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United States securities and exchange commission logo
May 15, 2023
Tony Xu Han
Chief Executive Officer
WeRide Inc.
21st Floor, Tower A, Guanzhou Life Science Innovation Center
No. 51, Luoxuan Road, Guangzhou International Biotech Island
Guangzhou 510005
People s Republic of China
Re: WeRide Inc.
Amendment No. 1 to
Draft Registration Statement on Form F-1
Submitted May 1,
2023
CIK No. 0001867729
Dear Tony Xu Han:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 1 to Draft Registration Statement on Form F-1 submitted
May 1, 2023
Cover Page
1. We note your response
to prior comment 3 and reissue the comment. Notwithstanding
that you completed the
unwinding of the VIE structure we continue to believe that your
corporate structure
subjects you to risks due to uncertainty of the interpretation and the
application of the PRC
laws and regulations, including but not limited to limitations on
foreign ownership of
technology companies.
Tony Xu Han
FirstName LastNameTony Xu Han
WeRide Inc.
Comapany
May NameWeRide Inc.
15, 2023
May 15,
Page 2 2023 Page 2
FirstName LastName
VIE Consolidation Schedule, page 18
2. We note your response to our prior comment 8. However, since the
schedules presented
are for the years ended December 31, 2022 and 2021 before you unwound
the VIE
structure, the references in the Consolidating Schedule should be to
the VIE. Please
revise accordingly.
Management's Discussion and Analysis of Financial Conditions and Results of
Operations, page
95
3. We note you do not present any statistical data in your Management's
Discussion and
Analysis of Financial Conditions and Results of Operations. In this
regard, tell us how
you considered Item 5 of Form 20-F as it relates to the presentation
of other statistical data
that the company believes will enhance a reader s understanding of
the company s
financial condition, cash flows and other changes in financial
condition, and results of
operations.
Results of Operations, page 103
4. We note on page 8 you discuss taxi services through your WeRide Go app
and
autonomous freight-as-a-service revenue. However, these services are
not mentioned in
your Results of Operations. Please disclose how these services have
affected your Results
of Operations.
5. We note your statement that, "Our product revenue increased from
RMB101.6 million in
2021 to RMB337.7 million (US$49.0 million) in 2022, primarily due to
the increase in the
sales of our autonomous driving vehicles and related sensor suites."
To give investors
insight into what drove your revenue growth, please expand your
disclosure to state what
specific products drove the revenue growth. Your disclosure should
provide both
quantitative and qualitative description of the reasons for the
underlying material
changes. We refer to guidance in Item 5 of Form 20-F.
6. You state that "service revenue increased from RMB36.6 million in 2021
to RMB189.8
million (US$27.5 million) in 2022, primarily due to the increase in
revenue generated
from ADAS solutions." Please describe in detail the ADAS solutions
services that were
provided and the underlying reason for the increase in ADAS solutions
revenue. We note
that on page 8 you refer to certain ADAS solutions that will go to
market in 2023. As
such, it is not clear what ADAS solutions drove historical revenue
versus what ADAS
solutions you expect to provide in the future. Clarify throughout the
filing.
7. Your current discussion of cost of revenue and gross profit is too
general and does not
provide enough quantitative and qualitative detail as to the reasons
for material fluctuation
in those line items. Please expand your disclosure to provide
investors with more detail
about what specific products and services drove the material
fluctuations in those line
items. We refer to guidance in Item 5 of Form 20-F.
Tony Xu Han
FirstName LastNameTony Xu Han
WeRide Inc.
Comapany
May NameWeRide Inc.
15, 2023
May 15,
Page 3 2023 Page 3
FirstName LastName
8. On page 105 you state, "We expect to narrow our loss in the
foreseeable future." Please
expand your disclosure by referencing specific trends and strategies
that will allow you to
narrow your loss in the future. Disclose specific line items that will
be affected. Also,
disclose the significant increase in stock compensation expense
expected to be recorded in
future periods if an IPO is effective and how this stock compensation
expense will affect
future net income (loss). We refer to your disclosure on pages 51 and
113-114.
Non-IFRS Financial Measures, page 107
9. We note your statement that "Adjusted net loss enables our management
to assess our
operating results without considering the impacts of the
aforementioned
non-cash adjustment items that we do not consider to be indicative of
our core
operations." We also note that one of your adjustments is for "fair
value changes of
financial liabilities measured at FVTPL." However, you do not adjust
for "fair value
changes of financial assets at FVTPL." This appears to be an
unbalanced presentation of
Non-IFRS adjusted net loss, please revise accordingly. Also, tell us
why you do not
adjust for net foreign exchange gain/(loss).
Liquidity and Capital Resources, page 108
10. We note that your financial assets at FVTPL and time deposits
represent about 42% of
your total assets as of December 31, 2022. Please disclose the
jurisdiction(s) that hold
these financial assets. Also, disclose the currency(ies) in which
these assets are held.
Contractual Obligations, page 111
11. On page 150 you state, "We enter into separate contracts with OEM
partners and Tier-1
supplier partner on market terms." Please confirm you do not have any
contractual
obligations related to these contracts.
Business
Overview, page 129
12. We note your response to prior comment 11. In order to provide context
to your statement
that you "operate one of the world s largest autonomous driving
fleets, with over 500
vehicles" please disclose the number of vehicles sold for the periods
presented.
Consolidated Financial Statements
Consolidated Statements of Profit or Loss, page F-3
13. We note your response to our comment 23. As noted in paragraph 1, IAS
1 prescribes the
basis for presentation of general purpose financial statements and in
paragraphs 81A - 105
it provides guidance on the presentation of the statement of profit or
loss and other
comprehensive income. Furthermore, paragraph 29 of IAS 1 indicates
that items of a
dissimilar nature or function shall be presented separately. Please
explain to us the nature
and function of the transactions that gave rise to your interest
income and net foreign
Tony Xu Han
WeRide Inc.
May 15, 2023
Page 4
exchange gain (loss) and why they are similar in nature and function
to your primary
sources of revenue. We note you present interest expense outside of
operating losses.
Notes to Consolidate Financial Statements
2 Significant accounting policies, page F-18
14. We note your disclosure on page 40 states, "We generally offer a
limited warranty to our
customers for our products in order to repair or replace for the
aforementioned errors,
defects or hardware component failures. However, subject to the
product liability related
laws and regulations in the jurisdictions where our products and
services are offered, we
may incur significant additional development costs and product recall,
repair or
replacement costs, or more importantly, liability for personal injury
or property damage
caused by such errors or defects, as these problems would also likely
result in claims
against us." Please disclose how you account for your warranty
obligations. Refer us to
your basis in the accounting literature.
(f) Intangible assets (other than goodwill), page F-21
15. We note your response to comment 24 and your new disclosure in Note
2(z). However,
the current disclosure in Note 2(f) continues to imply that certain
development activities
have been capitalized. Please revise to include disclosure in Note
2(f) that clearly states
you have not capitalized any development activities.
(g) Other investments in debt and equity securities, page F-22
16. It appears that at December 31, 2022 you have RMB 1.2 billion in
financial assets at
FVTPL. On page F-47 you state that they are non-equity investments
which "represent
wealth management products issued by banks with floating rates."
Please provide a more
detailed description of what these investments represent and their
associated rates.
Discuss how the floating rates are determined. Also, please reconcile
the disclosure on
page F-47 to your disclosure on page F-71 which indicates these
financial assets are
valued at Level 2 and are financial assets purchased from an
open-ended mutual fund.
(x) Revenue and other income, page F-31
17. On page 8 you discuss that you "provide robotaxi services through the
WeRide Go app"
and "provide autonomous freight-as-a-service." However, your revenue
recognition
policy does not appear to discuss these sources of revenue. Please
provide a discussion of
FirstName LastNameTony Xu Han
your revenue recognition policy as it relates to providing robotaxi
services through your
Comapany NameWeRide
WeRide Go app andInc.
providing fright-as-a-service via your robovans.
Also, disaggregate
May 15,these
2023revenue
Page 4sources in your revenue footnote.
FirstName LastName
Tony Xu Han
FirstName LastNameTony Xu Han
WeRide Inc.
Comapany
May NameWeRide Inc.
15, 2023
May 15,
Page 5 2023 Page 5
FirstName LastName
17 Contract assets and contract liabilities
(a) Contract assets, page F-45
18. We note your disclosure on page F-45 where you state "The Group
typically agrees to a
retention period between one to three years for the sales of L4
autonomous driving
vehicles and the related retentions are included in the contract
assets until the end of the
retention period as the Group s entitlement to the retentions is
conditional on the
Group s work satisfactorily passing retention period." In this
regard, please tell us and
disclose how you considered your revenue recognition policy as it
relates to retentions
being conditional on the Group's work satisfactorily passing the
retention period. In other
words, tell us how you meet the acceptance criteria if this type of
retention period exists.
37 Subsequent events, page F-78
19. We note your disclosure on page 204 states that on "January 19, 2023,
we issued
1,524,259 Series D preferred shares to Hainan Huifuchangyuan Equity
Investment Fund
Partnership (Limited Partnership) for a consideration of
US$7,099,998.42." Please
disclose this information and all significant post balance sheets
events in your subsequent
event footnote.
General
20. Please provide a detailed legal analysis regarding whether the company
and each of its
subsidiaries meet the definition of an investment company under
Section 3(a)(1)(A) of
the 1940 Act. In your response, please address, in detail, each of the
factors outlined in
Tonapah Mining Company of Nevada, 26 SEC 426 (1947) and provide legal
and factual
support for your analysis of each such factor.
21. Please provide a legal analysis of whether the company and each of its
subsidiaries meets
the definition of an investment company under Section 3(a)(1)(C)
of the 1940 Act.
Please include in your analysis all relevant calculations under
Section 3(a)(1)(C),
identifying each constituent part of the numerator(s) and
denominator(s). Please also
describe and discuss any other substantive determinations and/or
characterizations of
assets that are material to your calculations.
Tony Xu Han
FirstName LastNameTony Xu Han
WeRide Inc.
Comapany
May NameWeRide Inc.
15, 2023
May 15,
Page 6 2023 Page 6
FirstName LastName
You may contact Inessa Kessman, Senior Staff Accountant, at
202-551-3371 or Robert
Littlepage, Accounting Branch Chief, at 202-551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact Marion
Graham, Staff
Attorney, at 202-551-6521 or Jeff Kauten, Staff Attorney, at 202-551-3447 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Haiping Li