electric vehicle dealer aochuang holdings plans to go public in the u.s. to replenish its capital, having sold 3,661 vehicles in the last fiscal year
2024-09-18
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a dealer group with only four 4s stores plans to go public in the united states.
recently, according to the u.s. securities and exchange commission (sec), chinese electric vehicle dealer aochuang holdings, inc. (hainan aochuang holding group, hereinafter referred to as "aochuang holdings") submitted an ipo application to the sec with the stock code "ane".
according to the announcement, the ipo plans to raise us$6 million, with an estimated listing price between us$4 and us$6 per share. the company plans to issue 1.25 million shares of common stock in the form of commitments.
although aochuang holdings is a dealer mainly engaged in new energy vehicles, it cannot escape losses in the current fierce competition in the auto market.
there are 4 stores now, and the chairman held 100% of the shares before listing
according to the prospectus, aochuang holdings is a passenger electric vehicle dealer and comprehensive automotive service provider located in hainan province, china. hainan province is the first province in china to propose a timetable for "banning the sale of fuel vehicles" by 2030. with the help of the local government's preferential policies to promote electric vehicles, the company strategically focuses its business on the sales and services of electric vehicles rather than internal combustion vehicles.
aochuang holdings mainly distributes geely geometry, euler, chery new energy and gac trumpchi, etc. its first 4s store was established in haikou, hainan province in 2016, and now has four 4s stores that provide full-service.
it is expected that by the end of 2024, two more 4s stores will be put into operation, selling new energy brands of volkswagen and honda respectively. the company said that it also plans to gradually penetrate into other high-growth regions in southern china, such as guangdong, guangxi and hunan in the future.
a dealer group with only four 4s stores is not large in the country. take guanghui group, which was delisted not long ago, for example. its number of 4s stores exceeded 1,000 when it was listed, and it currently has about 700 stores. according to data from the china automobile dealers association, dealer groups with more than three 4s stores account for about 20% of the total number.
aotron holdings' main entity in china is hainan aotron energy development co., ltd., which was founded in 2013. the listed entity aotron holdings was established on february 15, 2023 in accordance with the laws of the cayman islands, with yuan liu as chairman of the board and ceo.
the shareholder structure in the prospectus shows that before aotron holdings went public, liu yuan held 100% of aotron holdings through a total of 7 companies including damei holdings and huihaoxin investment. the prospectus also states that liu yuan holds 100% of the shares of the above 7 companies.
according to the prospectus, after the ipo, liu yuan will hold 96.45% of the company's total outstanding common shares. if the underwriters exercise their over-allotment rights in full, he will hold 95.94% of the total outstanding common shares.
as of the filing, the authorized share capital of aotron holdings is us$50,000, totaling 500 million common shares. aotron holdings has issued and circulated 34 million common shares. after this ipo, if the underwriters do not exercise the over-allotment option, the company's outstanding common shares will be 35.25 million shares.
the price war has a serious impact: losses continue and revenue declines
aotron holdings began to incur losses in 2023 when a price war raged.
the prospectus shows that in the fiscal year 2022 ending september 30, 2022 and the fiscal year 2023 ending september 30, 2023, aochuang holdings achieved revenue of us$76.9489 million and us$68.1336 million, a year-on-year decline of 11% in fiscal year 2023; net profit was us$949,600 and us$-us$7,800, respectively.
in the first half of fiscal year 2024 ending march 31, 2024, its revenue was us$33.1897 million, a year-on-year decrease of 4%; net profit fell from us$71,300 in the same period last year to us$-399,400, a year-on-year decrease of 660%.
in its prospectus, aochuang holdings explained that the decline in revenue was mainly affected by the decrease in automobile sales revenue. automobile sales in fiscal year 2022 were 4,659 units, and automobile sales in fiscal year 2023 were 3,661 units. in the first half of fiscal year 2024, the company sold 1,358 new cars, a decrease of 162 units from the same period of the previous fiscal year; sales revenue decreased by us$1.7 million to us$33.1 million.
the prospectus shows that automobile sales revenue is the main source of income for aotron holdings. in fiscal years 2022, 2023, and the first half of fiscal year 2024, automobile sales revenue accounted for 94.3%, 95.1%, and 94.1% of total revenue respectively; automobile parts, repair and maintenance service revenue accounted for 3.2%, 2.9%, and 3.4% respectively; financial service revenue accounted for less than 1%.
the prospectus states that on the one hand, chinese electric vehicle manufacturers are rapidly launching new electric vehicle models and adding a large number of features to attract consumers. older models in the company's inventory are also being retired quickly.
on the other hand, there is an oversupply of electric vehicles in the market in 2023, which puts significant downward pressure on the retail price of electric vehicles. competitors start a price war to compete for market share, causing aotron holdings to lose orders and have to lower its retail price (including service price) to compete, which leads to a further decline in revenue.
in fact, since last year, declining profitability has become the main tone of the industry. price wars have severely squeezed dealers' profit margins, and the phenomenon of new car prices being inverted is serious. the "national automobile dealer survival status survey report in the first half of 2024" recently released by the china automobile dealers association shows that the "price-for-volume" policy of car companies has brought about an intuitive negative effect, and the profits of all dealers have shrunk significantly. in the first half of the year, the loss rate of domestic automobile dealers was as high as 50.8%, while the profit rate was only 35.4%. the loss has expanded significantly compared with the previous year, and some dealers are already in a deficit operation state, and the risks have further increased.
the paper reporter wu yuli
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