NEWS WRAP: Seres serves up luxury option for NEV investors

The high-end new energy vehicle maker expects to raise about $1.7 billion in its Hong Kong listing, becoming the third-biggest this year in the city’s hot IPO market

By Doug Young

Seres Group Co. Ltd. (601127.SH) is offering up a new option for new energy vehicle (NEV) investors with its Hong Kong IPO, hoping they will buy into its position at the upper end of the market as a made-in-China equivalent of Tesla (TSLA.US), BMW and Mercedes-Benz.

The company is a relative newcomer to a Chinese car market where NEVs have zoomed to account for half of all passenger vehicle sales, charged up by Beijing’s aggressive goals for reducing the country’s carbon footprint. It has rapidly carved out a place for itself with its 4-year-old AITO brand, which claimed the title for best-selling model in the 300,000 yuan ($42,244) range when its AITO M7 delivered 200,000 vehicles in 2024.

Seres is selling about 100 million shares to Hong Kong investors for HK$131.50 each to raise about HK$12.9 billion ($1.66 billion), becoming the third-largest new listing in Hong Kong this year. The Hong Kong portion of the IPO is already 133 times oversubscribed, attracting more than HK$120 billion in subscription financing, according to market sources. The stock will debut on Nov. 5, making Seres the first luxury NEV maker listed on both China’s A-share market in Shanghai and also in Hong Kong.

Seres uses cutting-edge driving technology, with a particular focus on its assisted driving systems that have cumulatively logged more than 3.45 billion kilometers of driving to date for the AITO brand, equal to about 40% of total mileage driven.

The company has posted strong growth since the launch of its first AITO model, the M5, in 2022. Its revenue roughly quadrupled from 34.1 billion yuan ($4.8 billion) that year to 145 billion yuan in 2024, according to its prospectus. Its AITO vehicle sales rose 268% year-on-year to 387,100 in 2024.

The growth stalled in the first half of this year, with revenue easing to 59.2 billion yuan from 60.4 billion yuan a year earlier, as China’s NEV market becomes increasingly saturated and competitive. Even so, Seres pointed out that after a weak first quarter partly due to lack of new models, its business picked up sharply in the second quarter with the April launch of its AITO M8, resulting in 10.8% year-on-year growth by vehicle sales volume for that quarter.

Seres is also one of only a handful of companies in China’s crowded NEV industry that can boast operating profitably, thanks to its rapidly growing sales and an improving gross margin that rose from just 7.2% in 2023 to 26.5% in the first half of this year. That helped the company drive into the black last year, and it continued that trend by reporting a profit of 2.94 billion yuan in the first half of this year.

Seres has rolled out four AITO models to date, all SUVs, which cost anywhere from a starting price of 230,000 yuan, or about $32,000, for the AITO M5, to as much as 570,000 yuan, or $80,000, for its top-of-the-line M9 with all the bells and whistles.

An important part of the company’s attraction lies in its major partnership with tech superstar Huawei, which has become a key supplier for its intelligent cockpits and assisted driving systems for all AITO vehicles.

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