Chinese regulator approves Leapmotor's IPO plan

Yusin Hu, DIGITIMES Asia, Taipei 0

Credit: Leapmotor

Following a 177% on-year growth in electric vehicle (EV) delivery in July, Leapmotor was granted approval by the China Security Regulatory Commission (CSRC) on August 19 to issue shares in Hong Kong.

The China-based Leapmotor delivered 12,044 EVs in July 2022 to reach a record high for the third month in a row. For the first seven months of 2022, the carmaker delivered 64,038 units in total.

Chinese EV startups XPeng and Li Auto delivered 80,507 and 70,825 units respectively in the first seven months of 2022.

Leapmotor is an EV startup established in China in 2015 by Dahua Technology co-founder Zhu Jiang-ming.

Table 1. Leapmotor EV deliveries, January-July 2022

Source: Leapmotor

According to official papers from HKSE, the company posted CNY116.9 million (US$17.13 million) in revenue in 2019, and its revenue leapt to CNY3.13 billion in 2021.

The company's R&D expenses doubled from 2019 to 2021. In the same timeframe, IFRS-adjusted net loss widened from CNY901 million to CNY2.85 billion.

Table 2. Leapmotor net loss, 2019-2021

Source: HKSE and Zhejiang Leapmotor Technology

According to the investor relation report this month by one of the carmaker's major stakeholders, Dahua Technology, Leapmotor has adopted sensors and ADAS systems developed by Dahua's subsidiary Hirige.

Dahua also revealed that its investment loss in Leapmotor increased from CNY165 million in the first half of 2021 to CNY209 million in the second half of 2022. However, Dahua expected Leapmotor's performance to improve in the fourth quarter of this year as car delivery continues to grow and its IPO in Hong Kong proceeds.

Chinese media Sina reported that Leapmotor plans to use 40% of the IPO funds in R&D, 25% in production expansion, and 25% in business and marketing. The company claimed to have a "full-suite R&D capabilities," with which it plans to develop and manufacture in-house the algorithm, operating systems, power systems, battery packs and modules, battery management systems, AD control units, and vehicle bodies.

Of all components of the vehicle, Leapmotor will source battery cells and car interiors and exteriors from third-party suppliers, while chassis and vehicle electronics will be developed in-house and produced by outsourced manufacturers.

Since 2019, the company has launched four models including the latest sedan C01 and plans to launch seven more models by 2025.