On February 28, Chery Automobile officially submitted its listing application to the Hong Kong Stock Exchange. As the only large vehicle group not listed in China, Chery Automobile's IPO is quite symbolic of a "dream realization."

Starting from three thatched huts in the abandoned brick factory in Wuhu in 1997 to now ranking among the 11th largest Mahayana car company in the world, Chery's growth trajectory reflects the transition of China's automobile industry from imitation to innovation.

Let's first look at financial performance. In a word, profits have increased.

Chery Automobile's financial performance can be called a "bucking sample" among traditional car companies.From 2022 to the first three quarters of 2024, its revenue jumped from 92.618 billion yuan to 182.154 billion yuan, with a compound annual growth rate of 57.6%; net profit for the same period increased from 5.806 billion yuan to 11.312 billion yuan, and the average daily profit exceeded 41.85 million yuan159.This growth rate far exceeds the industry average. In the first three quarters of 2024, revenue is second only to BYD and SAIC Motor, and net profit is close to Geely (13.053 billion yuan), showing strong profitability.

The key to Chery's "hidden competitiveness" lies in going out to sea.

In 2024, the company's overseas sales will reach 1.1446 million vehicles, ranking as the export champion of China brands for 22 consecutive years. Overseas revenue accounts for 45% and covers 110 countries and regions.Unlike other car companies that focus on European and American markets, Chery has chosen a "differentiated penetration" strategy: establishing localized R & D centers in emerging markets such as Russia and South America, and customizing products for high temperature, dusty and other environments (such as Tiggo's Middle East version of air conditioning systems)., and reduce tariff costs through the KD part-assembly model.This "regional deep cultivation" strategy has enabled its market share in Russia to exceed 40%.

In terms of the domestic market, Waiji achieves layered coverage through a multi-brand matrix: the main brand Waiji (58,000 - 229,900 yuan) consolidates the mass market with the Tiggo series; Xingtu (109,900 - 319,800 yuan) focuses on high-end, exporting 33,000 vehicles in the first three quarters of 2024; the Zhijie brand that cooperates with Huawei is aiming at intelligent tracks. Its order for its R7 model in the first month of launch exceeded 70,000 units, becoming the top seller of pure electric SUVs.

In terms of smart driving, Chery has not fallen behind.

Let's first look at Dazhuo Smart Driving. There are two major solutions: mid-level and high-level smart driving. Mid-level smart driving includes ACC, lane keeping and AEB. Automatic parking, which is the most basic L2; high-level solutions can realize L2+ level intelligent driving., supports high-speed NOA, Urban area NOA, intelligent summons and valet parking (AVP). The difference between AVP and automatic parking is that the owner can get off the car himself and find a parking space to park; Then there is the smart cockpit Lion OS, which supports remote car control and OTA, and is equipped with AI voice assistant, which can use most of the car's functions through dialogue.

In a word, Chery has extended its drive for fuel vehicles to trams, striving to meet the harsh requirements of the times for smart driving.

Let's take a look at the valuations that everyone cares about.

Bloomberg previously predicted that its valuation would be about 50 billion yuan, but some investment banks believed it was underestimated based on a net profit of 11.3 billion yuan in 2024 (PE of about 4.4 times). Referring to the average PE of Hong Kong stock car companies, Chery's reasonable valuation was about 90 billion yuan.

However, many people believe that Chery is underestimated by institutions.The reason is the market's doubts about Chery's growth model.First, the dealer channel contributed 86% of revenue, and contract liabilities dropped from 18.6 billion yuan to 16.8 billion yuan (the first three quarters of 2024), indicating terminal destocking pressure; second, the asset-liability ratio was 74.5%, and the net profit margin was 6.2%., its ability to resist risks is weaker than its peer Geely (net profit margin of 8.1%).

However, car building is not a number after all. The transformation of China's automobile industry from "market-for-technology" to "technology export" generally depends on a triple balance: the financial balance between fuel vehicle profits and new energy investment, the expansion of emerging markets and breakthroughs in mature markets. The geographical balance of independent innovation and open cooperation.

Chery accounts for all the above three.

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