"Fruit chain" is not as good as new energy "incense"? Luxun Precision invested 10 billion yuan to join hands with Chery to build cross-border vehicles

Text | Xie Lan Li Wenshan

Apple's electronics industry chain, which was favored by the market in the past, seems to be no longer the halo due to changes in the business environment, and has been transformed. Before there was Changying Precision vigorously layout power battery structural parts, and then There was Lens Technology to open up a new battlefield for photovoltaics, and now Lixun Precision can't sit still.

On February 12, Luxun Precision released two transactions with a total investment of about 11 billion yuan to the market. First, Lixun Precision's controlling shareholder, Lixun Limited, intends to purchase 19.88% of the equity of Chery Holdings, 7.87% of Chery shares and 6.24% of Chery New Energy held by Qingdao Wudaokou for 10.054 billion yuan; second, through a wholly-owned overseas subsidiary for HK$1.104 billion, it acquires 74.67% of the equity of Hong Kong-stock Convergence Technology for HK$1.104 billion.

Have you planned to cross-border new energy vehicle manufacturing field?

According to the announcement issued by Lixun Precision, in addition to signing the above-mentioned Equity Transfer Framework Agreement for the purchase of the relevant "Chery" equity, Lixun Precision will also jointly establish a joint venture with Chery New Energy, specializing in the research and development and manufacturing of new energy vehicles, providing cutting-edge R&D design, mass production platform and sea exit for the company's core auto parts business, and is committed to achieving the company's medium- and long-term goal of becoming a leading manufacturer of auto parts Tier1.

Among them, Lixun Precision intends to subscribe 500 million yuan to hold 30% of the registered capital of the cooperative subsidiary, and Chery New Energy to subscribe to 1.167 billion yuan and hold 70% of the equity of the registered capital. The cooperation between the two parties is exclusive, that is, Chery Group cannot cooperate with other automotive foundry enterprises in the OEM business, but can independently oem business or cooperate with auto brand enterprises in OEM business.

"Luxshare Precision has been looking for suitable automakers to lay out the field of new energy vehicles, Chery Automobile and Luxun have a lot of contacts in business, this official announcement of cooperation is not unexpected, in essence, the two cooperation plans have long been on the agenda." At the same time, there are not many automobile factories in the market that can choose investment and cooperation for Luxshare Precision, some of which have a relatively high cooperation cost and some of which have a weak synergy effect. A consumer electronics researcher at a local securities company in Guangzhou told the Securities Daily reporter.

According to the annual report of Luxun Precision in recent years, the company focuses on the "blood vessel and nervous system" of the whole vehicle in the automotive field, and the specific products include the functions of the vehicle and special wiring harness, the high-voltage wiring harness and connector of the new energy vehicle, the on-board communication unit (TCU) and the central gateway. According to the company's 2021 semi-annual report, automotive interconnection products and precision components accounted for 3.68% of the company's operating income, about 1.77 billion yuan.

"This time, the company finally reached a cooperation with Chery, mainly because it wants to enter the automotive field as soon as possible." Consumer electronics due to the impact of the market environment has not been as good as in previous years, the main business is slightly weak, for Luxshare Precision urgently need to find new business growth points to maintain the rapid development of the enterprise. The researcher said.

"In addition to being the leader in the field of consumer electronics foundry, Luxshare Precision has long laid out the automotive field itself, and has long cooperated with domestic and international vehicle brands." The layout of the consumer electronics giant's entry into the automotive industry can make it lay out a new growth flywheel in the old industry and core capabilities, which is very important for the performance and market value growth of each company, and its accumulation in the original research and development, production, manufacturing, OEM, and management will also help to quickly enter the automotive electronics field with similar product temperament. Qin Ruohan, general manager of Jinhua Fund, told reporters.

It is reported that Chery Group released its annual sales data for 2021 in early January this year, and its cumulative sales of cars in 2021 reached a historic 961,900 units, an increase of 31.7% year-on-year. Among them, exports were 269,200 units, an increase of 136.3% year-on-year, and sales of new energy vehicles were 109,000 units, an increase of 144.6% year-on-year. In 2022, Chery Group has set a goal of ensuring annual sales of 1.5 million vehicles, striving for 2 million vehicles, and an annual operating income of 200 billion yuan.

At the same time, Luxshare Precision intends to invest HK$1.1 billion to acquire 74.76% of the equity of Hong Kong-stocked Convergence Technology. Convergence Technology is a customized wire interconnection solution provider, the main products are used in data centers, industrial and medical equipment, communications and other fields. Lixun Precision said that it has strong complementarity with Convergence Technology, and further improves the company's strategic layout of interconnected products in the fields of communications, medical treatment, automotive, and industrial from the aspects of products, customers, and markets. In 2020, Convergence Technology achieved a total operating income of HK$3.008 billion and a net profit of HK$226 million.

The fruit chain giant aims at the new energy business

In fact, in the circle of friends of the fruit chain giants, Luxshare Precision is not the first company to operate in depth and cross-border to seek development.

Changying Precision announced in early 2021 that it intends to invest a total of about 8.8 billion yuan in the power battery structural parts automation production line project, and the location of the expansion project is consistent with the site selection of the Ningde era expansion project, and the target is directly aimed at "Ningwang".

At the end of last year, Lens Technology announced that it signed a strategic cooperation agreement with Kaisheng Technology, a leading photovoltaic chip company, and set up a wholly-owned subsidiary, Hunan Lens New Energy Co., Ltd., mainly engaged in photovoltaic projects and other businesses, with a registered capital of 1 billion yuan. This means that the photovoltaic industry of Lens Technology will officially open the curtain. At the same time, the company also expressed confidence in the growth of the new energy vehicle business earlier and strived to achieve higher growth in 2022. Shanghai Lingang's automobile project will also be actively promoted, and the layout planning is being made internally, and the company will also plan the global layout.

"Due to the longer mobile phone replacement cycle, from the original 2 years to the current 3 years, the overall demand has declined, the mobile phone industry chain is not as good as from the prospect, and the performance of some industrial chain companies will change significantly." At this stage, it will be relatively stable, and the future will be similar to the home appliance industry. Wang Sheng, research director of Shanghai Seaview Investment Management Co., Ltd., told reporters.

He also believes that the automotive industry is in the process of manufacturing from traditional manufacturing to technology manufacturing, the car is gradually developing from a simple means of transportation to a set of entertainment, office, consumption and other interconnected spaces, the car in the next 10 years will be similar to the transition and upgrading of feature phones to smart phone terminals, and the demand for automotive electronics will be highly stimulated.

Earlier, Lens Technology expected a net profit of 2 billion yuan to 2.3 billion yuan in 2021, down 51% to 59% year-on-year, mainly facing new difficulties and challenges such as repeated epidemics, limited electricity consumption, and lack of core in the supply chain. Changying Precision expects a net profit loss of 490 million yuan to 690 million yuan in 2021, and the company explained that the large loss is mainly due to the epidemic, the shortage of customer chips, and the sharp increase in the price of raw materials such as copper and aluminum.