Author | Eastland header image | Visual China If Huawei and Changan Automobile signed a memorandum of understanding in November 2023, it was equivalent to an "engagement"; in January 2024, Huawei registered Shenzhen Yinwang, which was regarded as the purchase of a "wedding house"

Author | eastland

If Huawei signed a memorandum with Changan Automobile in November 2023, it would be equivalent to an "engagement"; in January 2024, Huawei would register Shenzhen Yinwang, which would be regarded as the purchase of a "wedding house"; August 20, 2024 , signing the "Equity Transfer Agreement" is "receiving the certificate".

On August 23, 2024, the board of directors of Thalys (sh:601127) approved the proposal to purchase a 10% stake in Huawei from Huawei for 11.5 billion. On the same day, Cyrus Automobile (a wholly-owned subsidiary of a listed company) signed an "Equity Transfer Agreement" with Huawei and Yinwang. Although

is only 3 days behind Changan Automobile, it can only be ranked second. Thalys is not satisfied.

tasted the sweetness

On June 15, 2016, Xiaokang shares (code sh: 601127) were listed for trading. The year

was launched, the sales volume was about 380,000 units, and the following year it exceeded 400,000 units. Then began a long decline, with sales reaching 252,000 units in 2023, a 37.6% drop from 2017, with an average annual decline of 7.55%.

Although sales continue to decline, the product structure has undergone earth-shaking changes:

New energy vehicle sales will be approximately 9,000 units in 2019, accounting for 2.8% of total sales;

New energy vehicle sales will surge to 135,000 units in 2022, accounting for 50.5% of total sales;

The sales volume of new energy vehicles in 2023 will reach 151,000 units, accounting for 60.2% of the total sales; only half of the annual sales target of 300,000 units will be completed.

Among all the car companies that have produced fuel vehicles, in terms of the proportion of new energy vehicles in sales, BYD ranks first (100%), followed closely by Cyrus.

) The Thalys brand has delivered a total of 450,000

Xiaokang stock price new energy vehicles. The rise of new energy vehicles depends entirely on the Thalys brand. On August 2, 2022, the listed company simply changed its name to Thalys.

In 2021, sales of new energy vehicles will be 41,000. Among them, there are 11,000 Cyrus vehicles (2,200 vehicles in the first half of the year and 8,800 vehicles in the second half of the year), accounting for 26.6%;

In 2022, sales of new energy vehicles will surge to 135,000 vehicles. Among them, 80,000 Cyrus vehicles were sold (22,000 vehicles in the first half of the year and 58,000 vehicles in the second half of the year), accounting for 59.3%;

In the first three quarters of 2023, Cyrus sales were tepid, with monthly deliveries hovering below 5,000 vehicles; 9 The new M7, launched in March, was a great success. In 2023, Q4 Cyrus sales reached 66,000 units.

Q1 and Q2 Cyrus will continue to sell well in 2024; 98,500 units were delivered in the second quarter, accounting for 92.9% of the total sales of new energy vehicles;

In July 2024, sales of the Cyrus brand exceeded 40,000 units, accounting for 92.9% of the total sales of new energy vehicles. 95.5%.

As of the end of July 2024, the Thalys brand has delivered more than 450,000 vehicles.

double dividends, scale + high-end

is positioned in the mid-to-high end, with considerable sales volume and high gross profit margin. Cyrus has reaped the double dividends of scale + high-end.

) Bicycle prices

• The volume and price of new energy vehicles are rising

• Fuel vehicles are shrinking rapidly

In 2021, the sales volume of fuel vehicles will be 225,000 units, with an average ex-factory price of 45,000 yuan;

In 2022, the sales volume of fuel vehicles will drop to 132,000, with an average ex-factory price of 4.8 10,000 yuan;

In 2023, 101,000 fuel vehicles were sold, with an average ex-factory price of 45,000 yuan;

) Gross profit margin exceeded BYD

In 2016, the gross profit of the automobile business was 2.76 billion, with a gross profit margin of 18.4%; the gross profit of a single vehicle was close to 7,300 yuan;

In 2017, the gross profit of the automobile business was 4.2 billion, with a gross profit margin of 21.7%; the gross profit of a single vehicle was 10,400 yuan;

In 2018, the gross profit of the automobile business was 3.98 billion, with a gross profit margin of 22.5%; the gross profit of a single vehicle was more than 10,000 yuan;

In 2019, The gross profit margin of the automobile business fell back to 15.6%;

In 2020, the gross profit of the automobile business was only 270 million, the gross profit margin was less than 2.2%, and the gross profit of a single vehicle fell below 1,000 yuan!

In 2021, the gross profit of the automobile business increased significantly to 3.86 billion, but the gross profit margin was still 2.2%; of which the gross profit margin of new energy vehicles was 1.9%, and the gross profit margin of other models was 2.2% (disclosed separately for the first time).

In 2022, the gross profit margin of the automotive business will rebound to 11.2%. Among them, the gross profit margin of new energy vehicles is 13.1% and the gross profit of single vehicles is 24,000 yuan; in 2023, the gross profit margin of the automobile business is 9.5%. The gross profit margin of new energy vehicles is 9.9%, and the gross profit of single vehicles is 19,000 yuan.

In 2024 h1, car sales surged by 156%, and gross profit margin increased significantly to 25% (h1 in 2023 was only 6.3%). is 1 percentage point higher than BYD!

In 2017, Thalys’ sales volume and gross profit margin exceeded 400,000 units and 20% respectively, and then it suffered losses for six consecutive years (excluding non-profits).

In 2024, non-net profits for Q1 and Q2 will be 110 million and 1.32 billion respectively.

Throughout 2024, Sales of Cyrus are likely to exceed 500,000 vehicles, and non-net profit is expected to reach a record high of 5 billion yuan.

The valuation is reasonable and unreasonable

Huawei Smart Car Solution BU (hereinafter referred to as BU) was established in May 2019. It is positioned as an incremental component supplier for smart connected cars, providing smart driving and Hongmeng cockpit to OEMs. and other product solutions, and to be "Bosch in the era of smart electric vehicles".

On January 16, 2024, "Shenzhen Yinwang Intelligent Technology Co., Ltd." ("Yinwang") established by Huawei obtained the "Business License". Yinwang has a registered capital of 1 billion yuan, with Huawei holding 100% of the shares.

After securing strategic investors, Huawei plans to inject five major businesses, including smart driving, smart cockpit, smart car control, smart car cloud and smart car lighting. It is expected to complete the "loading" of related businesses in 2024.

"Huawei's car valuation is only 100 billion? So low!" You are right to think so. Compared with wework,

is ridiculously underestimated. But Changan Automobile and Thalys are A-share listed companies, not Masayoshi Son, and there are greater risks in investing at a valuation of 100 billion.

Yinwang’s valuation is based on simulated statements (Huawei’s related businesses are regarded as independent entities).

In 2022, revenue is expected to be 2.1 billion. Among them, hardware is 1.44 billion, accounting for 68.9%; software/services is 650 million, accounting for 31.1%;

is expected to generate revenue of 4.7 billion in 2023. Among them, hardware is 2.6 billion, accounting for 55.2%; software/services is 2.1 billion, accounting for 44.8%;

h1 in 2024 is expected to generate revenue of 10.4 billion. Among them, hardware is 6.1 billion, accounting for 58.4%; software/services is 4.34 billion, accounting for 41.6%;

From 2022 to 2024 h1, it is expected that the gross profit margin of the two types of businesses will double, which is impressive:

In 2022, hardware, Software gross profit margins are 14% and 25% respectively; in 2023 they will increase to 16% and 25% respectively; in 2024 h1, they will increase to 33% and 86% respectively; the comprehensive gross profit margin of

two businesses will increase from 18% in 2022 Increase to 55% of h1 in 2024.

) Highly dependent on Cyrus

Yinwang camp network is extremely high. In 2023, the five largest customers will contribute 89.5% of revenue; in h1, 2024, the contribution rate of the five largest customers will increase to 90.6%. The "Customer A" with the highest proportion among the five major customers of

is none other than Cyrus. In 2024, h1 will contribute revenue of 6.6 billion, accounting for 63.4% of Yinwang’s revenue (the proportion in 2023 will be 51%).

Using the sales volume of the Sailis brand in 2024 (183,000 vehicles) as the denominator, it can be calculated that each vehicle sold will contribute 36,200 yuan in revenue to Yinwang (22,500 yuan in 2023).

) Abandon the income method

Zhongjing Minxin used the asset-based method and the market method to evaluate 100% of Shenzhen Yinwang's equity. The result of the

asset-based method is: as of January 31, 2024, the net asset value of Shenzhen Yinwang is 19.85 billion (including fixed assets and intangible assets). The valuation result of

market method is: as of January 31, 2024, Shenzhen Yinwang is worth 115.25 billion.

Among the 6 listed companies selected, 3 have been profitable (excluding non-profits) for 10 consecutive years, 2 have been profitable for 7 years, and the shortest is 4 years (8 years on average). Shenzhen Yinwang will lose 7.6 billion and 5.6 billion in 2022 and 2023 respectively, and its h1 net profit in 2024 will be 2.23 billion. # A novice with a half-year driving license vs. an experienced driver who has been driving safely for 8 years #

In the end, Zhongjing Minxin selected the market method evaluation results as the evaluation conclusion (Jingxin Pingbao Zi 2024 No. 508).

The valuation method (income method) based on the expected future income of assets is more scientific, rigorous and has a wider application range. The most prominent advantage of the market method is simplicity!

Zhongjing Minxin’s explanation of the abandonment income method is:

Shenzhen Yinwang’s revenue structure accounts for a high proportion of the Saili period; the next step of cross-border integration and collaborative innovation will be highly uncertain if it evolves; Shenzhen Yinwang’s partners and customers There may be major changes in the structure, personnel composition, business model and equity structure in the future. Therefore, predictions cannot be made reliably and reasonably.#The income method is good, but it can’t be used #

There is another point:

Huawei promises not to develop, produce and sell products, system solutions and services that are the same or substantially similar to the introduction business within eight years; it will not use OEM, ODM, etc. model or covertly engage in business within the scope of competition by providing technical services, consulting, etc.; do not engage in business within the scope of competition by supporting third parties.

If the non-competition agreement is lifted, the valuation of Yinwang will be greatly affected. Therefore, using the income method for valuation can only estimate the income in the next eight years, and there is also the condition that "Huawei will not reduce its holdings to less than 5%."

The variables are too large to be valued using the income method. It is an authentic venture capital investment and is very suitable for Son Zhengyi’s appetite.

) Sustainability is worrying

In the past two and a half years, Shenzhen Yinwang’s key data such as revenue, gross profit, and gross profit margin have grown by leaps and bounds, but the sustainability of its liquidity needs to be verified over time.

Shenzhen Yinwang is like a video website.

"Youaiteng" spends huge sums of money to purchase/self-produce content, forming a huge copyright reserve and attracting paying members. Yinwang has invested heavily in research and development, forming huge intangible assets, and customers of Cyrus are equivalent to "members".

’s research and development expenses will be 766,000 in 2022, 718,000 in 2023, and h1 in 2024 will be 342,000, totaling 18.3 billion in two and a half years. During the same period, BYD's R&D expenses were 77.8 billion, 4.25 times higher than expected. h1 in 2024, BYD's research and development expenses are 19.6 billion, which is 5.75 times that expected.

Although Chebu was only officially established in 2019, Huawei will have to push forward at least five years to start research and development. In addition, Chebu is an integral part of Huawei and can "borrow light" and "borrow strength" in terms of talents, technology, facilities and other aspects. After

Shenzhen Yinwang is "uprooted", it will have to bear its own profits and losses and raise its own R&D expenses. It will be difficult to invest 10 billion in R&D in 2024.

If a certain company in Youai Teng only invests 10 billion in content every year and others invest 40 billion, no matter how strong the "literary cells" are, they will eventually be at a disadvantage.

Thalys strives to be the "eldest wife"

) It is not hot to attract equity

First, the new company's business scope includes: intelligent driving solutions, intelligent cockpits, intelligent car digital platforms, intelligent cloud, ar-hud and intelligent car lights etc. (The above are all automotive business, the specific scope shall be subject to the final transaction documents).

Second, Huawei will inject relevant technologies, assets, and personnel within the above-mentioned business scope into the new company (there are 7,000 automotive R&D personnel alone).

Third, Huawei promises "not to engage in business that competes with the target company's business scope."

Fourth, Changan Automobile plans to invest in acquiring equity in the new company, with the proportion not exceeding 40%.

On May 7, 2024, Changan Automobile issued an announcement saying:

In view of the importance and complexity of the project and the need for internal procedures for all parties to the transaction, the project progress is somewhat delayed compared to the estimate in the "Memo." According to the latest project progress, the company expects to sign the final transaction documents no later than August 31, 2024.

On August 20, 2024, Avita Technology (Changan Automobile holds approximately 39% of the shares) signed an "Equity Transfer Agreement" with Huawei, agreeing to purchase 10% of the equity from Huawei, with a transaction amount of 11.5 billion.

( Note: Avita is a company in which Changan Automobile holds shares, formerly "Changan Weilai " established in July 2018 (each party holds 50% equity); in 2020, Li Bin stepped down as chairman; in 2020 November In May, Changan Automobile announced that it would jointly build a high-end brand with Huawei and Ningde; in May 2021, it will be renamed Avita Technology. According to the 2023 memorandum, Changan Automobile can obtain up to 40% of the equity of Shenzhen Yinwang. However, in August 2024, Changan Automobile only subscribed for 10% of Shenzhen Yinwang's equity through its associate Avita (Changan Automobile indirectly held 4%).

If you believe that the investment returns are considerable, you should directly hold shares and strive for as much equity as possible. Changan Automobile's actual ability is to "downgrade" from directly obtaining 40% to indirectly holding 4%.

) Cyrus is active everywhere

Cyrus purchased Yinwang’s equity as a wholly-owned subsidiary, and Changan Automobile held 40% of the shares through an associated company

In addition, there are many details showing Cyrus’s enthusiasm:

• Yinwang’s valuation

Changan Automobile only disclosed that the consideration for purchasing 10% of Yinwang’s shares was 11.5 billion (the corresponding valuation was 115 billion). The pricing is based on the "Asset Appraisal Report" issued by "Beijing Zhongqihua Asset Appraisal Company" (Zhongqihua Zi 2024 No. 6499), but no details were disclosed.

Thalys disclosed the full text of the "Asset Assessment Report" issued by "Zhongjing Minxin (Beijing) Asset Estimation Company" (Jingxin Pingbao Zi 2024 No. 508), and the assessment result is 115.25 billion.

Two independent institutions separately evaluate a 100-billion-level (12-digit) target, just like Zhang San and Li Si counting how many hairs there are on the same cow. Damn if the results are highly consistent.

A more likely situation is that the parties negotiate and use one of the evaluation reports as the standard, and the other one is simply not disclosed, to avoid triggering material disputes .

• Price payment

Changan Automobile and Cyrus will pay in three installments and set payment prerequisites respectively. The prerequisites for

Cyrus are procedural. As long as Huawei is willing, there will be no problem:

is signed, Huawei approves, and a payment is made;

loading is basically completed (no less than 5,500 patents, no less than 1,000 trademarks, employees No less than 4675), make another payment; the

business cooperation agreement is signed and becomes effective; the relevant change registration is completed and the balance is paid.

• does not set performance compensation.

The "Purchase Report - Major Risk Warning" published by Cyrus states: The parties to the transaction do not set performance compensation based on market-oriented commercial negotiations.

It’s not that Cyrus doesn’t understand performance compensation—when it acquired 86.37% of the equity of “Luzhou Rongda” for 640 million in 2018, the seller promised that the net profit in 2018, 2019, and 2020 would not be less than 200 billion, 90 million, and 150 million respectively. If the total net profit for three years is less than 260 million, the difference will be compensated.

There is no such risk warning in Changan Automobile's announcement, and it cannot be ruled out that the payment prerequisites are related to performance expectations. For example, in 202x, the revenue is xxx billion and the net profit is xx billion...

• board seats

Changan Automobile said that it hopes that the board of directors will consist of 7 people. Six people were nominated by Huawei and one person was nominated by Changan Automobile.

Thalys said that the board of directors is composed of seven people. Thalys has the right to nominate one director; it is expected that the audit committee (without a supervisory board) will consist of five people, one of whom will be held by Thalys Automotive.

The cooperation between Cyrus and Huawei is even closer; the shareholding is the same as that of Changan Automobile, and the seats on the board of directors are the same; if the 11.5 billion is fully paid first, it should be upgraded to the "eldest wife".

Author | eastland

If Huawei signed a memorandum with Changan Automobile in November 2023, it would be equivalent to an "engagement"; in January 2024, Huawei would register Shenzhen Yinwang, which would be regarded as the purchase of a "wedding house"; August 20, 2024 , signing the "Equity Transfer Agreement" is "receiving the certificate".

On August 23, 2024, the board of directors of Thalys (sh:601127) approved the proposal to purchase a 10% stake in Huawei from Huawei for 11.5 billion. On the same day, Cyrus Automobile (a wholly-owned subsidiary of a listed company) signed an "Equity Transfer Agreement" with Huawei and Yinwang. Although

is only 3 days behind Changan Automobile, it can only be ranked second. Thalys is not satisfied.

tasted the sweetness

On June 15, 2016, Xiaokang shares (code sh: 601127) were listed for trading. The year

was launched, the sales volume was about 380,000 units, and the following year it exceeded 400,000 units. Then began a long decline, with sales reaching 252,000 units in 2023, a 37.6% drop from 2017, with an average annual decline of 7.55%.

Although sales continue to decline, the product structure has undergone earth-shaking changes:

New energy vehicle sales will be approximately 9,000 units in 2019, accounting for 2.8% of total sales;

New energy vehicle sales will surge to 135,000 units in 2022, accounting for 50.5% of total sales;

The sales volume of new energy vehicles in 2023 will reach 151,000 units, accounting for 60.2% of the total sales; only half of the annual sales target of 300,000 units will be completed.

Among all the car companies that have produced fuel vehicles, in terms of the proportion of new energy vehicles in sales, BYD ranks first (100%), followed closely by Cyrus.

) The Thalys brand has delivered a total of 450,000

Xiaokang stock price new energy vehicles. The rise of new energy vehicles depends entirely on the Thalys brand. On August 2, 2022, the listed company simply changed its name to Thalys.

In 2021, sales of new energy vehicles will be 41,000. Among them, there are 11,000 Cyrus vehicles (2,200 vehicles in the first half of the year and 8,800 vehicles in the second half of the year), accounting for 26.6%;

In 2022, sales of new energy vehicles will surge to 135,000 vehicles. Among them, 80,000 Cyrus vehicles were sold (22,000 vehicles in the first half of the year and 58,000 vehicles in the second half of the year), accounting for 59.3%;

In the first three quarters of 2023, Cyrus sales were tepid, with monthly deliveries hovering below 5,000 vehicles; 9 The new M7, launched in March, was a great success. In 2023, Q4 Cyrus sales reached 66,000 units.

Q1 and Q2 Cyrus will continue to sell well in 2024; 98,500 units were delivered in the second quarter, accounting for 92.9% of the total sales of new energy vehicles;

In July 2024, sales of the Cyrus brand exceeded 40,000 units, accounting for 92.9% of the total sales of new energy vehicles. 95.5%.

As of the end of July 2024, the Thalys brand has delivered more than 450,000 vehicles.

double dividends, scale + high-end

is positioned in the mid-to-high end, with considerable sales volume and high gross profit margin. Cyrus has reaped the double dividends of scale + high-end.

) Bicycle prices

• The volume and price of new energy vehicles are rising

• Fuel vehicles are shrinking rapidly

In 2021, the sales volume of fuel vehicles will be 225,000 units, with an average ex-factory price of 45,000 yuan;

In 2022, the sales volume of fuel vehicles will drop to 132,000, with an average ex-factory price of 4.8 10,000 yuan;

In 2023, 101,000 fuel vehicles were sold, with an average ex-factory price of 45,000 yuan;

) Gross profit margin exceeded BYD

In 2016, the gross profit of the automobile business was 2.76 billion, with a gross profit margin of 18.4%; the gross profit of a single vehicle was close to 7,300 yuan;

In 2017, the gross profit of the automobile business was 4.2 billion, with a gross profit margin of 21.7%; the gross profit of a single vehicle was 10,400 yuan;

In 2018, the gross profit of the automobile business was 3.98 billion, with a gross profit margin of 22.5%; the gross profit of a single vehicle was more than 10,000 yuan;

In 2019, The gross profit margin of the automobile business fell back to 15.6%;

In 2020, the gross profit of the automobile business was only 270 million, the gross profit margin was less than 2.2%, and the gross profit of a single vehicle fell below 1,000 yuan!

In 2021, the gross profit of the automobile business increased significantly to 3.86 billion, but the gross profit margin was still 2.2%; of which the gross profit margin of new energy vehicles was 1.9%, and the gross profit margin of other models was 2.2% (disclosed separately for the first time).

In 2022, the gross profit margin of the automotive business will rebound to 11.2%. Among them, the gross profit margin of new energy vehicles is 13.1% and the gross profit of single vehicles is 24,000 yuan; in 2023, the gross profit margin of the automobile business is 9.5%. The gross profit margin of new energy vehicles is 9.9%, and the gross profit of single vehicles is 19,000 yuan.

In 2024 h1, car sales surged by 156%, and gross profit margin increased significantly to 25% (h1 in 2023 was only 6.3%). is 1 percentage point higher than BYD!

In 2017, Thalys’ sales volume and gross profit margin exceeded 400,000 units and 20% respectively, and then it suffered losses for six consecutive years (excluding non-profits).

In 2024, non-net profits for Q1 and Q2 will be 110 million and 1.32 billion respectively.

Throughout 2024, Sales of Cyrus are likely to exceed 500,000 vehicles, and non-net profit is expected to reach a record high of 5 billion yuan.

The valuation is reasonable and unreasonable

Huawei Smart Car Solution BU (hereinafter referred to as BU) was established in May 2019. It is positioned as an incremental component supplier for smart connected cars, providing smart driving and Hongmeng cockpit to OEMs. and other product solutions, and to be "Bosch in the era of smart electric vehicles".

On January 16, 2024, "Shenzhen Yinwang Intelligent Technology Co., Ltd." ("Yinwang") established by Huawei obtained the "Business License". Yinwang has a registered capital of 1 billion yuan, with Huawei holding 100% of the shares.

After securing strategic investors, Huawei plans to inject five major businesses, including smart driving, smart cockpit, smart car control, smart car cloud and smart car lighting. It is expected to complete the "loading" of related businesses in 2024.

"Huawei's car valuation is only 100 billion? So low!" You are right to think so. Compared with wework,

is ridiculously underestimated. But Changan Automobile and Thalys are A-share listed companies, not Masayoshi Son, and there are greater risks in investing at a valuation of 100 billion.

Yinwang’s valuation is based on simulated statements (Huawei’s related businesses are regarded as independent entities).

In 2022, revenue is expected to be 2.1 billion. Among them, hardware is 1.44 billion, accounting for 68.9%; software/services is 650 million, accounting for 31.1%;

is expected to generate revenue of 4.7 billion in 2023. Among them, hardware is 2.6 billion, accounting for 55.2%; software/services is 2.1 billion, accounting for 44.8%;

h1 in 2024 is expected to generate revenue of 10.4 billion. Among them, hardware is 6.1 billion, accounting for 58.4%; software/services is 4.34 billion, accounting for 41.6%;

From 2022 to 2024 h1, it is expected that the gross profit margin of the two types of businesses will double, which is impressive:

In 2022, hardware, Software gross profit margins are 14% and 25% respectively; in 2023 they will increase to 16% and 25% respectively; in 2024 h1, they will increase to 33% and 86% respectively; the comprehensive gross profit margin of

two businesses will increase from 18% in 2022 Increase to 55% of h1 in 2024.

) Highly dependent on Cyrus

Yinwang camp network is extremely high. In 2023, the five largest customers will contribute 89.5% of revenue; in h1, 2024, the contribution rate of the five largest customers will increase to 90.6%. The "Customer A" with the highest proportion among the five major customers of

is none other than Cyrus. In 2024, h1 will contribute revenue of 6.6 billion, accounting for 63.4% of Yinwang’s revenue (the proportion in 2023 will be 51%).

Using the sales volume of the Sailis brand in 2024 (183,000 vehicles) as the denominator, it can be calculated that each vehicle sold will contribute 36,200 yuan in revenue to Yinwang (22,500 yuan in 2023).

) Abandon the income method

Zhongjing Minxin used the asset-based method and the market method to evaluate 100% of Shenzhen Yinwang's equity. The result of the

asset-based method is: as of January 31, 2024, the net asset value of Shenzhen Yinwang is 19.85 billion (including fixed assets and intangible assets). The valuation result of

market method is: as of January 31, 2024, Shenzhen Yinwang is worth 115.25 billion.

Among the 6 listed companies selected, 3 have been profitable (excluding non-profits) for 10 consecutive years, 2 have been profitable for 7 years, and the shortest is 4 years (8 years on average). Shenzhen Yinwang will lose 7.6 billion and 5.6 billion in 2022 and 2023 respectively, and its h1 net profit in 2024 will be 2.23 billion. # A novice with a half-year driving license vs. an experienced driver who has been driving safely for 8 years #

In the end, Zhongjing Minxin selected the market method evaluation results as the evaluation conclusion (Jingxin Pingbao Zi 2024 No. 508).

The valuation method (income method) based on the expected future income of assets is more scientific, rigorous and has a wider application range. The most prominent advantage of the market method is simplicity!

Zhongjing Minxin’s explanation of the abandonment income method is:

Shenzhen Yinwang’s revenue structure accounts for a high proportion of the Saili period; the next step of cross-border integration and collaborative innovation will be highly uncertain if it evolves; Shenzhen Yinwang’s partners and customers There may be major changes in the structure, personnel composition, business model and equity structure in the future. Therefore, predictions cannot be made reliably and reasonably.#The income method is good, but it can’t be used #

There is another point:

Huawei promises not to develop, produce and sell products, system solutions and services that are the same or substantially similar to the introduction business within eight years; it will not use OEM, ODM, etc. model or covertly engage in business within the scope of competition by providing technical services, consulting, etc.; do not engage in business within the scope of competition by supporting third parties.

If the non-competition agreement is lifted, the valuation of Yinwang will be greatly affected. Therefore, using the income method for valuation can only estimate the income in the next eight years, and there is also the condition that "Huawei will not reduce its holdings to less than 5%."

The variables are too large to be valued using the income method. It is an authentic venture capital investment and is very suitable for Son Zhengyi’s appetite.

) Sustainability is worrying

In the past two and a half years, Shenzhen Yinwang’s key data such as revenue, gross profit, and gross profit margin have grown by leaps and bounds, but the sustainability of its liquidity needs to be verified over time.

Shenzhen Yinwang is like a video website.

"Youaiteng" spends huge sums of money to purchase/self-produce content, forming a huge copyright reserve and attracting paying members. Yinwang has invested heavily in research and development, forming huge intangible assets, and customers of Cyrus are equivalent to "members".

’s research and development expenses will be 766,000 in 2022, 718,000 in 2023, and h1 in 2024 will be 342,000, totaling 18.3 billion in two and a half years. During the same period, BYD's R&D expenses were 77.8 billion, 4.25 times higher than expected. h1 in 2024, BYD's research and development expenses are 19.6 billion, which is 5.75 times that expected.

Although Chebu was only officially established in 2019, Huawei will have to push forward at least five years to start research and development. In addition, Chebu is an integral part of Huawei and can "borrow light" and "borrow strength" in terms of talents, technology, facilities and other aspects. After

Shenzhen Yinwang is "uprooted", it will have to bear its own profits and losses and raise its own R&D expenses. It will be difficult to invest 10 billion in R&D in 2024.

If a certain company in Youai Teng only invests 10 billion in content every year and others invest 40 billion, no matter how strong the "literary cells" are, they will eventually be at a disadvantage.

Thalys strives to be the "eldest wife"

) It is not hot to attract equity

First, the new company's business scope includes: intelligent driving solutions, intelligent cockpits, intelligent car digital platforms, intelligent cloud, ar-hud and intelligent car lights etc. (The above are all automotive business, the specific scope shall be subject to the final transaction documents).

Second, Huawei will inject relevant technologies, assets, and personnel within the above-mentioned business scope into the new company (there are 7,000 automotive R&D personnel alone).

Third, Huawei promises "not to engage in business that competes with the target company's business scope."

Fourth, Changan Automobile plans to invest in acquiring equity in the new company, with the proportion not exceeding 40%.

On May 7, 2024, Changan Automobile issued an announcement saying:

In view of the importance and complexity of the project and the need for internal procedures for all parties to the transaction, the project progress is somewhat delayed compared to the estimate in the "Memo." According to the latest project progress, the company expects to sign the final transaction documents no later than August 31, 2024.

On August 20, 2024, Avita Technology (Changan Automobile holds approximately 39% of the shares) signed an "Equity Transfer Agreement" with Huawei, agreeing to purchase 10% of the equity from Huawei, with a transaction amount of 11.5 billion.

( Note: Avita is a company in which Changan Automobile holds shares, formerly "Changan Weilai " established in July 2018 (each party holds 50% equity); in 2020, Li Bin stepped down as chairman; in 2020 November In May, Changan Automobile announced that it would jointly build a high-end brand with Huawei and Ningde; in May 2021, it will be renamed Avita Technology. According to the 2023 memorandum, Changan Automobile can obtain up to 40% of the equity of Shenzhen Yinwang. However, in August 2024, Changan Automobile only subscribed for 10% of Shenzhen Yinwang's equity through its associate Avita (Changan Automobile indirectly held 4%).

If you believe that the investment returns are considerable, you should directly hold shares and strive for as much equity as possible. Changan Automobile's actual ability is to "downgrade" from directly obtaining 40% to indirectly holding 4%.

) Cyrus is active everywhere

Cyrus purchased Yinwang’s equity as a wholly-owned subsidiary, and Changan Automobile held 40% of the shares through an associated company

In addition, there are many details showing Cyrus’s enthusiasm:

• Yinwang’s valuation

Changan Automobile only disclosed that the consideration for purchasing 10% of Yinwang’s shares was 11.5 billion (the corresponding valuation was 115 billion). The pricing is based on the "Asset Appraisal Report" issued by "Beijing Zhongqihua Asset Appraisal Company" (Zhongqihua Zi 2024 No. 6499), but no details were disclosed.

Thalys disclosed the full text of the "Asset Assessment Report" issued by "Zhongjing Minxin (Beijing) Asset Estimation Company" (Jingxin Pingbao Zi 2024 No. 508), and the assessment result is 115.25 billion.

Two independent institutions separately evaluate a 100-billion-level (12-digit) target, just like Zhang San and Li Si counting how many hairs there are on the same cow. Damn if the results are highly consistent.

A more likely situation is that the parties negotiate and use one of the evaluation reports as the standard, and the other one is simply not disclosed, to avoid triggering material disputes .

• Price payment

Changan Automobile and Cyrus will pay in three installments and set payment prerequisites respectively. The prerequisites for

Cyrus are procedural. As long as Huawei is willing, there will be no problem:

is signed, Huawei approves, and a payment is made;

loading is basically completed (no less than 5,500 patents, no less than 1,000 trademarks, employees No less than 4675), make another payment; the

business cooperation agreement is signed and becomes effective; the relevant change registration is completed and the balance is paid.

• does not set performance compensation.

The "Purchase Report - Major Risk Warning" published by Cyrus states: The parties to the transaction do not set performance compensation based on market-oriented commercial negotiations.

It’s not that Cyrus doesn’t understand performance compensation—when it acquired 86.37% of the equity of “Luzhou Rongda” for 640 million in 2018, the seller promised that the net profit in 2018, 2019, and 2020 would not be less than 200 billion, 90 million, and 150 million respectively. If the total net profit for three years is less than 260 million, the difference will be compensated.

There is no such risk warning in Changan Automobile's announcement, and it cannot be ruled out that the payment prerequisites are related to performance expectations. For example, in 202x, the revenue is xxx billion and the net profit is xx billion...

• board seats

Changan Automobile said that it hopes that the board of directors will consist of 7 people. Six people were nominated by Huawei and one person was nominated by Changan Automobile.

Thalys said that the board of directors is composed of seven people. Thalys has the right to nominate one director; it is expected that the audit committee (without a supervisory board) will consist of five people, one of whom will be held by Thalys Automotive.

The cooperation between Cyrus and Huawei is even closer; the shareholding is the same as that of Changan Automobile, and the seats on the board of directors are the same; if the 11.5 billion is fully paid first, it should be upgraded to the "eldest wife".