Chery races through the grasslands.

Article | Mr. Li on Financial Street

Chery Automobile, which has seen a significant increase in sales this year, has been holding family banquets all over the country. Unlike in previous years, this year’s family banquet is the first joint gathering of the Chery Holding Group, Chery Automobile, Xingtu Automobile, Jietu Automobile, and Chery New Energy. For the low-key Chery, the external posture has changed, and it seems that there is a courage to show its true strength.

Chery’s recent development is indeed impressive. Its technology remains solid, and its sales are continuously improving. At the same time, Chery is becoming increasingly adept at marketing. Meanwhile, in the capital market, there is news concerning Chery. Based on Mr. Li’s recent observations, Chery is likely to embark on a “flowering everywhere” IPO path. In the next few years, Chery Holding is expected to have several listed companies.

Therefore, today, Mr. Li will talk again about why now is the best time for Chery’s listing, what Chery’s IPO strategy is, and how the secondary market views Chery’s listing.

The Best Time for Listing in History

As we enter 2023, Chery has been a key enterprise of Mr. Li’s attention. On the one hand, Chery’s performance is impressive and has the potential to rival Geely and Great Wall. On the other hand, Chery’s continuous moves in the marketing field, especially the “marketing for all” model, has shown a different Chery. Li Xueyong, Assistant General Manager of Chery Automobile Co., Ltd., General Manager of Chery Automobile Marketing Co., Ltd., and General Manager of Jietu Automobile, also mentioned at the family banquet that based on the brand and technology, through “new products and innovative marketing,” Chery is transitioning and upgrading from “Chery of technology” to “Chery of science and technology.”

In “Chery IPO: From technical men to commercial men?”, Mr. Li mentioned that there are two critical moments for a car company’s IPO: the timing of the capital market, and the timing of the company itself. If the company conditions are met, but the timing of the capital market is not good, the company’s valuation will not be good after listing, and the elasticity will not be too good, as seen from the case of NIO last year. If the timing of the capital market is met, but the company’s own conditions are not enough, the listing cannot be realized, which is what happened to Chery in the past.From Chery Holding Group’s perspective, there are increasing signs that Chery is approaching the best time for an IPO, starting this year. In 2022, Chery Group achieved four “historic firsts”:

  • The first is that annual revenue exceeded RMB 200 billion for the first time, achieving the best performance in Chery’s 25-year history. Annual revenue exceeded RMB 200 billion, surpassing Geely Automobile and Great Wall Motors.

  • The second is that annual sales exceeded one million vehicles for the first time, achieving a new historical high of 1.23 million vehicles for the year. This means that Chery has stepped into the first-tier lineup of independent brands.

  • The third is that annual exports reached a new milestone of 450,000 vehicles, refreshing the “going global” record of Chinese brand passenger cars, and remaining the top exporter of Chinese brand passenger cars for 20 consecutive years. It is well known that the performance in overseas markets will determine the market value trend of Ningde Times and also bring good news to Chery’s IPO.

  • The last milestone is that annual new energy vehicle sales exceeded 200,000 vehicles for the first time, achieving a year-on-year doubling to 230,000 vehicles. Although Chery’s voice is not high in the field of new energy vehicles, the actual sales volume of 200,000 vehicles exceeds that of “Tesla Xiaoli”.

In recent years, Chery’s financial reports have not been visible, but according to internal sources, since 2019, Chery Group’s financial reports have shown a trend of improvement for consecutive years, especially in 2022, when Chery achieved its best performance since 1997.

At the same time, Chery has also accelerated its pace in the field of new four revolutions. In 2022, it launched the “Yao Guang 2025” forward-looking technology strategy, planning to invest RMB 100 billion in technology research and development in the next five years and establish 300 Yao Guang laboratories worldwide, with a focus on breaking through the 13 core strategic technologies in the fields of chips, three-electricity, intelligent cabins, and automatic driving. It can be seen that technology is still the foundation of Chery’s development.

In January 2023, Chery’s new car sales exceeded 100,000 vehicles. According to this trend, Chery will continue to maintain its current development trend. According to the official statement, “Entering 2023, Chery Group will strive to achieve a greater leap in sales, revenue, market share, and other indicators than in 2022, with a strategy of steady progress and an ‘acceleration’ far exceeding the industry’s average growth rate.” This provides support for Chery’s path to listing.

Chery sales and revenue chart

Chery’s IPO Strategy

Industry and capital market trends indicate that Chery is facing the best opportunity for an IPO in its history. However, up to now, Chery has not announced its listing strategy to the public. Whether Chery Holding will go public as a whole or split its subsidiaries for listing, and whether it will list on the A-share main board or the Science and Technology Innovation Board, are all unknown variables, leaving much room for speculation within the industry.

Internally, Chery is also discussing this topic, because the IPO strategy is not entirely decided by the enterprise. It must take into account the operating conditions of the listing subject, consider the restrictions imposed by the stock exchange, and consider the listing strategy given by the coaching institution.

Mr. Li’s opinion is that Chery has a greater chance to split for listing compared to the “hodgepodge” of Chery Holding going public as a whole.

It needs to be explained that Chery here refers to Chery Holding, which covers six major sectors including automobiles, auto parts, real estate, finance, services, and intelligentization. The automobile sector, including Chery passenger cars and commercial vehicles with more than 10 brands, is the largest sector under Chery Holding, while the auto parts sector is mainly represented by Chery Technologies with over 90 subsidiaries, and the financial sector is mainly represented by Chery Huiyin.

Currently, there are three listed companies under Chery Holding, namely Bortle, EFT and Ruihe mold, with Bortle being the first main board listed company under Chery Holding, engaging in the R&D, manufacturing, and sales of automobile safety systems and advanced driving assistance systems, with a total market value of over 30 billion yuan. EFT is a leading domestic enterprise in the industrial robotics industry.

Undoubtedly, the advantage of splitting for listing is speed. Chery can establish a set of companies that conform to the “listing echelon”, where Chery Automotive and Chery New Energy under the car sector, and Chery Huiyin under the financial sector, are all high-quality companies for listing.

Since the mixed ownership reform, with the entry of new shareholders like Luxshare Precision and others, Chery’s actions in the capital market have increased. Last year, a subsidiary of NIO Power also participated in the shareholding of Chery Holding. With shareholders such as Luxshare Precision and NIO Power joining in, attention on Chery in the capital market will increase even further.

Many of Chery’s supporters believe that Chery Automotive is likely to choose to list on the A-share main board, Chery Huiyin is likely to go public in Hong Kong, while Chery New Energy is likely to choose the Hong Kong Stock Exchange and the Science and Technology Innovation Board. Compared to a series of auto parts companies, these three core businesses are Chery’s most imaginative businesses.

From the perspective of difficulty level, Chery Huizhong’s IPO in Hong Kong is easier, the key is valuation. Li’s friend has done IPO counselling for Chery Huizhong before, and Chery Huizhong has always maintained profitability, making it a better quality listing target than Chery Automobile and Chery New Energy.

Among several entities, Chery New Energy has the greatest difficulty in going public. It is well known that the profitability of the new energy vehicle sector is not good at present. Although Chery New Energy had good sales in the past year, its main products are still economic cars. In addition, Geely Automobile and WmAuto Automobile have failed to enter the STAR Market, which makes Li hold a reserved attitude towards Chery New Energy’s attempt to enter the STAR Market.

Currently, Chery Holdings lacks a high-end new energy brand. Chery previously announced plans to release the iCar automotive brand before the Shanghai Auto Show. The iCar vehicle focuses on the A0-B level pure electric and extended-range new energy markets, providing users with a more diverse ecological new experience with new products and new modes, aiming to create a technological high-end brand, which is the best way for Chery to improve its valuation.

Chery in the Secondary Market

When it comes to Chery, the secondary market’s impression is “low-key” or “unfamiliar”. On the one hand, because Chery is not listed, it is impossible for the secondary market to pay comprehensive attention. On the other hand, because Chery is in third- and fourth-tier cities, its degree of attention is not high.

Currently, the automotive sector in China’s secondary market is facing many changes. On the one hand, as leading domestic enterprises such as Geely, Great Wall, and Changan gradually enter a period of stable growth, the value space of leading domestic enterprises is decreasing, while smaller-sized companies such as Jianghuai Automobile are in the secondary lines. On the other hand, as electrification and intelligence enter the deepwater area, the mining space of China’s electrification industrial chain enterprises is decreasing. In this situation, the domestic automotive sector urgently needs to have new incremental listed enterprises, and Chery is one of the few enterprises.

Domestically, the primary capital market also holds a relatively optimistic attitude towards Chery. In the past three years, Chery has made continuous efforts in the primary market, successfully realized mixed ownership reform, which is a type of transformation. Whether it is the previous Qingdao Wudaokou or Lixun Precision later, or the current Ningde Era, the capital side wants to promote the business restructuring and industrial chain’s upstream and downstream integration of Chery, which provides opportunities for Chery’s accelerated development, which is the external environment.Actually, external environment and internal strategy complement each other. For a small and medium-sized enterprise like Chery Holdings, the role of external environment is often greater than that of internal strategy. Therefore, the development of Chery Holdings will determine the development of its own enterprise. If the enterprise develops well, listing will naturally come. Just like the current Beiteli, with the development of Chery Automobile, its market value has been soaring.

Beiteli K-line chart

For large-scale Chery Automobile or Chery New Energy, the importance of internal strategy is often greater than that of external environment. After more than 20 years of development, Chery has indeed taken many detours. However, in the past three years, Chery seems to have returned to the right track. Especially after the mixed-ownership reform, Chery’s performance has continued to break through, showing a momentum of catching up with the three major domestic car makers.

The capital market also values Chery’s internal strategy. Frankly, the current automobile assets are not valuable. Five years ago, having the qualification to make cars was a hot commodity, three years ago, automobile production capacity was a hot commodity, but now neither qualification nor production capacity can be sold at a good price in the capital market. What the market really lacks is well-managed and quality assets, and Chery with a clear internal strategy can be counted as a quality asset.

Over the years, Chery’s position in the automobile industry has remained unchanged. In the industry, no matter it’s a big event or a small one, Mr. Yin’s ranking is always at the forefront. Unlike FAW and Dongfeng, which are full of the fetters of state-owned enterprises, or Geely and Great Wall, which are purely private, as a local enterprise, Chery is looking for a unique way of development, and listing is not its ultimate goal. Development is the ultimate goal. Under this background, Chery’s road to listing is inevitably tortuous.

In the future, if Chery wants to achieve great development, it must shoulder the banner of reform and technology, use reform to promote internal strategy, and use technology to improve capital expectation. Old Li believes that under the trend of electrification and intelligence, all enterprises will move towards the direction of BYD or Tesla. At this stage, everyone is competing for speed. Undoubtedly, listing will be the key node to promote Chery’s development to the next stage.# 测试标题

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This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email