In the new decade, smart cars relay smartphones have become another disruptive product in the technology industry. In the face of the new outlet, the "fruit chain giants" who have taken advantage of the wind in the era of smart phones have started the idea of the automotive supply chain...
The first shot of the year of the tiger was fired by the "fruit chain giant" Lixun Precision.
On the evening of February 11, Luxun Precision issued two announcements in a row, bringing tens of billions of heavy gold to "enter" the car industry.
In the first announcement, Lixun Precision said that its 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; another announcement revealed that Luxun Precision will acquire 74.67% of the equity of Hong Kong-stock convergence technology through its wholly overseas subsidiary for HK$1.104 billion.
The wave of traditional consumer electronics has gradually subsided, and Luxshare Precision is trying to explore a new growth curve outside the near-"peak" smartphone business.
In the field of auto parts for more than ten years, Luxshare Precision chose to join hands with Chery to bet on new energy vehicle ODM. However, on the eve of the outbreak of new energy vehicles, can the "belated" Luxun Precision tell the new story of the automobile foundry?
Luxshare Precision enters the field of car manufacturing
"Luxshare Precision does not build complete vehicles", on February 13, Luxun Precision stated in a record of investor relations activities, "but instead cooperate with Chery New Energy to develop the ODM business of building good cars for others, and aim to seize the window of opportunity to fight into the world's leading Tier1." ”
A few words revealed a signal: unlike the star enterprises that cross-border car manufacturing in the past, Luxshare Precision tried to "reproduce" its successful case as a fruit chain oem in the field of automobile manufacturing.
Specifically, looking at the cooperation method between Lixun and Chery, according to the announcement of Lixun Precision, it will jointly establish a joint venture with Chery New Energy, of which Lixun Precision intends to subscribe for 500 million yuan to hold 30% of the registered capital of the cooperative subsidiary, and Chery New Energy to subscribe 1.167 billion yuan and hold 70% of the equity of the registered capital.
The joint venture will specialize in the R&D and manufacturing of new energy vehicles, and provide cutting-edge R&D design, mass production platform and sea outlet for Lixun Precision's core automotive components business. In terms of business division, because Chery is good at the vehicle business, the joint venture company will be led by Chery, and Luxun Precision will coordinate in terms of business and customers.
According to media reports, since last year, Chery has been looking for a partner in the field of technology manufacturing, hoping to seek help in software development and solve the problem of overcapacity. Before signing a contract with Luxshare Precision, Chery also had some contact with another mobile phone foundry giant, Foxconn. However, in the end, he chose to cooperate with Luxun Precision to test the automotive ODM business.
Lixun Precision further revealed that the cooperation between the two sides is exclusive, that is, Chery Group cannot cooperate with other automotive foundry companies in the OEM business, but can independently oem business or cooperate with auto brand enterprises in OEM business.
According to the data, Luxshare Precision has been immersed in automobile manufacturing related business for more than ten years, and the main products related to automobiles are connectors/connecting wires, low/high voltage vehicle wiring harnesses, special wiring harnesses, etc., and the main customers include domestic traditional car companies, new car manufacturing forces and some large Tier1 manufacturers.
According to the 2021 semi-annual report, Luxshare Precision Automotive Interconnection Products and Precision Components accounted for 3.68% of the company's operating income, about 1.77 billion yuan. For more than ten years of development, the revenue of automobile-related business accounts for only 3.68%. The outbreak of new energy vehicles is coming, and Luxshare Precision "can't sit still".
"If we follow the current pace and pace, we're afraid we'll miss the window. Especially when there is an ODM opportunity, we are also worried about losing the opportunity to enter key components, so we are cooperating with Chery at the current point in time. ”
At the investor exchange meeting, Luxshare Precision made no secret of its goal - to achieve Tier1 take-off in three to five years and become the world's leading manufacturer of Tier 1 auto parts. It is understood that at present, its ODM business has a relatively clear landing project, which will be put into production in about the next 12-18 months. As for the main target business of the joint venture, it is expected to be the business of foreign traditional brand car companies and the new SmartEV brand business in China.
Industry analysts believe that for Luxun Precision, which does not have any experience in mass production of complete vehicles, finding a traditional manufacturer to set up a joint venture company is one of the safest and most economical choices for cross-border car manufacturing. However, such an ideal partner is not easy to find.
Luxun Precision is menacing, and tens of billions of heavy gold have entered the automobile market with a high profile. However, judging from the information currently flowing out, in this cross-border, Luxshare Precision prefers to define itself as a "supporting role".
As an important leading enterprise in the fruit chain, Luxun Precision was once the capital darling of the A-share market. It is such a star enterprise with a market value of hundreds of billions of yuan, what are the considerations behind the "low-profile" entry into the car?
Fruit chain giants are also "anxious"
Since the second half of 2020, Luxshare Precision's stock price has entered a volatile downward range. As of the close of trading on February 14, Luxun Precision closed at 41.9 yuan per share, up 2.07%, and the latest market value was 296 billion yuan. Compared with the 400 billion yuan at the high point of 2020, Luxshare Precision has lost more than 100 billion yuan in more than a year.
The ups and downs of Lixun Precision in the secondary market are closely related to the prosperity of apple's industrial chain.
Since 2016, due to the major orders of Apple Watch and Airpods, Luxshare Precision's revenue has risen from 13.763 billion yuan to 92.501 billion yuan in 2020, with an average annual compound growth rate of 88.72%. In terms of net profit attributable to the mother, it rose from 1.157 billion yuan to 7.225 billion yuan, with an average annual compound growth rate of 84.15%.
In the secondary market, the market value of Luxun Precision also rose synchronously, soaring all the way to a high of 400 billion, about 5 times the lowest point. According to the financial report, in 2020, Apple alone contributed 63.843 billion yuan in sales to Luxun Precision, accounting for about 70% of the total revenue. During the same period, luxshare Precision's second largest customer sales were only 4.234 billion yuan.
When the binding between Luxshare Precision and Apple continues to deepen, the risk is also quietly approaching.
In January 2022, Apple, the world's leading consumer electronics company, released its financial report, with revenue reaching a record high of $123.95 billion in 2021, an increase of 11.2% year-on-year; net profit of $34.63 billion, an increase of 20.2% year-on-year.
The downstream market is hot, and in the same period, the middle and upstream suppliers related to Apple have presented another picture: the latest financial report shows that the net profit of Luxun Precision in the first three quarters of 2021 was 4.69 billion yuan, an increase of 0.21% year-on-year, maintaining the growth momentum. However, the net profit in the same period was only 1.6 billion yuan, down 25.28% year-on-year.
Not only Luxun Precision, in 2021, ofOWCO,which was excluded from the fruit chain, estimated that the net loss was between 1.9 billion and 2.7 billion yuan; Changying Precision also said in the performance forecast that the net profit would decline significantly.
Behind the ice and fire of the market, the golden age belonging to the traditional consumer electronics ODM is becoming a thing of the past. Before the industry ceiling arrives, fruit chain giants such as Luxshare Precision need to seek transformation.
In this context, smart cars, which are similar to smartphones, have become the transformation direction of most technology manufacturing companies. In addition to Luxun Precision, many companies, including Foxconn, Lens Technology, Changying Precision, etc., have taken action.
In January, Foxconn signed a strategic cooperation framework agreement with Byton Automobile and Nanjing Economic and Technological Development Zone to jointly promote the mass production of Byton new energy vehicle products. On the 13th of the same month, Foxconn also signed a strategic cooperation agreement with Geely Holdings, stipulating that the two sides will establish a joint venture company to provide OEM production and customization consulting services for global automobile and travel companies.
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. At the same time, Lens Technology also said that the automobile project in Shanghai Lingang will also be actively promoted.
Further back, 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.
Compared with the above peers, Luxshare Precision has more urgent transformation pressure. In addition to the revenue mainly relying on Apple, in the past period of time, in order to retain large customers, Luxun Precision has also carried out a large number of research and development, mergers and acquisitions around Apple. According to the financial report, as of the third quarter of 2021, Luxshare Precision's interest-bearing liabilities in one year reached 16.9 billion yuan, and the asset-liability ratio was close to 60%, nearly 40 percentage points higher than when it entered The Apple supply chain.
The series of efforts made by Apple to "cater" are like a sword of Damocles, and to some extent, Luxshare Precision is also helpless in the automotive field.
But in any case, the wave of new energy vehicles has arrived, and there is not much time left for enterprises to hesitate.
Luxshare Precision's new story?
At the investor exchange meeting on February 13, Luxshare Precision repeatedly said that the Tier1 field is a "blue ocean" full of opportunities.
For example, Lixun Precision said that the current Tier1 market is almost 70% of the total output value of all car companies, and the four major Tier1 manufacturers in the world known to everyone - Bosch, Denso, ZF, magna, have been established for more than 50 years, and the revenue scale is more than 30 billion US dollars, but there are no Chinese companies in the four major manufacturers.
And Luxshare Precision just wants to tell a new story of a "Tier1 leader".
"The company has always been aiming to become a leading Tier1 manufacturer in the automotive field, and has been looking for a platform that can exercise its tier1 core component capabilities. This strategic cooperation will rapidly develop the company's Tier1 business on the basis of building a cooperative car manufacturing ODM model. ”
Through the cooperation with Chery, Luxshare Precision can put various components of the product line in the joint venture company "training". In the words of Luxshare Precision, it is: "Quickly improve the company's comprehensive capabilities as the core components of Tier 1 manufacturers, quickly polish, optimize and increase in practice, realize the diversification and large-scale development of the company's core components, and achieve the medium- and long-term goal of becoming a leading tier 1 manufacturer." ”
However, before becoming the head Tier1 manufacturer, Luxshare Precision still has a long way to go. According to the management of Lixun Precision, in the early stage of cooperation, when the ODM car manufacturing scale of the joint venture company formed by Lixun Precision and Chery New Energy was less than one million units, the main function of Lixun Precision was to help Chery develop the ODM business, and after the development of the ODM car manufacturing business in the future, the core parts business of Luxun Precision also developed.
In other words, the cooperation between Luxshare Precision and Chery actually has a time delay. In the early stage, Luxshare Precision helped Chery open up the ODM market; in the later stage, the ODM scale became a line, and Luxshare Precision took advantage of this to develop parts on a large scale.
From the perspective of this cooperation model, for Luxshare Precision, its auto parts business wants to grow and develop, and it is bound to experience a period of pain.
Looking at the initial ODM business of the two sides, in 2007, Apple released the iPhone4, which opened the curtain of the smart phone era, and the domestic mobile phone ODM foundry industry came into being; now, new energy vehicles are about to usher in an outbreak after a ten-year cultivation period, and analogously, the new energy automobile industry may also open up the ODM market.
However, during the incubation period of the ODM market, whether it is Lixun Precision, Chery or other outsiders, it will face multiple difficulties in the automotive OEM market from scratch.
Responsible Editor | Chen Bin