The article is from the WeChat public account: BusinessCars (ID: BusinessCar01) , author: Ganfang Li

The 9 billion U.S. dollars invested in Daimler has not only increased the reputation of the Geely brand, but also an insurance that Geely buys to truly participate in international competition in the future. From this point of view, Li Shufu has not “lost.”

In March 2020, we witnessed the history of the US stock market “4 times in 10 days” with Buffett, the “share god”. At the same time, European stock markets have also experienced severe volatility, because there is no fusing mechanism for the entire market or linked to the broader market index. In the face of the slumping stock market, European shareholders can only survive the crisis by praying.

Since entering March, the major European stock indexes, such as the British Forex 100 Index, French CAC40 Index, and German DAX Index, can all be described as “cliff style” plunges, and these three major stock indexes have produced a 52-week range this month. The lowest value.

“There is no finished egg under the nest”, only Germany’s three major car manufacturers Volkswagen Group, BMW and Daimler have suffered different degrees of impact in this robbery. In March, the stock prices of the three major automakers all had their lowest values ​​in the 52-week range, which were 99.16 euros, 36.595 euros, and 21.015 euros, with year-on-year decreases of 13.53%, 31.16%, and 40.93%. It can be seen that Daimler’s situation is even worse among the three.

Daimler’s 5-year stock price chart

Daimler’s current stock price is the lowest in five years. I don’t know if Daimler’s largest single shareholder, how does Geely feel about this? As of now, when Geely buys Daimler stocks, it is when Daimler stocks are “highest.” In other words, Daimler’s overall stock price has been in a downward trend since 2018, from less than 70 euros at the time to less than 30 euros. Of course, there have been some rises in the period, but in the past year, Daimler’s stock price also peaked. Only around 60 euros.

Obviously, Geely has “lost” since it bought Daimler.

Loss of over 5 billion

Daimler’s shares subscribed by Geely are currently “losing” more than half.

On February 24, 2018, Geely Group Co., Ltd. announced that it has acquired 9.69% of Daimler’s voting shares through its overseas company Tenaclou3 Prospect Investment Limited. As a result, Geely has exceeded 6.8% of its holdings. The Kuwait Investment Authority and 6% of BlackRock have become Daimler’s largest single shareholder. Regulatory documents show that Geely Group has more than 103.6 million shares of voting rights.

In terms of equity value, the total value of Geely ’s equity at the time was approximately US $ 9 billion. $ 87 per share (about 70 euros at the time) . As of press time, judging from Daimler’s latest stock price, it is 28.2 euros per share and owns 103.6 million Daimler Geely shares.The total value of the equity is 2.92 billion euros, with a floating loss of more than 5 billion euros (approximately $ 5.5 billion) .

The cross-word motto of the stock market, “The stock market is risky, and investment needs to be cautious” explains the risks of the stock market very well. As one of them, Geely knows this. Therefore, when initially purchasing Daimler shares, Geely used a low-risk, medium-yield option portfolio strategy, which can help strategic investors who are optimistic about and holding stocks for a long time and effectively control unlimited downside risks.

Geely made the worst investment plan from the beginning. As for how much Geely actually invested to leverage this 9 billion US dollars investment, we do n’t know, but even if the current floating loss exceeds 5.5 billion, Geely actually lost money. Not so much. Of course, there are definitely losses.

In addition to the most intuitive profit and loss performance in the stock market, as a shareholder of Daimler, Geely also has the right to receive dividends.

Last month, Daimler released its 2019 financial results. According to data, total revenue in 2019 was 172.7 billion euros, a year-on-year increase of 3%, and annual profit before interest and taxes was 4.3 billion euros. (11.1 billion in 2018 Euro) , down 61% from 2018. Net profit fell 64% year-on-year to 2.7 billion euros. Daimler AG shareholders’ net profit attributable to shareholders was 2.4 billion euros, and earnings per share fell to 2.22 euros. According to the plan, Daimler’s 2019 dividend per share is 0.9 euros, which shows that Geely can receive a return of 93 million euros.

However, Geely received much higher dividends in 2018. In 2018, the dividend per share paid by Daimler to shareholders was 3.25 euros. It can be calculated that Geely received a return of 337 million euros that year. In the past two years, Geely has received a total dividend of more than 400 million euros.

For 2020, Daimler ’s forecast is relatively conservative, but overall it is better than 2019. Daimler predicts that the total sales volume of the group in fiscal year 2020 will be slightly lower than the level in 2019, and the turnover will be stable at the level of 2019. Negative effects of some major adjustment factors. In addition, Daimler also expects that the vigorous efficiency measures that have been carried out in all business areas will have a preliminary positive effect on profits in 2020 and will fully exert its effect in the following years.

Although we are not sure about the future trend of Daimler’s stock market, it can be determined now that in 2020, Geely will receive a higher dividend return from Daimler than in 2019. With the development of Daimler Group in all directions in the future, it is reasonable for the stock price to gradually pick up. By then, Geely’s floating losses in the stock market will also be relatively reduced.

Even if Daimler’s stock price has been uncertain for a short period of time, Geely will not sell Daimler’s shares, because Geely can hold Daimler’s over 100 million shares.

In fact, Geely “sucks” Daimler not for a while. The “scandal” between Geely and Daimler began to spread in 2016, and in November 2017, Geely also reported that it wanted to acquire 3% to 5% of Daimler’s shares, but Daimler claimed that Satisfied, unwilling to dilute investor shares, but welcomes Geely to acquire shares in the secondary market. Therefore, when Geely became the de facto largest shareholder of Daimler in February 2018, the car circle inside and outside the Great Wall was shocked by the news.

However, Li Shufu spends so much money on Daimler. It is neither a stock price nor a dividend, but a different plan.

Unfortunately, “Book Blessing”

From the beginning, Geely Group has treated Daimler stock as a long-term strategic investment.

There have been reports that Geely reduced Daimler’s shares by half. Geely Group stated that as a long-term strategic investor and single largest shareholder of Daimler AG, there is no plan to reduce Daimler’s shares. Some Daimler shares remain unchanged. As early as the completion of the shareholding, Geely promised to hold a long-term stake in Daimler, hoping to help Daimler become a leader in electric mobility and online technical services.

Things are going the way Geely hopes.

On October 24, 2018, Daimler Travel Services Co., Ltd. formally managed with Geely Group of Zhejiang Geely Holding Group (New Business) The company reached an agreement. The two parties will form a joint venture in China to jointly develop the software infrastructure needed to conduct business in China and provide high-end private car travel services.

Half a year later, on May 9, 2019, Weixing Technology Co., Ltd. was established with capital injection, with each party accounting for 50%. This also means that Daimler and Geely’s “siege strategy” in the field of high-end private car travel services has started substantial progress.

This strong alliance will be of great benefit to both parties. Through this cooperation, Daimler has enriched the “tentacles” of its global travel business. For Geely, this cooperation is a key move for its automaker to transform into a global automotive technology group.

Not only that, on March 28, 2019, Daimler AG and Zhejiang Geely Holding Group announced that the two parties will set up a joint venture company to link globallyCooperate with and promote the transformation of the smart brand, and are committed to building smart into the world’s leading high-end electric smart car brand. The joint venture company is headquartered in China and each party holds 50% of the shares.

According to the joint venture agreement, the new generation of pure electric smart will be designed by Mercedes-Benz’s global design department, and Geely Global R & D Center will be responsible for engineering research and development. The new model will be produced in a brand new factory in China, and it is expected to be launched on the market in 2022 and sold worldwide.

At this point, Geely’s “ambition” scroll is slowly unfolding-a “deservedly” global automotive group.

Long ago, Li Shufu, chairman of Geely Holding Group, proposed to build Geely into the top ten global automotive industry and a respected global automotive group. Excluding Daimler, Geely Holding Group already owns five major segments of Geely Automobile Group, Volvo Car Group, Geely Commercial Vehicle Group, Geely Group and Mingtai Group, involving Geely Automobile, Volvo Cars, Lotus Cars, etc. 8 More than half of the car brands or brands are aimed at the international market, which also means that the territory of Geely Empire to be built by Li Shufu is gradually taking shape.

“Single fight alone has no future.” Li Shufu said that Geely Holding Group is willing to collaborate with all outstanding companies, including Daimler, to develop in compliance with laws, regulations, fairness and transparency, and take into account all aspects. Under the premise of the interests of partners, we will seek broader opportunities for cooperation and jointly promote the transformation of the global automotive industry.

However, Geely Holding Group is not currently a truly “global” automotive group. Because from the perspective of brand operation, Geely and Lingke, two important brand carriers, have not started a comprehensive international operation. If you want to become such a group, you will gain a certain market share in developed countries such as North America and Europe, and continue to operate without interruption. Like Japanese and Korean car brands, it is considered successful.

To become a truly global automotive group, you must have a first-rate corporate group governance system. As an automobile inventor, Daimler not only has first-class automotive technology and brand value, but also has such a governance system. After investing in Daimler, Li Shufu once said: “Daimler is an excellent company with a first-class management team.”

It can be seen that Geely has become a major shareholder with voting rights through its stake in Daimler. It is necessary to participate in it and have the opportunity to understand, learn and absorb Daimler’s corporate governance culture and management system for more than 130 years. Only in this way can we gain a global perspective and establish a more comprehensive manufacturing standards system. In this way, we can understand why Geely holds Daimler shares for a long time and has strong willpower.

The 9 billion U.S. dollars invested in Daimler has not only increased the reputation of the Geely brand, but also an insurance that Geely buys to truly participate in international competition in the future. From this point of view, Li Shufu has not “lost.”

Before the $ 9 billion “trickle”Geely and Daimler can be said to be very distinct. After the emergence, Geely and Daimler have broken this line, and there has been a “marginal” cooperation in the field of travel and smart operation. Although there is no more substantial and core cooperation content, but the future is still long, who knows what will happen?

Now it is certain that “$ 9 billion” has become all the possible “knocker blocks” for Geely and Daimler in the future. Geely ’s vision of going global has also been perfected by Li Shufu ’s Geely-Volvo-Leck-Daimler collaboration alliance. At the same time, Geely also jumped onto a higher platform through the “coordination” springboard and looked forward to farther scenery. ♪

The article is from the WeChat public account: BusinessCars (ID: BusinessCar01) , author: Ganfang Li