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Huawei's automotive BU business is making big moves.

On the evening of August 19, Changan Automobile disclosed that its joint venture Avita Technology plans to sign a "Share Transfer Agreement" with Huawei in Chongqing on the morning of August 20, stipulating that Avita Technology will purchase Huawei's 10% equity in Shenzhen Yinwang Intelligent Technology Co., Ltd. The transaction amount is 11.5 billion yuan. After the transaction, Avita Technology will hold 10% of Yinwang's shares and Huawei will hold 90% of Yinwang's shares.

It is worth mentioning that in addition to Changan Automobile, at the end of July, SERES also announced that it plans to invest in Shenzhen Yinwang Intelligent Technology Co., Ltd. to help it become a world-class leader in automotive intelligent driving systems and components industry, but did not disclose the equity ratio.

It is worth mentioning that Shenzhen Yinwang Intelligent Technology Co., Ltd. was established in January this year. It is a new company established by Huawei's Automotive BU. If calculated based on the investment valuation of Yinwang by Avita Technology, the overall valuation of the company, which was established less than a year ago, has reached 115 billion yuan.

Huawei and Avita to sign contract

Since the big move by Changan Automobile and Huawei was exposed in November last year and then fell silent, the cooperation between the two parties has finally made new progress.

On the evening of August 19, Changan Automobile issued an announcement on the progress of the <Investment Cooperation Memorandum> and the overseas investment of its joint ventures. The announcement showed that the company's joint venture Avita Technology officially invested in Shenzhen Yinwang Intelligent Technology Co., Ltd. (hereinafter referred to as "Yinwang"), holding a 10% stake, and jointly supporting the company's future development with Huawei.

It is reported that Huawei and Changan Automobile plan to sign the "Comprehensive Upgrade Strategic Cooperation Agreement" on the morning of August 20, 2024. Huawei, Changan Automobile, and Avita will comprehensively upgrade their strategic cooperation in the fields of brand and ecology, cloud and AI technology, green energy, and industrial chain cooperation to give full play to the advantages of both parties and help the industry upgrade and development.

According to the transaction agreement, after the transaction, Yinwang's board of directors will be composed of 7 members, and the board seats will be determined based on the shareholding ratio of shareholders; Huawei has the right to nominate 6 directors, and Avita Technology has the right to nominate 1 director.

On November 25 last year, Huawei and Changan Automobile signed a memorandum of investment cooperation in Shenzhen. After negotiation, Huawei plans to establish a new company to focus on the research and development, production, sales and service of intelligent driving systems and incremental components for intelligent connected vehicles.

According to the memorandum, Huawei intends to integrate the core technologies and resources of its intelligent vehicle solutions business into the new company. Changan Automobile and its affiliates are interested in investing in the company and will work with Huawei to support its future development. The new company will strive to become a world-class leader in the automotive intelligent driving system and components industry, and as an open platform serving the automotive industry, it will open equity to existing strategic partner automakers and strategically valuable automakers and other investors, becoming a company with diversified equity.

When signing the "Memorandum of Investment Cooperation" earlier, Huawei's rotating chairman Xu Zhijun said: "Huawei insists on not making cars, but instead uses its own ICT technology advantages and marketing capabilities to help car companies make and sell good cars. We will continue to fulfill our commitments to customers and partners and jointly promote the rise of the automotive industry."

Yu Chengdong, Huawei's executive director and chairman of the Intelligent Automotive Solutions BU, said: "We have always believed that China needs to build an open platform for electrification and intelligence with the participation of the automotive industry, an open platform with a 'locomotive'." We will work with partners to promote innovation and leadership in intelligent vehicle technology and promote the prosperity and development of the automotive industry.

The valuation of Yinwang exceeds 100 billion

In fact, the open platform that Yu Chengdong mentioned as a "locomotive" in the field of electrification and intelligence in the automotive industry may be the role that this promising company will play.

In January this year, Shenzhen Yinwang Intelligent Technology Co., Ltd. was established, with Zheng Liying as the legal representative, and a registered capital of RMB 1 billion. Its business scope includes the manufacturing and sales of intelligent vehicle-mounted equipment, etc. At the beginning of its establishment, Huawei Technologies Co., Ltd. held 100% of the shares.

A reporter from Securities China previously learned from an informed source that Shenzhen Yinwang Intelligent Technology Co., Ltd. is a new company established by Huawei's Automotive BU. The establishment of Yinwang is the first step for Huawei's intelligent vehicle business to better serve the industry. It will be equipped with Huawei's Automotive BU's current technology and resources. Initially, it will be wholly owned by Huawei, and later as more partners join, it will become a technology open platform with diversified equity.

The announcement on August 19 showed that the transaction amount was RMB 11.5 billion. After the transaction, Avita Technology held 10% of Yinwang and Huawei held 90% of Yinwang. That is, according to the preliminary calculation of the valuation of Avita's investment, the overall valuation of Yinwang, which was established less than a year ago, has reached RMB 115 billion.

It is worth mentioning that in addition to Changan Automobile, Seres is also a company that favors the Yinwang car platform and has openly stated that it wants to invest in it.

On July 28, Seres announced that based on the progress of the previous work between Yinwang and related parties, the company has initiated negotiations with Yinwang and its shareholders to join the investment in Yinwang. At present, the specific investment amount, transaction method, transaction price and other terms of Seres' investment in Yinwang are subject to the final transaction documents signed by both parties.

SERES announced that if the transaction is completed, Yinwang will become a subsidiary of the company and the scope of the company's consolidated financial statements will not change.

According to Huawei's financial report, Huawei's automotive BU's annual revenue in 2022 will be 2.1 billion yuan, and its revenue in 2023 will be 4.7 billion yuan, a year-on-year increase of 128.1%. On March 16 this year, Huawei's executive director and chairman of the automotive BU, Yu Chengdong, said at the China Electric Vehicle 100 Forum that Huawei's automotive BU was in a loss-making state in the past due to large R&D investment, and this year it will probably be able to turn losses into profits, thanks to the hot sales of high-end models created by us and our partners.

It is reported that the hot sales of Hongmeng Intelligent Driving models are the main engine of Huawei's automotive BU revenue growth. Official data shows that in the first half of 2024, the cumulative sales of Hongmeng Intelligent Driving are about 194,200 vehicles. Among them, Wenjie, a subsidiary of SERES, has become the sales leader, accounting for more than 90% of Hongmeng Intelligent Driving's overall sales in the first half of the year.

Source: China Securities

Statement: All information content of Databao does not constitute investment advice. The stock market is risky and investment should be cautious.

Editor: He Yu

Proofreading: Li Lingfeng

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