EV maker Li Auto passes HKEX review for secondary listing

US-listed Chinese carmaker Li Auto Inc has passed a review and is ready for a secondary listing at the Hong Kong stock market, according to a document released by Hong Kong Exchanges and Clearing (HKEX) on Monday.

This will make Li Auto the second US-listed Chinese electric vehicle (EV) first-tier brand to list on the Hong Kong capital market after XPeng Motors. The latter passed its hearing at the HKEX in June and was listed on July 7.

The “return” of US-listed Chinese leading EV brands to Hong Kong is a way to broaden their financing channels and reduce financing risks under the increasingly stringent scrutiny of the US regulators.

Li Auto’s shares closed at $30.28 on Friday on the NASDAQ, with a market value of $27.39 billion. Li Auto listed in the US stock market on July 30, 2020, following Nio and XPeng.

The EV brand will need to accept joint supervision by the US Securities and Exchange Commission and the Securities and Futures Commission of Hong Kong after the dual listing.

“The US’ crackdown on Chinese companies and launch of the Holding Foreign Companies Accountable Act, which allows access to Chinese companies’ audit working papers, has increased the regulatory risks for Chinese stocks listed in the US,” Dong Dengxin, director of the Finance and Securities Institute of Wuhan University, told the Global Times on Monday.

Therefore, some large-cap Chinese companies are seeking secondary listings at a market nearing home, Dong said.

In addition to XPeng and Li Auto, Nio plans to list in Hong Kong this year.

The dual listing will help companies raise more funds for long-term development amid the accelerated expansion of the Chinese EV market, Dong said. Industry practitioners predicted that Li Auto could raise more than $1 billion on the Hong Kong stock market.

Li Auto’s first-quarter revenue totaled 3.58 billion yuan ($545.7 million), up 319.8 percent year-on-year and up 13.8 percent quarter-over-quarter, according to its results released in May.

The company delivered a new monthly high of 7,713 Li ONEs in June, up 320.6 year-on-year and up 78.4 percent quarter-on-quarter. As of June 30, it delivered over 63,000 Li ONEs.

In June, Chinese carmakers sold 256,000 new-energy vehicles (NEVs), a year-on-year increase of 139.3 percent, according to the China Association of Automobile Manufacturers.

In the filing documents that Li Auto submitted to the HKEX, the company anticipated that NEVs would make up 22 percent of all passenger-car sales in China by 2025, compared to 5.8 percent in 2020, which means huge growth potential for the sector, even though China is already the world’s largest NEV market.

Source: Global Times

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