2020.05.22 CoStone Capital Views:
On May 22nd, CHERVON Auto(603982), invested by Co-Stone in 2017, made IPO on Shanghai Stock Exchange. On its first day, the company’s stock achieved a soaring rise of 44%, the limit up of new stock’s IPO.
On May 22nd, CHERVON Auto(603982), invested by Co-Stone in 2017, made IPO on Shanghai Stock Exchange. On its first day, the company’s stock achieved a soaring rise of 44%, the limit up of new stock’s IPO.
Following Vland(603739), CHERVON becomes Co-Stone’s second investment project that made IPO this year.
CHERVON Auto’s business scope mainly involves the R&D, production and sale of key automobile spare parts. The company supplies for many major multinational automobile spare part suppliers, and it is seizing the opportunities brought by new energy. CHERVON is growing rapidly, and it has a promising outlook.
Steady Growth
CHERVON’s business engagement with multinational automobile spare part suppliers is shown in the chart below:
CHERVON achieved an annual revenue increase of 26.7% from 2015 to 2018, and a annual net profit increase of 33.41% in the same period.
Promising Potential
Global automobile market is transforming, major spare part suppliers with technology and capital advantage will be more competitive, and CHERVON’s clients are exactly these primary suppliers.
Chart:Clients Distribution of CHERVON
The development of new energy cars, the trend of energy conserving and environment protection will promote the need of magnalium automobile parts. CHERVON has made breakthroughs in this field, with higher productivity and better quality, the company has increased its gross profit.
From 2015 to 2018, CHERVON has raised its sales revenue of new energy related products from ¥8.7276 million to ¥114.2822 million, with an annual increase of 135.7%, the share of sales revenue has increased from 1.47% in 2015 to 9.51% in 2018.
The funding raised from the IPO will be partly allocated to improve the production capacity of spare parts for new energy cars.
CoStone believes that the future of China’s new energy cars lies in the upstream and downstream of the automobile industrial chain, thus Co-Stone is determined to invest in the industrial chain to search for the next star corporation like Bosch and Aisin Seiki.
CoStone sees the value of CHERVON in the following 3 aspects:
The strong management team with rich international experience led by chairman of CHERVON Auto, Mr. Pan Longquan.
Advanced technology including cutting-edge manufacturing process, prominent mould designing and strong R&D competence.
Constant flow of quality clients.
Currently, CoStone has invested over ¥5 billion in automobile industry. Among these investment projects, five companies, including CHERVON Auto(603982), HUITIAN New Material(300041), XUCHANG YUANDONG Drive Shaft(002406), Huachangda Intelligent Equipment(300278) and SOLING(002766), has made IPO. Meanwhile, Co-Stone has also invested a considerable amount of funding in automobile industrial chain related companies including Lanke Lithium, EFORT, Xcar, Klclear, Grand Auto, ZHONGDING Sealing Parts, HMT, JiangnanMould&PlasticTechnology, Joyson Electronics and Carzone.
Rewritten by: Xue Guanda, Edited by: Du Zhixin, Li Yunzhen
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026