Chinese electric vehicle (EV) maker Nio has joined a growing list of overseas companies with a secondary listing on the Singapore Exchange.
Founded in 2014, Nio is a Chinese multinational automobile company that manufactures premium battery EVs, with some of its models among the top-selling by sales volume in their respective categories last year in China. Nio has just five EV models but has already established itself as a formidable contender to some of the existing large EV players in China, such as BYD and Tesla.
Nio currently has a main listing on the New York Stock Exchange (NYSE) and a secondary listing on the Hong Kong Stock Exchange (HKSE) that started in March this year.
The company’s interest in secondary listings stem from an attempt to mitigate possible delisting risks, in light of how Nio and several other US-listed Chinese companies were added to a US Securities and Exchange Commission (SEC) list of firms facing possible delisting from American exchanges. These companies are to be subjected to strict auditing rules, as the US moves to clamp down on Chinese regulators, repeatedly denying requests from the Public Company Accounting Oversight Board to inspect the audits of Chinese firms that list and trade in the US.
Nio’s SGX listing came just two months after it had already hedged its listing status by listing on HKSE. When asked why, William Li, Nio’s founder and CEO, says he has considered venturing into Singapore for a while now, for greater exposure to different markets. “We believe that Singapore has a good talent pool and the relevant technology and resource expertise to support Nio’s business moving forward,” he said in an online briefing on May 20.
“Singapore is a strong and promising enterprise hub, which is attractive to Nio,” Li added. Previously dubbed the “Elon Musk of Asia”, Li is also the founder of Bitauto Holdings, a provider of web content for the automotive industry, which he sold in 2013. His current net worth is US$2.5 billion ($3.43 billion), according to Forbes.
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Nio is also aware of Singapore’s sustainability goals and intent to work towards making every HDB town EV-ready by 2025 while completely phasing out petrol-based vehicles by 2040. Given such a large national goal, Nio is determined to grab a piece of the pie and believes that its listing in Singapore is somewhat strategic. Nio also has Singapore sovereign fund Temasek Holdings as an investor.
Thus far, Nio EVs are not sold here, but Li explains that the company is figuring out what might fit this market. Li is confident that the company’s long-standing partnership with Temasek as well as several leading Singapore-based firms can help it penetrate into and grow in the Singapore and regional markets.
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For now, Nio is busy with its other markets. Nio has offices in eight cities across three continents — four in China, with its headquarters in Shanghai; three in Europe, with Oslo, Norway, being its latest European addition; and one in San Jose, US. Nio established the first battery swap station in Norway earlier this year, and plans to install 4,000 battery swap stations, including 1,000 outside China, by the end of 2025.
Not a dividend play
Nio, just like several other Chinese companies listed in the US, is not profit-making. In its latest FY2021 ended December 2021 results, the company registered a loss of RMB4.0 billion ($823.9 million), narrowing from RMB5.3 billion a year ago. This came on the back of revenue more than doubling y-o-y to RMB36.1 billion.
Expenses, however, have remained high, with total operating expenses in FY2021 coming in at RMB11.3 billion, higher than RMB6.5 billion a year ago.
Just like most tech companies, Nio has no plans to pay out any dividends — at least not for the foreseeable future. When asked how Nio intends to attract investors without any dividends, Li explains: “Several other large companies have managed to gather investor interest without giving out dividends, thanks to their innovative aspects. We have recently registered positive cash flow and we believe that most investors are interest in cash flow gains.”
Li adds that he will be wooing investors with the opportunity to invest in the company’s advanced digital technology, online platforms, as well as innovative strategies.
Nio aims to expand quickly across various markets globally. To fund the growth, its gearing level has reached a high 57.9%. Li is aware of this and assures that the company will take a cautious stance in managing funds within its means. “Nio will continue to strive to achieve balance in [financials], and not go overboard [with borrowings] to sustain the company,” he says.
Thus far, investors have not taken to Nio’s SGX listing too warmly. On May 20, it started trading at US$17.30 and rose as high as US$18.43 on the same day, but has since then been on a downward trend to close at US$15.30 on May 25.
