Leidi.com Lei Jianping December 7

Following the resignation of Nezha Automobile CFO Chen Rui three months ago, recently, Nezha Automobile CEO Daniel Zhang has also resigned and transferred to the company's consultant, and Fang Yunzhou, founder and chairman of Nezha Automobile, has taken the position of CEO.

Nezha Automobile also disclosed Fang Yunzhou's "Towards Victory, Set Off Again!" 》All staff letter, the letter to the Chinese side Yunzhou admitted the current difficulties encountered by Nezha Automobile, saying that in the face of the extreme involution of market competition in the past two years, the rapid expansion of public opinion dissemination, and a series of problems exposed by Nezha Automobile's own strategy, organization and management system, the company's development has suffered short-term shocks. The recent various voices in the field of public opinion have also brought influence and disturbance to the normal operation of the company. "As the founder of the company, I have the first responsibility and I apologize to everyone."

Fang Yunzhou listed six major reform measures that will be implemented: including: firmly implement "people-oriented" and respect talents; Implement a full stock ownership plan; Through optimization and reorganization, the organization is flatter and more efficient, the middle and back office are streamlined, administrative costs are reduced, and the rejuvenation is promoted. Reform the organizational mechanism to build a more transparent, efficient, honest and energetic new Nezha; Reshape the corporate culture and build a fighting iron army with ideals, enthusiasm, responsibility and ambition; In terms of market strategy, the business focuses on overseas, focusing on products that are more in line with market expectations and have a positive gross profit margin.

Fang Yunzhou hopes that through the six major measures, Nezha Automobile will go all out to achieve the IPO, and at the same time, it will be able to achieve half of the sales volume in the next 2-3 years, half of the sales volume, the overall gross profit margin will turn positive in 2025, and the company will be profitable as a whole in 2026.

In fact, although Nezha Automobile is booming, it has shown a decline in the past two years.

At the beginning of the year, Daniel Zhang said that after the brutal price war in 2023, he has deeply realized that there is no way out for continuing to lose money and sell cars, which is a problem in front of all car companies. If they can't achieve positive operating cash flow, independent automakers will not survive 2-3 years.

At that time, Daniel Zhang also proposed several change measures: 1. Domestic production is concentrated in the Tongxiang factory, and large-scale has a cost advantage; 2. Loss-making product lines need to immediately reduce production, insist on products going up, sell products with gross margins, get out of the comfort zone, and short-term sales decline is a problem that needs to be faced; 3. Insist on going abroad and doing a good job in overseas markets, saying that globalization is the most important strategy of Nezha Auto and the way to survive.

However, Daniel Zhang still failed to achieve his ideals, and instead lost Maicheng.

is preparing to go public: but the CEO and CFO have left one after another

Nezha Automobile completed the D1 round of financing of 3.522 billion yuan in October 2021, the D2 round of financing of 2.79 billion yuan in October of the same year, the D3 round of financing of 1.887 billion yuan in August 2022, the cross-round financing of 6.822 billion yuan in March, September 2023 and June 2024, the Tongxiang convertible bond of 940 million yuan in April 2024, and the Nanning convertible bond of 120 million yuan in June.

At the end of June 2024, Nezha Automobile submitted a prospectus to be listed on the Hong Kong Stock Exchange. According to the prospectus, Nezha Automobile's revenue in 2021, 2022, and 2023 will be 5.087 billion yuan, 13.05 billion yuan, and 13.55 billion yuan respectively; gross losses were 1.748 billion yuan, 2.939 billion yuan and 2.014 billion yuan respectively; The gross loss ratios were 34.4%, 22.5% and 14.9% respectively.

Nezha Automobile's operating losses in 2021, 2022, and 2023 will be 4.5 billion yuan, 5.95 billion yuan, and 6.758 billion yuan respectively; The operating loss ratios were 88.6%, 45.6% and 49.9% respectively.

Nezha Automobile's losses in 2021, 2022, and 2023 will be 4.84 billion yuan, 6.666 billion yuan, and 6.867 billion yuan respectively; The loss ratios for the year were 95.2%, 51.1% and 50.6% respectively.

As of December 31, 2023, Nezha Auto held cash and cash equivalents of RMB2.837 billion.

However, Nezha Automobile has not passed the listing hearing for a long time, and Nezha Automobile's capital chain continues to deteriorate.

On November 8, intelligent manufacturing solution provider EFORT (688165. SH) issued a lawsuit announcement stating that the Yichun Branch of Hezhong Automobile was overdue for the payment of the remaining price of 48.195 million yuan in the contract, so it sued Hezhong Automobile and Yichun Branch of Hezhong Automobile to the Yuanzhou District Court of Yichun City, Jiangxi Province.

Recently, D&S Public Relations took Nezha Automobile to court, claiming that the two parties had signed a number of project service contracts between October 2021 and March 2024, stipulating that the plaintiff would provide professional public relations services for the defendant's automobile sales and promotion. The plaintiff of the aforesaid project has completed the performance of the contract and submitted various acceptance materials in accordance with the requirements of the defendant, and some of them have issued special VAT invoices, but the defendant has not paid any contract money to the plaintiff so far, and the total amount of unpaid payment exceeds 53.55 million yuan.

In just a few months, the CFO and CEO of Nezha Automobile have resigned, which also shows that the company's survival is in serious difficulties.

In fact, Nezha Automobile submitted its form, but it was unable to be listed for a long time, and it may be difficult for the company to solve its difficulties, for example, WM Motor also sprinted to the Science and Technology Innovation Board and the Hong Kong Stock Exchange successively, and in the end, WM Motor still disappeared.

360 Lying Gun is facing huge investment losses

According to the prospectus, Fang Yunzhou holds a total of 11.82% of the shares, Yichun entities hold 12.18% of the shares, Yichun Xinhe holds 2.85% of the shares, Liansheng holds 1.9% of the shares, Jiaxing Xinsong holds 1.79% of the shares, and Jiaxing Xinzhu holds 1.56% of the shares. Yichun Entity, Yichun Xinhe, Liansheng, Jiaxing Xinsong and Jiaxing Xinzhu are all acting in concert with Fang Yunzhou, holding a total of 20.28% of the shares. Fang Yunzhou controls a total of 32.1% of the shares.

In addition, Nanning Fund, a subsidiary of Minsheng Equity, holds 11.2% of the shares, and Liuzhou Minsheng holds 0.26% of the shares of Minsheng Equity; Huading Capital holds 9.82% of the shares, 360 holds 9.12% of the shares, Cheng Zhizhong holds 5.35% of the shares, Tongxiang Finance Bureau holds 4.44% of the shares, Hefei High-tech holds 3.49% of the shares, CATL New Energy Technology Co., Ltd. holds 3.04% of the shares, and Tongxiang Science and Technology Venture holds 2.18% of the shares.

Once Nezha's car thunders, it may affect the 360 group. In 2021, Zhou Hongyi, the founder of 360, said at the 360 performance briefing that he would actively explore market opportunities in the field of smart car safety, and study and judge the feasibility of increasing investment in related fields and in-depth development of commercial business related to smart car safety.

In November 2021, 360 announced that it would invest 2.9 billion yuan to acquire a total of 16.5940% of the equity of Hezhong New Energy Automobile Co., Ltd. (also known as "Nezha Automobile"), becoming its second largest shareholder.

Fortunately for Zhou Hongyi, 360 paid 1.9 billion yuan in investment, and 1 billion yuan has not been paid.

Daniel Zhang once said, "In terms of shareholder relations, I think we are very good, shareholders do not point fingers, we are also more humble and cautious, investors are taking money for us to spend, we must have a sense of reverence for others, I think our shareholder relationship is very good." Daniel Zhang also commented on Zhou Hongyi, saying that he respects the laws of the industry, he also respects the industry, and indeed professional people do professional things. If we don't go public or raise money now, we will basically be able to achieve positive operating cash flow next year. At present, the money in Nezha's account is enough. ”

is also such a change, 360 can be fortunate to lose 1 billion less.

The following is the core content of Fang Yunzhou's internal letter:

Towards victory, set off again!

——Our new decade, our new starting point

Dear friends:

Today is the heavy snow solar term, and everything is hidden in winter and waiting for spring. We are standing at a new starting point, facing the fierce competition and challenges of the global automotive industry in the midst of major changes unseen in a century.

"The heavy snow presses the green pine, and the green pine is straight and straight", pointing out the perseverance quality that an entrepreneur should have. Looking back on the past ten years of entrepreneurship, the past is vivid. As a founder, I'd love to have something heartfelt to you today.

From 2014 to 2024, Nezha Automobile has gone through a journey full of challenges, ups and downs and continuous progress from scratch, "from 0 to 1". In the past ten years, we have unswervingly taken the road of independent innovation, attached great importance to independent product research and development and technological innovation, actively explored the frontier of new energy vehicle technology, and become a leading enterprise in national new energy technology. In the past ten years, we have also encountered the embarrassment of facing the salary of four or five hundred people, and only a few hundred thousand yuan of book funds remained; I have experienced the ...... of a partner who sells a house without hesitation and supports the business for 7 months

Today, Nezha Automobile, which has been in business for ten years, is standing at the crossroads of Phoenix Nirvana. In the face of the extreme involution of market competition in the past two years, the rapid expansion of public opinion dissemination, and a series of problems exposed by our own strategy, organization and management system, the company's development has suffered short-term shocks. The recent various voices in the field of public opinion have also brought influence and disturbance to the normal operation of the company.

As the founder of the company, I have the first responsibility and apologize to everyone.

Looking back on the original intention of entrepreneurship, from the time of its establishment, Nezha has taken it as our responsibility to become the "representative of China's intelligent electric vehicles", advocating "equal rights in science and technology" and "making cars for the people", which is our unshirkable sense of mission. I firmly believe that we are on the right path, and that the difficulties we are encountering now are difficulties in the process of moving forward, and we have the ability to overcome them.

If our choice in the "adversity" is to be more energetic and more proactive in embracing change, then the juncture we are experiencing today is the "highlight moment" for our company to become a great enterprise. Looking back at the history of industrial development in the world, in order to become an industrial leader, it is necessary to go through tempering, so as to develop the ability to resist crises and go through cycles. Jiang Taigong said: "Great difficulties and great understanding, the beginning of great success" is this truth.

We have passed the most dangerous juncture. In the future, we can only get better and thriving every day. In the next step, the company will implement a series of reform measures:

1. Firmly implement the "people-oriented". Respect talents, stimulate the greatest innovation power and vitality of talents.

2. Implement the full stock ownership plan, so that every partner can share the fruits of Nezha's development and struggle.

3. Achieve a flatter and more efficient organization, streamline the middle and back offices, reduce administrative costs, and promote rejuvenation through optimization and reorganization.

4. Reform the organizational mechanism and build a more transparent, efficient, honest and energetic new Nezha. Let the talented and capable partners stand out, and ensure that the pragmatic and hard-working partners can work more and get more.

5. Reshape corporate culture. Build a fighting iron army with ideals, enthusiasm, responsibility and ambition.

6. Strategically focus on business, be reborn from the ashes, and go overseas. Focus on products that are more in line with market expectations and have a positive gross profit margin, moderate domestic competition, and strive to create several global best-selling models.

What Nezha Automobile wants to take is not the road of deep involution, not the road of self-consumption, but a road of high-quality sustainable development. Based on domestic global expansion, it is the answer to Nezha Automobile's second venture: this is a strategy that will be firmly implemented after in-depth thinking! It's not just about the short-term survival of the company, it's also about whether we can stand out from the competition in the future.

Through the above series of reforms, I believe that Nezha Automobile can develop healthily and sustainably with a lighter and more flexible attitude. While going all out to achieve the IPO, in the next 2-3 years, half of the sales volume can be realized, the overall gross profit margin will turn positive in 2025, and the company will be profitable as a whole in 2026.