4 2023, highlighting its financial momentum.
An InvestingPro Tip suggests that Geely Auto holds more cash than debt on its balance sheet, providing a cushion for future investments and stability. Another key insight is that Geely Auto is trading at a low revenue valuation multiple, which could signal an attractive entry point for investors considering the company's growth trajectory and its majority stake in Zeekr.
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