As a popular electric vehicle track stock recently, NIO ’s share price has doubled in the past month and a half. Its market value of nearly 40 billion US dollars has also made it one of the most valuable car companies in the world. But just now Just when it was getting popular, it was targeted by the foreign short-selling institution "Grizzly Research".
On Tuesday local time, the overseas short-selling agency Grizzly said NIO imitated Valeant-style accounting games to achieve its goals by exaggerating revenue and increasing net profit margins. As of closing, Weilai's share price closed down 2.57%, at $22.36.
html On June 29, NIO stated that the company had observed the report. The report is filled with a large amount of false information and misunderstanding of the information disclosed by NIO. NIO has always strictly complied with the relevant standards for listed companies and has currently initiated relevant procedures for this report. Please pay attention to subsequent announcements. Image source: tech planet
"Grizzly Bear": NIO uses Wuhan Weineng to exaggerate revenue and profitability
As the core argument of this report, Grizzly Bear puts the conflicting focus on NIO's BaaS battery rental service superior.
Grizzly said that in August 2020, Weilai, industrial funds and CATL and other companies established Wuhan Weineng Battery Asset Co., Ltd. . After subsequent investment, Weilai currently holds 19.8% of the equity of the battery company. Starting from the 2020 fourth quarter report, NIO’s financial results began to significantly exceed the average market expectations. For example, in fiscal year 2021, Wall Street expected the company to lose 6 billion yuan, but the final figure was only 3 billion yuan.
For such a good financial report, the Grizzlies believe that the secret lies in Wuhan Weineng.
According to the business model, Weineng, as an entity that provides BaaS battery rental services, purchases batteries from Weilai and provides subscription services to car owners. In the four months after its establishment in 2020, Weneng contributed 290 million yuan in revenue to Weilai, and then this number soared to 4.14 billion yuan in 2021.
Next is Grizzly Bear’s reasoning time. Short-selling institutions believe that Weilai will spin off the battery pack business into an independent company for three purposes: 1. To include users’ subscription fees for the next few years into the current financial report at once; 2. Create a third party willing to over-purchase batteries; 3. Remove battery impairment charges from the balance sheet.
The first point mentioned above is the main reason why Grizzlies accused Weilai of inflating revenue and profit margins.
Grizzly Calculation said that in the first three quarters of fiscal year 2021, Weilai inflated revenue by 1.147 billion yuan through this method. After this operation was reversed, the net loss also increased from 1.8 billion yuan to 3 billion yuan.
Regarding the hypothetical response that "the battery replacement business inherently requires more batteries," Grizzly also said that it does not make sense, because NIO has stated in SEC regulatory documents that the company's sale of batteries to NIO is a back-to-back arrangement. , that is, after a BaaS user purchases a car, Weilai can purchase a battery from Weilai and include it as an asset.
Grizzly Bear confirmed through investigators that Weilai’s battery swap station does not distinguish whether the battery belongs to Weilai or Weneng. The important significance of this is that Weneng does not need to maintain additional battery inventory. In addition, Grizzly Bear’s due diligence team also reported that the utilization rate of NIO’s power swap stations is not high. The
Grizzly Team also pointed out that after purchasing so much excess battery inventory, NIO should have a physical inventory address, but the investigation team did not find such a warehouse, which means that NIO’s oversupplied batteries are still in NIO itself. in facilities.
Grizzly concluded that considering that the service life of Weilai's batteries is about 5-8 years, dumping these assets on Weneng's account can save a large amount of asset impairment charges. If the charges for oversupply of batteries and impairment are included, Weilai's losses in the first three quarters of fiscal year 2021 will double from 1.8 billion yuan to 3.6 billion yuan.
How related is Li Bin to the key figures in the Ruixing fraud case?
also pointed out in the report that NIO Chairman and CEO Li Bin has a close relationship with Joy Capital and its founding partner Liu Erhai , and Liu Erhai of Joy Capital is the core figure in the Luckin Coffee performance fraud case, that is, Luckin One of the "Golden Triangle" of shareholders - , Lu Zhengyao, , Li Hui, and Liu Erhai.
According to the report, the close relationship between Li Bin, Liu Erhai and Joy Capital is as follows:
Liu Erhai has been a director of the automotive Internet company Biche since 2005, and has been an independent director since 2011. Bitche has always been controlled by Li Bin. In September 2019, Liu Erhai was appointed as one of the independent directors of the special committee evaluating Bitauto's privatization transaction. There are reports that Liu Erhai is an early investor in Weilai Automobile and Mobike . NIO Capital and Joy Capital have jointly invested US$315 million in used car trading service provider and Uxin . Another short-selling institution, JCap, disclosed Uxin’s financial fraud in a 2019 report. The
report also stated that Li Bin is known as China's Musk, but the companies he participated in in the past - Bitauto, Yixin, Mobike have all experienced plummeting stock prices or valuations, and they have been privatized or When sold, valuations were well below peak levels. The
Grizzly Bear Report also mentioned the NIO User Trust, saying that based on the documents they obtained from British Virgin Islands , it was judged that NIO’s user trust had been pledged to UBS on June 28, 2021, but the company did not This was not explicitly disclosed.
According to the first quarter financial report released by NIO on June 9, its first quarter revenue was 9.91 billion yuan, a year-on-year increase of 24.2%, a month-on-month increase of 0.9%, higher than market expectations; a net loss of 1.78 billion yuan, a month-on-month increase. Narrowed by 16.8%; adjusted net loss (under non-GAAP ) was 1.31 billion yuan, narrowed by 25% month-on-month. As of March 31, NIO’s cash reserves were 53.3 billion yuan.
NIO responded: A large amount of false information has been initiated and relevant procedures have been initiated.
html On June 29, NIO responded to the Grizzly Bear short selling incident, stating that the company had observed the report. The report is filled with a large amount of false information and misunderstanding of the information disclosed by NIO. NIO has always strictly complied with the relevant standards for listed companies and has currently initiated relevant procedures for this report. Please pay attention to subsequent announcements.As of the closing of US stocks on the 28th, NIO closed down 2.57% at $22.36.
Related news
NIO has lost nearly 30 billion yuan in more than three years, and its growth rate has declined and its rating has been downgraded
On June 22, 2022, a NIO test car carrying two test drivers fell from the third floor of the Shanghai Innovation Port parking lot. , among the two test drivers who were rescued, Du died due to ineffective rescue, and Zhang was declared dead in the early morning of the 23rd after surgery in the hospital showed poor results.
NIO responded: "One of them is a company colleague and the other is a partner employee. After the accident, the company immediately cooperated with the public security department to launch an investigation and analysis process of the cause of the accident. According to the analysis of the scene, It can be preliminarily confirmed that this was an accident (not caused by the vehicle). We are very sad about this accident and express our deep condolences to the colleagues and partner employees who were killed. The company has set up a special team to help the family members deal with the aftermath. "
Before this response, NIO's first response sparked heated discussions. The last sentence of NIO's response stated: "It has nothing to do with the vehicle itself." Many netizens expressed their disappointment, and the response was subsequently deleted. Post, NIO responded again.
Why should we test the car on the third floor of the parking lot, which sounds very risky? Some insiders pointed out: "This site selection is actually normal in the industry." Shen Meng, director of
Chanson Capital, said: "Although the accident occurred during the test run, the incident caused a great negative impact on public opinion, which is not good for Wei. The brand of the car may also affect the performance competition between Weilai and other brands. Although test driving itself is full of dangers, consumers will not pay special attention to the difference. "
In addition, according to Flush data, Weilai Hong Kong stocks stocks. Since its listing, it has increased by 18.06%, while U.S. stocks have fallen by 49.08% in one year from June 28, 2021 to June 27, 2022, with a price-to-earnings ratio of -32.54 times.
html On June 1, NIO announced its delivery volume in May this year, with a total of 7,024 new cars delivered, achieving year-on-year growth.Compared with peers, in May this year, Li Auto delivered 11,496 units, Li Auto delivered 11,009 units, Xpeng Motors delivered 10,125 units, Leap Motors delivered 10,069 units. However, Weilai failed to break through the 10,000-vehicle barrier and fell behind new forces.In addition, before and after the release of the first quarter report, many institutions have downgraded NIO, including Citibank , Daiwa, Deutsche Bank , Morgan Stanley , etc.
Daiwa believes that Weilai’s adjusted net loss in the first quarter was 1.285 billion yuan, which was narrower than the loss of approximately 1.716 billion yuan in the fourth quarter of last year. During the period, the gross profit margin of the automotive business was 18%, which fell year-on-year and quarter-on-quarter, which is believed to be due to the increase in battery costs.
financial data shows that NIO achieved revenue of 7.825 billion, 16.258 billion and 36.136 billion respectively from 2019 to 2021, achieving a good trend. But compared with net profit, NIO is still in a state of loss. During the same period, net profits were -11.413 billion, -5.611 billion and -10.572 billion respectively. In the first quarter of 2022, it still incurred a net loss of 1.825 billion. In other words, in more than three years, NIO's total losses exceeded 29.4 billion yuan.
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