The A-share fruit chain leader Lixun Precision has joined hands with Chery to build a car.
The company announced on the evening of February 11 that it intends to form a joint venture with Chery New Energy to specialize in the research and development and manufacture of new energy vehicles. In addition, the company's controlling shareholder, Lixun Co., Ltd., intends to purchase Chery-related equity for 10.054 billion yuan.
On the afternoon of February 13, Wang Laichun, chairman of Luxun Precision, said in a conference call that Luxun Co., Ltd. is an investor in Chery Holdings, and Luxun Precision does not build complete vehicles, but cooperates with Chery New Energy to develop ODM business that builds good cars for others.
Some analysts believe that Luxshare Precision is expected to enter the automotive business industry chain of its big customer Apple in the future.
According to the data of the China Securities Taurus APP, in the morning of February 14, Lixun Precision once rose more than 6%, and as of the noon close, it was 42.35 yuan / share, up 3.17%, with a market value of 299.5 billion yuan.
Chairman: The company does not build complete vehicles
On the evening of February 13, Luxun Precision released an investor relations activity record sheet showing that a conference call on the afternoon of the 13th attracted the participation of top investment institutions. Wang Laichun, Chairman and General Manager of Lixun Precision, Li Bin, Chief Operating Officer, Huang Dawei, Deputy General Manager and Secretary of the Board, li Jing, General Manager of automotive division, attended the conference call.
Wang Laichun said that Luxshare Co., Ltd. is an investor in Chery Holdings, Lixun Precision does not build the whole vehicle, but cooperates with Chery New Energy to develop the ODM (original design and manufacturing) business for others to build a good car, and aims to seize the opportunity to enter the world's leading Tier1 (first-tier supplier of the depot).
Wang Laichun believes that under the new pattern, the market needs ODM to build cars. Chery's vehicle research and development base has also improved rapidly in recent years, and in the learning mode of double T (Toyota R&D quality system and Tesla subversive innovation), it grew against the trend last year, and it is also the largest export volume of domestic brand car companies. Luxshare Precision's experience and market reputation in the field of consumer electronics over the years can cooperate with Chery to develop another new industry - to build a good car for others.
According to the information, Luxun Limited is controlled by Wang Laichun and his brother Wang Laisheng.
According to Luxun Precision, the joint venture will develop the ODM platform and assemble the complete vehicle. Luxshare Precision has rich ODM experience in the consumer electronics, communications, and automotive fields, and has a very familiar grasp of the ODM business model, and at the same time, it can also provide empowerment for joint ventures in terms of core customer resources. Chery has been working in the field of vehicles for many years and has a deep understanding of vehicle products.
Regarding the main customers of the newly established joint venture company, Luxshare Precision said that the ODM business has a relatively clear landing project, and it will be put into production in about 12-18 months. The joint venture is expected to target the business of foreign traditional brand car companies and the new SmartEV brand business in China.
The future may enter the Apple car supply chain
It is worth noting that as a fruit chain leader, The stock price of Luxun Precision Tiger Year performed poorly in the first week, falling by 12.03% in five trading days, and the market value evaporated by 39.67 billion yuan. Stimulated by the good news of "car building", in the morning of February 14, The stock price of Lixun Precision rose by more than 6% at one point.
At present, the largest customer of Luxshare Precision is Apple. Industry insiders told the China Securities News · China Securities Taurus reporter that most of the investment needs of major enterprises in Apple's supply chain are around the service of Apple, Luxshare Precision is more obvious, and the company may become one of the main suppliers of Apple cars in the future.
Although the automotive business is growing rapidly, it still accounts for a relatively low proportion of Luxshare Precision's revenue. In the first half of 2021, Luxshare Precision's revenue from automotive interconnection products and precision components was 1.774 billion yuan, an increase of 38.99% year-on-year, accounting for 3.68% of revenue.
According to the analysis of CITIC Construction Investment, the cooperation between Lixun Precision and Chery, and the acquisition of Chery's equity by the controlling shareholder, mean that Lixun Precision has made efforts to expand the business of vehicle assembly and new energy vehicle parts. On the one hand, Luxshare Precision can rely on its rich experience in cost management and automation in the field of consumer electronics to empower the automotive business; On the other hand, Luxun is expected to be introduced into the industrial chain of its own major customer automotive business, bringing momentum to future growth. This cooperation will not have a significant impact on the financial situation and operating results of Lixun Precision in the short term, and will have a relatively important strategic significance in the long run.