On the morning of February 10th, the stock market in Hong Kong witnessed a rollercoaster ride for Zhixing Automotive Technology (01274.HK). Opening at a low, the company's stock plummeted shortly after the trading began, reaching a dip of nearly 10%. This downturn sparked a rather pessimistic sentiment among investors. However, in an unexpected turn of events, the stock quickly rebounded, initiating a pattern of oscillating gains. By the end of the trading day, Zhixing's stock had surged by 4.17%, indicating a remarkable intraday volatility of over 18%, closing at HKD 25 per share, with a total market capitalization of HKD 57.69 billion. Such dramatic movements in stock price have drawn significant attention from market analysts and investors alike.
The company attributed this fluctuating performance to its recent announcement regarding a new share placement agreement with Guotai Junan Securities (Hong Kong) Limited. According to this agreement, the placement agent has conditionally agreed to use its best efforts to procure the purchase of no less than six subscribers for a maximum of 11.19 million shares at a price of HKD 20.88 per share.
This share placement price is about 13% below the closing price of HKD 24 per share on the previous day, indicating the company's eagerness to raise funds.
If all the placement shares are sold, they will represent approximately 4.85% of the company’s already issued capital. The expected net proceeds from this placement are around HKD 228 million. After deducting related costs, the anticipated net placement price will be about HKD 20.41 per share.
Despite these factors, the capital market seems optimistic about Zhixing Automotive Technology's stock price, which could be linked to the company's strategic direction.
The announcement outlines that the net proceeds from this share placement will be primarily allocated for enhancing high-level intelligent driving solutions and products, with approximately HKD 137 million earmarked for research and development; around HKD 22.84 million will go towards upgrading research and manufacturing facilities; and the remaining funds will be directed towards expanding overseas sales, service networks, and other purposes.
In the current era, where the automotive industry is rapidly adopting intelligent technologies, many automotive manufacturers are pouring resources into research and development to offer consumers a seamless and intelligent operational experience. Among the various emerging fields, intelligent driving presents enormous potential. According to forecasts from Frost & Sullivan, the sales volume of autonomous passenger vehicles in China is expected to reach 20.9 million units by 2027, with a penetration rate projected at 81.7%.
Zhixing Automotive Technology has positioned itself as a pioneer in the domestic autonomous driving sector, earning the title of the "first stock of autonomous driving" in the Hong Kong market. The company has been deeply engaged in the industry for years, securing orders from major automotive manufacturers such as Geely, Chery, and Dongfeng. This stock placement intends to enhance their focus on high-level intelligent driving and propel further investment in research and development, anticipate broader collaborations with automotive giants, and expand their market share in intelligent driving applications.
Moreover, the recent popularity of technologies like DeepSeek has injected robust momentum into the development of intelligent driving. The industry's outlook remains buoyant. Research from Western Securities suggests that DeepSeek could play a critical role in reducing the computation costs associated with autonomous vehicles and cloud services. The technological advancements from DeepSeek, particularly in terms of cost control, are likely to significantly accelerate the empowerment of the intelligent driving sector. By lowering computational costs, DeepSeek can help autonomous driving companies improve resource utilization and reduce operational expenses, subsequently enhancing performance. As a key player in the autonomous driving landscape, Zhixing Automotive Technology stands to benefit profoundly from the transformations brought by DeepSeek, thereby boosting its competitiveness.
It is noteworthy that this share placement represents the second time Zhixing Automotive Technology has sought financing since its debut over a year ago. If the issuance is completed, including the funds raised during the IPO, the company would have amassed almost HKD 1 billion through its listing endeavors. Given that autonomous driving is a burgeoning and high-growth industry, considerable financial investment is essential for technology research and development. The company is currently in a "burning cash" phase, actively fundraising to stockpile resources necessary for ongoing investments in technology development and market expansion.
However, the continuous financing efforts might have implications for the company's ownership structure and financial health. Factors like technological advancements, growth in market share, and enhancement in profitability will be critical for investors to monitor. Achieving a well-balanced and prosperous development across technological, market, and financial dimensions is vital for Zhixing Automotive Technology to distinguish itself in the fiercely competitive realm of autonomous driving and ensure sustainable growth.