China Fund News reporter Lu Ling
After investing for 8 years, Dahua Group transferred all 90 million shares of Zero Run Auto held by it to Stellantis Group, with an investment return of approximately 49.53 times.
Meanwhile, Stellantis Group and Zero Motor announced on the morning of October 26th that they plan to invest approximately 1.5 billion euros to acquire approximately 20% equity in Zero Motor. While further enhancing sales in the Chinese market, Zero Runner will rely on Stellantis Group to start global layout from the European market.
On the morning of October 26th, Zero Run Motors opened high and closed low. As of press release, its stock price was HKD 33.8, a decrease of 8.15%; Dahua Shares' stock price was 18.92 yuan, a decrease of 3.27%.
Make 50 times more money
On the morning of October 26th, Dahua Group announced that in order to optimize the industrial structure and further integrate resources to achieve asset returns, the company and STELLANTIS N.V. signed the "SHARE PURCHASE AGREEMENT" on October 26th, 2023, intending to transfer 90 million shares (45 million of which are H-share "fully tradable" shares and 45 million are domestic shares) to Zhejiang Lingpao Technology Co., Ltd. for a price of HKD 3.4929 billion, Accounting for 7.88% of Zero Run's total share capital at the time of signing the agreement. After the completion of this transfer, the company will no longer hold Zero Run shares.
According to the announcement, in December 2015, Dahua Shares participated in the establishment of Zero Run and paid in a registered capital of RMB 33 million; In May 2017, Dahua Shares increased its capital to zero by 57 million yuan, with the aforementioned two contributions priced at 1 yuan per share. In September 2022, Zero Run was officially listed on the Hong Kong Stock Exchange.
Dahua Group stated that according to the accounting standards for long-term equity investments accounted for using the disposal equity method, after preliminary calculations by the company's finance department, it is expected that after the completion of this transaction, the company's current profit will increase by approximately RMB 4.548 billion (before tax, accounting for 195.7% of the audited net profit attributable to shareholders of the listed company in 2022). The income from this transaction is mainly due to the difference between the transaction amount and the book value of the long-term equity investment, Other changes in equity during the holding period are transferred to investment income.
Based on this calculation, compared to the total investment cost of 90 million yuan, Dahua Shares gained approximately 49.53 times from the sale of all equity in Zero Run Automobile.
Stellantis plans to invest 1.5 billion euros
Will acquire approximately 20% equity in Zero Run Motors
On the morning of October 26th, Stellantis Group and Zero Motor also announced that Stellantis Group plans to invest approximately 1.5 billion euros to acquire approximately 20% equity in Zero Motor.
This transaction also confirms that Stellantis Group and Leapmotor International will form a joint venture called "Leapmotor International" in a ratio of 51% to 49%. Except for the Greater China region, the joint venture company has the exclusive right to export and sell to all other markets worldwide, as well as the exclusive right to manufacture Zero Run automotive products locally. The establishment of a global partnership between the two parties will be an industry initiative, where a world leading automaker and a new power electric vehicle enterprise from China have collaborated on global electric vehicle projects.
Stellantis Group will have 2 seats on the board of directors of Zero Motor, and will appoint the CEO of the "Zero International" joint venture company by Stellantis Group.
According to data, Stellantis Group was established in early 2021, formed by the merger of two former Peugeot Citroen and Fiat Chrysler groups with over a century of history, respectively.
Currently, Stellantis Group has 14 iconic car brands and 2 mobile travel service units, including Abbas, Chrysler, Citroen, Maserati, Peugeot, and others.
In 2022, Stellantis Group sold over 6 million cars worldwide, achieving a net revenue of 179.6 billion euros and a net profit of 16.8 billion euros. In the first half of 2023, Stellantis Group achieved a net revenue of 98.4 billion euros and a net profit of 10.9 billion euros, and continued to become one of the highest profit margins in the global automotive industry with an adjusted operating profit margin of 14.4%.
Expand the European market
Stellantis Group and Zero Motor stated that this partnership not only aims to further increase Zero Motor's sales in China, the world's largest automotive market, but also relies on Stellantis Group's mature commercial layout in other global markets to vigorously increase Zero Motor's sales in the local market, starting from the European market.
Stellantis Group plans to leverage Zero Run's highly innovative and cost-effective electric vehicle ecosystem to help Stellantis achieve its electrification goals in the "Dare Forward 2030" strategic plan. At the same time, both parties may further explore mutually beneficial synergies. It is expected that the joint venture of "Zero Run International" will begin its export business in the second half of 2024.
With the integration of strong electric vehicle startups in the Chinese market, a small number of efficient and flexible new electric vehicle companies such as Zero Run Motors will occupy the mainstream segment of the Chinese electric vehicle market. This trend is becoming increasingly evident. We believe that in Zero Run Motors' global expansion plan, now is the best time for Stellantis Group to support it and take on a leading role Carlos Tavares, Global CEO of Stellantis Group, said.
According to Stellantis Group's plan, over the next decade, it will invest over 50 billion euros in the electrification sector to achieve its electrification goal in the "Dare Forward 2030" strategic plan: by 2030, all passenger cars sold by the group in Europe will be pure electric vehicles, and 50% of passenger cars and light trucks sold in the United States will be pure electric vehicles.
