The largest IPO in Chinese automotive history has been born

Author | Chai Xuchen

Editor | Zhang Xiaoling

The rising star of domestic new car manufacturers, the high-end brand benchmark SERES, is about to take the stage in the capital market again.

On November 5th, SERES officially listed on the Hong Kong Stock Exchange, pricing at the maximum issuance price of HKD 131.5 per share, raising approximately HKD 14 billion in total, making it the largest IPO of a Chinese car company to date, and the largest car company IPO globally since 2025.

Such a luxurious start is due to Aito's strong performance in the high-end market. The flagship M9/M8's explosive popularity has captured the core profit pie of BBA, with sales skyrocketing, quickly rising to the top tier of new forces in just two years, becoming a phenomenal model for car manufacturing.

SERES's "refreshing turnaround script" in the new energy track and capital market is inseparable from Huawei's support. Many industry insiders view this as the core selling point of SERES's valuation of over 200 billion. This IPO in Hong Kong is also seen as an appraisal of "Huawei's car manufacturing."

However, after being supported by Huawei, SERES cannot expect to be carried further. This listing on the Hong Kong stock market is an opportunity for it to raise funds and seek revaluation.

According to the prospectus, SERES plans to allocate 70% of the IPO financing for research and development. This is seen as an important signal for SERES to strengthen its independent capabilities in key technological areas and reduce external dependence. Not long ago, SERES announced a partnership with ByteDance, preparing to enter the embodied intelligence track, seemingly with ambitions to become China's version of Tesla.

From this moment on, SERES aims to fight independently. Chairman Zhang Xinghai, throwing down the chips again, wants to take another gamble, seizing the high ground in the new round of industrial revolution, and turning SERES's fate around for the fourth time.

Capital Darling

Nine years ago, with a pricing of HKD 5.81 per share, Zhang Xinghai raised a mere 700 million in the A-share market, perhaps not even anticipating that the car company he leads would attract another round of capital market bets nine years later at a price 20 times higher.

On November 5th, the gong of the Hong Kong Stock Exchange resonated through the trading hall as the domestic new force luxury car star SERES officially landed on the Hong Kong stock market, walking the red carpet. This is the largest round of financing for a car company in Hong Kong this year. According to the allocation results, SERES's Hong Kong IPO raised approximately HKD 14.283 billion, with a net fundraising amount of about HKD 14.016 billion.

SERES is quite confident this time. Although it claims that the issuance price is discounted compared to the A-share market, the market's enthusiasm for subscriptions exceeding a hundred times during the offering period pushed SERES to ultimately choose to price at the upper limit. The price difference between the two markets is only 21.8%, leaving investors with little room for "gains."

Some investors believe that the issuance price of HKD 131.5 is relatively high and may put some pressure on SERES's stock price. However, some institutions point out that SERES, as a leading player in the new energy vehicle sector, has enormous potential, and the high issuance price also reflects the market's recognition of its future value. Because behind it, there are institutions willing to support its rise In this IPO, SERES attracted 22 cornerstone investors, with a total subscription of approximately HKD 6.42 billion, including Chongqing Industrial Mother Fund, Linyuan Fund, Huatai Capital, GF Fund, Sanhua Intelligent Control, Yunfeng Fund, Mirae Securities, and other industrial and financial capital as well as international long-term funds.

From the perspective of some securities practitioners, in the narrative of SERES's Hong Kong stock listing, the collaboration with Huawei's Aito has always been the core value label and is a key leverage for attracting international capital. In other words, institutions are largely paying for the "Huawei brand."

However, it is also an undeniable fact that SERES's performance has improved this year. In the current brutal industry competition, SERES's performance shows a slowdown in sales, but profits have increased instead of decreased. In the first three quarters, SERES recorded sales of 304,000 units, a year-on-year decline of 3.8%; however, revenue during the same period grew by 3.7% year-on-year, and net profit attributable to the parent company increased by over 30%, earning a staggering 5.31 billion yuan, approaching last year's total profit level.

Zhongtai Securities pointed out that the improvement in SERES's profits is mainly due to the growth of high-end models, with the sales proportion of the two high-end twin stars, Aito M9 and M8, reaching 65.5% in the first three quarters, while this figure was only 36.5% in 2024. This has caused SERES's gross profit margin to soar from 7.2% in 2023 to 29.5% in the third quarter of this year.

As of the end of October, the cumulative delivery volume of the Aito M9 series officially surpassed 250,000 units, setting a new record for the delivery of luxury models in China at the 500,000 level. It has maintained its position as the sales champion of luxury models above 500,000 for 18 consecutive months, completely ending the long-term monopoly of BBA in this field.

The high-priced flagship product has made Aito dismantle the key barriers of BBA and solidify its position in the luxury car sector. SERES's fortunes have also risen accordingly, and its fate has become deeply intertwined with Huawei. In the five years alongside Huawei, SERES's market value has increased by more than 12 times.

On the day of listing, SERES's market value once reached a high of HKD 220 billion, surpassing XPeng, Li Auto, Great Wall, Geely, Chery, and others, with only BYD ahead of it in the Hong Kong stock automotive sector.

Preparing for Rainy Days

Zhang Xinghai, who has been immersed in the business world for nearly 40 years and has dealt with capital countless times, knows that capital loves to "borrow an umbrella on a sunny day and collect it on a rainy day."

From a timing perspective, SERES's trip to Hong Kong coincides with the outbreak of Aito, bringing a turning point in profitability. Currently, high gross margins and improved profitability provide important support for SERES's listing in Hong Kong. However, this is also a phase where its internal capital structure is under pressure.

On the surface, backed by Huawei, SERES has become a "money-making machine." After experiencing cumulative losses of nearly 10 billion yuan over four consecutive years, the M9, which toppled BBA, allowed SERES to turn a profit last year, achieving a net profit of 5.946 billion yuan, becoming the fourth global new energy vehicle company to achieve profitability, and this year it has earned a windfall.

Miracles come at a cost.

According to the prospectus, SERES's procurement from its largest supplier "Supplier A" (Huawei) has shown a year-on-year growth trend. From 2022 to 2024, SERES's procurement from it increased from 5.8 billion to 42 billion yuan, accounting for 14.5%, 17.4%, and 30.2% of the company's total procurement. This proportion remained around 30% of revenue in the first half of this year In the new situation where the "Five Realms" converge, SERES has invested 11.5 billion yuan in cash to acquire a 10% stake in Huawei to further bind itself to Huawei and gain more reliable guarantees in technology, decision-making, and supply chain.

On the other hand, since 2022, SERES's sales expenses have consistently been more than three times its R&D expenses, far exceeding BYD's 0.45, Geely's 1.27, Xiaomi's 1.05, and Leapmotor's 0.74. In the first three quarters of this year, SERES's sales expenses continued to rise by 15% to 15.99 billion yuan, which is 3.2 times its R&D expenses during the same period.

This means that SERES needs more funds to support Aito's rapid operation. Industry insiders point out that although SERES currently appears to have ample cash on hand, a high proportion of structured deposits and restricted funds exists. The company indeed needs to obtain new funding through a listing in Hong Kong.

In addition to financial pressure, in the long run, SERES also wants to restructure its relationship with Huawei and move towards greater independence.

In the past, SERES was the "only child" of Huawei's smart selection vehicles, enjoying all of Huawei's technology, brand, and channel empowerment, which was the starting point of the Aito miracle. However, with the addition of other "Four Realms," SERES has transitioned from "only child" to "eldest son." Although the position of "eldest son" is currently stable, the risk of resource dilution objectively exists, as peers like the Xiangjie S9 and Zunjie S800 are also trying to carve out a share in the high-end market.

Although SERES still cannot do without Huawei at present, it wants to quickly step out of the shadow of the "big brother," and in fact, Zhang Xinghai has been planning this for a long time.

SERES's listing in Hong Kong was initiated as early as April this year, from submitting the listing application to receiving the overseas listing filing notice from the China Securities Regulatory Commission in September, then passing the Hong Kong Stock Exchange's listing hearing in October, and finally listing on November 5. SERES's IPO in Hong Kong has been rapidly advanced.

In addition to financing, another major purpose of SERES's secondary listing in Hong Kong is to use the new capital market stage to prove that it is not just a car company, but also a technology company.

New Narrative

The prospectus shows that SERES plans to use 70% of the net proceeds for R&D investment; 20% for diversifying new marketing channels, overseas sales, and charging network services to enhance global brand awareness; and 10% for working capital and general corporate purposes.

For SERES, standing on the Hong Kong Stock Exchange not only provides an additional financing channel but also helps to expand its overseas market, adding fuel to its independence.

The prospectus clearly states that the company needs to establish a more open valuation system through the Hong Kong Stock Exchange to support its globalization strategy and further reduce its reliance on the domestic credit system and A-share financing channels. The choice of Hong Kong as the listing location also aligns with the rhythm of the Aito brand's plan to go overseas and seek growth opportunities in Southeast Asia and the Middle East.

However, to truly achieve independence, SERES needs to develop its core capabilities.

Specifically, R&D investment will focus on three directions: first, upgrading the "Magic Cube" platform architecture; second, increasing investment in intelligent driving algorithms and the HarmonyOS cockpit system; and third, developing the next generation of electric drive and range extension systems.

In terms of R&D expenditure, SERES has already invested nearly 5.2 billion yuan in the first half of the year. Zhang Xinghai also stated that this year, 5 billion yuan will be invested to build its own R&D center. His "open strategy" points to one of the hottest tracks this year—embodied intelligence In October this year, SERES announced that its wholly-owned subsidiary signed a "Embodied Intelligence Business Cooperation Framework Agreement" with ByteDance's Volcano Engine, laying out plans in the smart robotics sector. This is because Zhang Xinghai has sensed the opportunity.

At NVIDIA's annual shareholder meeting in June this year, Jensen Huang emphasized that AI and robotics technology are the two biggest growth opportunities, representing a growth potential worth trillions of dollars. Morgan Stanley predicts that by 2050, there will be a cumulative deployment of 1 billion robots globally, with a market size reaching $5 trillion. This figure is approximately twice the total revenue of the 20 largest automotive manufacturers worldwide last year.

Industry insiders believe that automotive companies have an inherent first-mover advantage in the manufacturing and application of humanoid robots. Companies like XPeng and Changan have also jumped on the humanoid robot bandwagon. Musk regards his humanoid robot "Optimus" as the core of Tesla's future value, aiming to first disrupt the production model of its own factories.

Clearly, SERES also wants to extend into the robotics sector through in-car AI, attempting to replicate Tesla's ecological transition from automobiles to humanoid robots. This cross-industry move may open up a trillion-dollar market space for SERES. On the day of its listing, Zhang Xinghai revealed that SERES is exploring the implementation of AI+, aiming to drive the company's transformation into a technology-oriented enterprise.

Some sell-side analysts believe that the compound annual growth rate of net profit for automotive parts will only be 12% by 2025; whereas the compound annual growth rate of shipments in the robotics sector from 2025 to 2027 is expected to be 60%. With a 10% cost reduction in automotive-grade components and endorsements from major manufacturers, SERES could raise its net profit compound annual growth rate to 45%.

CITIC Securities bluntly stated that SERES is expected to become China's Tesla. Southwest Securities pointed out that, referring to Tesla's 50% jump in market sales ratio after the 2022 robot launch event, SERES's valuation is likely to continue increasing to over 30-40 times.

It can be said that SERES is actively seeking change at the peak of its performance, using a grand narrative about the future to hedge against potential growth bottlenecks and identity anxiety in reality. This is another bold gamble by Zhang Xinghai, as SERES's success has been achieved through repeated "bets" on decisions.

This time, he aims to make the market reassess SERES's long-term value, transforming this rising star in the new forces into a technology company with real potential to lead future industrial transformation, rather than merely being seen as a "Huawei concept stock."

If SERES can successfully break through, it will pave the way for Chinese automotive companies to transition from technological dependence to ecological leadership. This path is bound to be fraught with challenges, but it is also full of infinite possibilities