Sudden short-selling by institutions, the stock price plummeted, and Weilai has a major event?

At noon on June 29, NIO applied for a trading suspension on the Singapore Exchange. As of 13:00 on the same day, its share price on the SGX fell 8.47%. Later, although NIO applied to lift the trading suspension, its share price continued to fall and closed on the same day. The decline extended to 11.42%.On the same day, Weilai Hong Kong stocks closed down 11.36%, and U.S. stocks fell more than 7% before the market.

Image source: Screenshot of Weilai's stock price

On the news, on June 28, the well-known short-selling agency Grizzly Research released a report stating that Weilai has inflated its revenue and net profit margin through the BaaS model and Wuhan Weineng, and disclosed some secrets of Li Bin, the founder of Weilai. Transactions and a complex web of relationships.One wave has not settled, and another wave has arisen. The accident of the test car falling from the building has not completely subsided, and a "cauldron" has hit NIO again.

Grizzlies pointed out in a report that Weilai used an unconsolidated related party to inflate revenue and inflated profits, and this related party was Wuhan Weineng.

As we all know, Wuhan Weineng is an entity company of NIO BaaS battery rental service. It was jointly invested by shareholders such as NIO and CATL, and was established in August 2020.In the same year, Weilai launched a BaaS car purchase plan for users. If you choose the BaaS plan, the price of the car can be subtracted from the original price of the battery (128,000 yuan for a 100 kWh battery), and then the battery rental service fee will be paid on a monthly basis.

Wuhan Weineng's role in BaaS is to provide subscription services to car owners after purchasing batteries from Weilai, and is the recipient of BaaS subscription payments.The Grizzly Report pointed out that in the four months after its establishment in 2020, Wei Neng contributed 290 million yuan in revenue to Wei Lai, and by 2021, this number increased to 4.14 billion yuan.Since the establishment of Wuhan Weineng, NIO’s performance has also suspiciously exceeded market expectations.

Grizzly believes that the main reason for this increase is that Weilai deliberately oversupplied batteries to Wuhan Weineng to whitewash its financial situation.According to Weineng Battery's ABN (Green Battery Asset-Backed Note) issuance document, as of September 2021, Weineng had 40,053 batteries, but during the same period, only 19,000 users of NIO had subscribed to the BaaS plan, which means 21,053 is a stock battery.

Speaking of battery assets, on June 28, Yang Zhen, chief marketing officer of Wuhan Weineng Battery Assets Co., Ltd., said that as of May this year, Weineng's assets under operation and management exceeded 6GWh.According to NIO’s official website, the current battery pack capacities provided by NIO for vehicles are mainly 75kWh and 100kWh. If all are calculated as 100kWh, Wuhan Weineng has about 60,000 100kWh battery pack assets. There will be more in September 2021.