Seres is finally "seeing the light at the end of the tunnel."

On July 9, Seres disclosed its "report card" for the first half of the year, announcing that it expects to achieve revenue of 63.9 billion to 66 billion yuan, an increase of 479% to 498% year-on-year; and net profit attributable to shareholders of 1.39 billion to 1.7 billion yuan, finally turning around from a loss of 1.344 billion yuan in the same period last year.

For Seres, this is definitely a memorable moment.

After all, since its transformation in 2019, Seres has suffered losses for five consecutive years, and this is its first profitable mid-year report in five years.

However, despite achieving profitability, the capital market is not enthusiastic about it. On the second trading day after the announcement, Seres' share price fell by 4.72% despite the significant increase in performance. As of the close on July 12, Seres' share price was 82.02 yuan, with a total market value of 123.8 billion yuan. Since July, Seres' share price has fallen by 10%.

"Seeing the Light at the End of the Tunnel"

Seres' journey has been fraught with difficulties.

Before transitioning to new energy, Seres' predecessor, Dongfeng Xiaokang, was just a small automaker producing minivans.

In 2016, shortly after successfully entering the capital market, Seres decided to fully transition to the new energy vehicle sector. That year, Chairman Zhang Xinghai invested US$30 million to establish "SF MOTORS," a new energy vehicle company in Silicon Valley, USA, and later invested heavily in ACP, a core technology development enterprise for electric vehicle power systems.

However, transitioning from minivans to new energy vehicles was not easy. In 2019, Seres launched its first electric vehicle, "Seres SF5," but it ended in disappointment – with cumulative sales of only 732 vehicles in 2020, leading to a significant loss of over 1.2 billion yuan that year.

The huge losses brought Seres to the brink of danger. According to financial reports, Seres' monetary funds were 2.932 billion yuan, a significant decrease of 36.3% compared to 4.603 billion yuan in 2019. In addition, Seres' current liabilities reached 16.25 billion yuan, with accounts payable and notes payable alone amounting to 10.94 billion yuan.

Fortunately, Huawei extended an "olive branch."

On April 6, 2021, Huawei and Seres signed a cooperation agreement in Chongqing, and subsequently launched the "Seres Smart Choice SF5" at the Shanghai Auto Show on April 19. This Huawei-backed model became a hot seller upon its launch, with sales exceeding 8,000 units in 2021, a tenfold increase year-on-year.

As for subsequent developments, everyone is aware – in 2021, Seres proactively "stepped up" its cooperation with Huawei and jointly launched the new brand "AITO."

This brand, which is almost entirely managed by Huawei while Seres is responsible for production, received a warm reception upon its launch and has shown a "blowout" trend this year. According to data, in the first half of 2024, AITO delivered a cumulative total of 181,153 new vehicles, with the AITO M9 alone exceeding 100,000 orders since its launch, ranking first in sales among models priced above 500,000 yuan. The stylish urban SUV AITO New M5 has delivered over 10,000 units, while the AITO New M7 has sold over 110,000 units in the first half of the year, ranking first among new force models in China.

With the help of AITO's strong sales, Thalys finally achieved profitability in the first half of this year. On July 9, Thalys disclosed its "report card" for the first half of the year, announcing that it expects to achieve revenue of 63.9 billion to 66 billion yuan, an increase of 479% to 498% year-on-year; and net profit attributable to shareholders of 1.39 billion to 1.7 billion yuan, turning around from a loss of 1.344 billion yuan in the same period last year.

"Challenges" Remain Unresolved

Despite profitability in the first half of the year, the capital market is not impressed.

On the second trading day after the announcement, Seres' share price fell by 4.72% despite the significant increase in performance. Over the three trading days following the announcement, Seres' share price fell by a cumulative 8.28%. As of the close on July 12, Seres' share price was 82.02 yuan, with a total market value of 123.8 billion yuan. Since July, Seres' share price has fallen by 10%.

While the fall in share price may seem abnormal, there are reasons behind it.

On the one hand, although Seres achieved profitability in the first half of the year, its fundamentals are still not optimistic, especially in terms of debt.

According to the first-quarter report, Seres' total liabilities were 55.54 billion yuan, with a debt-to-asset ratio of 88.27%. Among them, accounts payable and notes payable alone amounted to 42.85 billion yuan, while Seres' monetary funds and trading financial assets were approximately 22.5 billion yuan, insufficient to cover the accounts payable and notes payable.

On the other hand, Seres recently announced that its subsidiary, Seres Automobile Co., Ltd., plans to acquire all global categories of "AITO" and other related trademarks and applications, as well as related design patents held by Huawei, for a total purchase price of 2.5 billion yuan. This announcement put Seres in the spotlight.

Although Seres stated that "this transfer will not affect the existing cooperation business between the two parties and will further safeguard the long-term development of AITO," it is clear that Seres cannot rely on Huawei forever. After acquiring the AITO trademarks, Seres' next step will inevitably be to try independent development, especially after achieving profitability.

Currently, Seres' achievements cannot be separated from Huawei's strong support. However, as Seres successfully achieves profitability, the market is concerned that Seres may lose its status as Huawei's "favorite child." After all, more and more automakers are embracing Huawei's Smart Selection model, such as Chery, Beijing Automotive Group's New Energy Vehicle Business, JAC Motor, etc., which are stronger than Seres. While Seres previously had exclusive access to Huawei's resources, it may now face competition from internal rivals.

For Seres, achieving profitability in the first half of the year is indeed good news, but it also marks a new beginning. It is worth noting that, in the long run, as competition in the new energy market intensifies, Seres' challenges are far from over.