Listing plan: Extreme Krypton was listed on the New York Stock Exchange on May 10, 2024, raising capital of US$441 million and valued at US$5.199 billion. With 210 million common shares issued, the total share capital after issuance was 2,476 million shares. This public offering accounts for 8.48% of the total shares.
Basic situation: The high-end pure electric vehicle market segment is clearly positioned, with concentrated equity and a high proportion of R&D personnel in the team. After the public offering, Li Shufu, chairman of Jikrypton Real Holdings, held 78.8% of the shares, and the total number of Jikkrypton senior management held 82.8% of the shares.
Main business: Bringing together high-quality assets under the Geely Group, mainly selling high-end pure electric vehicles. The main business involves R&D and manufacturing of core components for electric vehicles such as batteries and motors, as well as related R&D services.
Krypton holds high-quality assets such as the Swedish Research Center (CEVT) and Ningbo Verrill Electric Vehicle Technology Company, and has diversified cooperation with leading global strategic partners such as Waymo/Moblieye/Ningde Times. As of May 2024, Extreme Krypton products have launched 6 models, covering the price range of 18.98-789 million yuan. The product matrix covers various body types of cars, SUVs, and MPVs, which can meet the needs of various vehicles such as comfortable home use and business reception. Extreme Krypton insists on independent research and development in the field of intelligent electric core technology, including vehicle SEA vast architecture, electronic and electrical ZEEA 2.0 E/E architecture, DCU control architecture, and ZEEKR OS operating system. In response to the mileage anxiety of pure electric vehicles, Extreme Krypton provides the following three solutions: home charging solutions, road charging solutions, and mobile charging services. Extreme Krypton insists on building a DTC sales network, which consists of ZEEKR centers (26 companies), ZEEKR space (240 companies), ZEEKR delivery centers (31 companies), and ZEEKR houses (45 companies).
Space and pattern: Extreme Krypton has strong competitiveness in the high-end pure electric vehicle segment; it continues to enter Europe and other overseas markets. Krypton's products are positioned in the high-end pure electric market: the ZEEKR 001, which is priced at nearly 300,000 yuan, achieved a total delivery volume of 10,000 vehicles within 4 months, becoming one of the fastest models ever delivered in the Chinese high-end EV market. With a delivery volume of 75,900 units in 2023, it ranked first among high-end EV models; ZEEKR, which is priced at nearly 500,000 yuan, sold 19,500 units in 2009, ranking in the top ten EV sales in China; ZEEKR X is among the top ten EV sales in 2023 with a price of 150,000 to 300,000 yuan. Extreme Krypton has accelerated its entry into Europe and other overseas markets. In the second half of 2023, the first batch of European Krypton 001 and Extreme Krypton X was shipped to Europe, and finally completed overseas sales of more than 4,000 vehicles throughout the year.
In 2024, Krypton's overseas footprint in Europe will increase to 8 countries. The plan is to enter most Western Europe in 2026, and simultaneously enter emerging markets such as Southeast Asia, the Middle East, and South America. It is expected to launch sales operations in 50 countries.
Finance and forecasting: It is expected that the future sales and revenue of Extreme Krypton will continue to increase. In 2023, Krypton's revenue was 51.7 billion yuan, with a gross profit margin of 13.3%, and net loss increased to 8.35 billion yuan; bicycle revenue was 435,000 yuan, leading the industry. It is predicted that the sales volume from 2024 to 2026 will be 21,30.8, and 365,000 units, respectively. Considering the impact of the industry price war and the increasingly fierce competitive environment, the average bicycle revenue ASP will decline compared to 2023. Assuming 250,000 yuan, the corresponding revenue from 2024 to 2026 is 525, 770, and 91.25 billion yuan, respectively. Geely Automobile's high-end brand Kyokrypton is progressing smoothly in its electrification, intelligence and internationalization strategy, and automobile sales and profitability are growing steadily. We are optimistic about the company's future development.
Extreme Krypton is mainly controlled by Geely Automobile Group Co., Ltd. Geely Auto's electrification, intelligence and internationalization strategy is progressing smoothly, and vehicle sales and profitability are growing steadily. The company is expected to achieve operating income of 2024, 2377, and 26.4 billion yuan in 2024-2026; achieve net profit of 76.8, 114.0, and 15.11 billion yuan; EPS is 0.76, 1.13, and 1.50 yuan. PE valuations corresponding to the current stock price are 12.4, 8.4, and 6.3 times, respectively, maintaining an “increase” rating.
Risk warning: Market competition intensifies risks, Extreme Krypton sales fall short of expectations, Extreme Krypton R&D progress falls short of expectations, high-end brand progress falls short of expectations, risk of unstable international trade environment, risk of competition within Geely brands, difficult comparison between different companies and models, and imposition of tariffs on Chinese electric vehicles in Europe have led to the overseas progress of the Gekrypton brand falling short of expectations.