Author 丨 Ni Yuqing Peng Suping
Editor 丨 Lin Hong Zhang Ruosi
Figure Source 丨 Figure Worm
The smart electric vehicle track has ushered in another heavyweight, and Luxshare Precision, which currently has a market value of nearly 300 billion, has decided to enter.
At a research meeting on February 13, Wang Laichun, chairman and general manager of Luxun Precision, said: "We believe that Smart EV is an opportunity that Chinese automakers have not encountered in a hundred years... The opportunities brought by the Smart EV (Smart Electric) include not only the whole vehicle, but also the more vitality of the Tier1. ”
Luxshare Precision's market positioning is the tier 1 supplier (Tier1) of the depot. Wang Laichun said that the market size of Tier1 itself is almost 70% of the total output value of all car companies, such as the world's four major Tier1 manufacturers Bosch, Denso, ZF, Magna, the revenue scale is more than 30 billion US dollars. Among the world's top 100 Tier1 manufacturers, there are 8 Chinese companies, and under the new pattern, the market needs ODM to build cars.
At the same time, she stressed: "Luxshare Precision does not build the whole vehicle, but cooperates with Chery New Energy to develop the ODM business of building a good car for others, and aims to seize the window of opportunity to fight into the world's leading Tier1." ”
Cross-border is not easy, need more resources and support, Luxshare Precision chooses and car companies to make alliances. On February 11, Luxshare Precision issued an announcement that the company and a number of Chery companies signed the "Strategic Cooperation Framework Agreement", and Luxun Precision and Chery New Energy intend to jointly establish a joint venture company, specializing in the research and development and manufacturing of new energy vehicles.
Capital is naturally indispensable, and Luxshare Precision enters the game with heavy gold. On the same day, Lixun Precision Controlling Shareholder Lixun Co., Ltd. signed the Equity Transfer Framework Agreement with Qingdao Wudaokou, stipulating that Lixun Limited would purchase 19.88% of the equity of Chery Holdings, 7.87% of the equity of Chery Shares and 6.24% of the equity of Chery New Energy held by Qingdao Wudaokou for 10.054 billion yuan, and after the completion of the transaction, Lixun Limited would not form control over Chery Holdings, Chery Shares and Chery New Energy.
Some manufacturing foundry executives told the 21st Century Business Herald reporter: "New energy vehicles contain a huge blue ocean market, which is an industry that everyone will definitely cut into." "For the huge automobile industry, the amount of tens of billions of dollars may only be the beginning, which warriors can compete for a place in the future, and will stage a protracted competition."
Qingxi Town, Dongguan City, Guangdong Province, Lixun Precision Industrial Zone. Visual China
After Lixun Limited invested in the "Chery System", regardless of whether the Qingdao Wudaokou Fund had paid all the acquisition money before, Chery would be injected with fresh blood. Moreover, compared with the government and financial background of Qingdao Wudaokou Fund, Luxshare Limited and Luxshare Precision have an industrial background, which is expected to bring more imagination space to Chery's mixed reform.
Luxun Precision started with the production and sales of connectors, and later fully launched the precision formation oem business of computers, mobile phones and other products, and was once known as "a brother of the fruit chain" and was the leading company on the Apple ecological chain. On the afternoon of February 13, the management of Luxun Precision said at an investor meeting that the company's automotive business has been precipitated for more than ten years, mainly focusing on the "nervous system" of the whole vehicle, and cooperating with Chery to achieve a breakthrough in this part of the business "from 0 to 1, 1 to 10 or 1 to 100".
10 billion to start
Luxshare Precision itself has been broadening its product line and looking for a new growth curve. As a leading manufacturer of consumer electronics and an important supplier of Apple, Luxshare Precision once soared in market value of more than 400 billion yuan, but now it is declining.
From the performance point of view, Luxun Precision volume is still growing, but due to the impact of the epidemic, raw materials, consumer electronics boom, etc., the growth rate of non-net profit in the first half of 2021 is lower than market expectations. At the same time, the pain points of the fruit chain relying on apples have always existed, and market sentiment is also fluctuating, and Luxshare Precision wants to cultivate more robust product lines.
All along, Luxshare Precision has carried out a series of acquisitions, step by step into notebook cables, automotive electronic cables, mobile phone cables, communications, headphones, wireless charging, to iPhone assembly and other fields. Among them, the OEM Apple's wireless headphones AirPods are widely known, in the industry's view, a large number of OEM Airpods marks the strength of Luxshare Precision in high-complexity and precision intelligent hardware manufacturing and scale production, and also allows Luxshare Precision to achieve a breakthrough from parts to the whole machine FOUNDRy.
Now, Luxshare Precision is entering a new track. According to the financial report, in 2020, Luxshare Precision achieved sales revenue of 92.501 billion yuan and net profit attributable to the parent company of 7.225 billion yuan. From the numerical point of view, Luxun Limited's investment of about 10 billion yuan exceeded the net profit attributable to the mother of Luxun Precision for the whole year of 2020.
Its determination to invest in new energy vehicles is evident. Industry insiders told reporters that the level of investment of tens of billions is the beginning, the main source of income of Lixun Precision is still from the consumer electronics industry, although the revenue growth rate of automobile-related business is high, but the proportion of the base is low. The addition of large-scale enterprises will have an impact on the market, and whether it can become a "new storm" in the market also needs to observe the landing products.
For customers and models, Luxshare Precision did not disclose the specific situation, "but the ODM business has a relatively clear landing project, which will be put into production in about 12-18 months." The joint venture is expected that the main target business will be the business of foreign traditional brand car companies and the domestic new Smart EV brand business," said the executive of Luxshare Precision, "Luxshare Precision synergistic ODM car investment, in addition to the need for more investment overseas, in the domestic ODM car, currently based on Chery's existing production capacity platform and the future Chery new energy related planning, Luxshare Precision does not need too much investment, and we are determined to participate, focusing on Tier1, will be combined with interests to consider the decision." ”
After holding hands with Chery, Luxshare Precision said that it will seize this opportunity to achieve Tier1 take-off in the next 35 years, and achieve 1 to 100 in the rapid realization of important components from 0 to 1 and rapid growth in scale through the new platform.
At the same time, the executives of Luxshare Precision also frankly said: "Luxun Precision's automotive business started from scratch, after 10 years of development to achieve a breakthrough, to reach the current scale of revenue, so it is very difficult to achieve a breakthrough from 0 to 1 or 1 to 100." Especially in this period, if we follow the current rhythm and speed, we are afraid of missing the window. Especially when there is an ODM opportunity, we are also worried about losing the opportunity to enter key components. ”
Fruit Chain's new car arena
On the other hand, in recent years, from Foxconn to Luxshare Precision, Apple's foundries are accelerating their entry into the field of new energy vehicles. Some investors told reporters that after the vigorous semiconductor investment boom in previous years, the new energy automobile industry chain this year is the focus of attention, and the valuation of enterprises in the upstream of the industrial chain has been very high.
According to data from the Ministry of Industry and Information Technology, the annual sales of new energy vehicles will exceed 3.5 million units in 2021, and the market share will increase to 13.4%. The Association expects that new energy vehicles are expected to exceed 6 million in 2022, and the penetration rate of new energy vehicles will reach about 22%. No one wants to miss the industrial opportunity, Apple cars or still on the road, but the foundry has been in advance to lay the foundation.
In fact, foundries have long been involved in the automobile industry, but the degree of participation in the industrial chain has not been very deep, and now they want to deepen the tentacles of foundry into the new energy industry.
According to reports, the main products of Luxshare Precision's automotive business 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. In addition to the original traditional business, BCS outside the body has now added intelligent cockpit, intelligent driving, power module, Internet of Vehicles and other services, with customers all over the world, including Volkswagen, General Motors, Tesla, BBA and Japan's three major brand customers.
According to Luxshare Precision, when the ODM car-making business model was less than one million units in the early stage, Luxshare Precision was more to assist Chery to develop ODM business and build the platform well, because there were essential business differences and management differences between doing brand and doing ODM. With the continuous development of the ODM business, the core components business will also be brought into play.
In addition to Luxshare Precision, Foxconn is an industry pioneer. Hon Hai Group has made a series of moves in 2021, released three electric vehicles, cooperated with the American electric vehicle company Fisker, and geely established an automobile foundry company to invest in Byton. Although the development of Byton is lamentable, the pace of Foxconn's investment has not stopped, and the intensity is still increasing. Liu Yangwei, chairman of Hon Hai Group, previously said that the global electric vehicle market is expected to reach 36 million vehicles per year from 2025 to 2030, while Foxconn will take 10% of the global market share from 2025 to 2027.
Whether it is Foxconn or Luxshare Precision, they have entered the oem of the whole vehicle through cooperation. Luxshare Precision is experimenting with new models, and Foxconn has a wider range of layouts from brand to manufacturing. Although some companies are not currently involved in automobile manufacturing, they have also entered the links of components and automatic driving, such as LingyiZhi manufacturing acquired Zhejiang Jintai in June 2021, horizontally expanded the layout of new energy vehicle structural parts business, and issued an announcement in July to invest in the construction of battery precision structural parts projects in Jingmen, Hubei Province. Overseas Flex has also long been involved in the automotive field and participated in Baidu's autonomous driving solution cooperation.
Vertically, Luxun Precision and other manufacturing representatives are extending their comprehensive strength to the integrated layout; horizontally, the head enterprises of Apple's industrial chain are extending their boundaries, with the changes in user needs and brand demand, foundries have also entered the stage of integration and intensive competition of the whole industry chain.
The track of new energy vehicles is in contention, and foundries are facing not only the competition of peers, but also the old automobile supply chain and the competition of a number of technology giants, such as Huawei's positioning is also as a supplier to help car manufacturers build good cars.
The players in the stadium are faced with opportunities, questions, challenges, and even failures. Who will be the real warrior in the new energy vehicle market, and wait and see.
Chery back in the arms of Wuhu?
After Lixun takes over the baton, Qingdao Wudaokou Fund and the Qingdao Municipal Government behind it will lose the majority shareholder status of Chery Holdings.
According to the announcement released by Lixun Precision, after the completion of the transaction, the shareholding ratio of Qingdao Wudaokou Fund in Chery Holdings will drop to 26.89%, lower than the 27.68% of Wuhu Construction Investment Co., Ltd., while the remaining shareholding ratio of Qingdao Wudaokou is unknown in Chery Automobile and Chery New Energy, where the automobile business is more focused.
Some commentators pointed out that the Qingdao Wudaokou Fund "retreated to the second line", which means that the control of chery system has returned from the Government of Qingdao Jimo District to the hands of the State-owned Assets Supervision and Administration Commission of Wuhu City. Moreover, from the personnel changes, it can also be seen that Qingdao Wudaokou Fund has withdrawn from the "Chery System" - there is information that in August 2021, Zhou Jianmin, the actual controller behind Qingdao Wudaokou, withdrew from Chery Automobile, and in December of the same year, Zhao Zhenhua, another natural person shareholder behind Qingdao Wudaokou, also withdrew from Chery Holdings.
However, the 21st Century Business Herald reporter checked on the public platform that Zhou Jianmin is still among the senior managers of Chery Holdings, and Chery Automobile has no information on personnel changes in the past year. In addition to Zhao Zhenhua's withdrawal from Chery Holdings, in December last year, the company also added Zang Yijie, Zhang Guozhong and other senior management personnel, of which Zang Yijie was the deputy director of Qingdao State-owned Assets Supervision and Administration Commission, and is currently the general manager and director of Qingdao Urban Construction Investment (Group) Co., Ltd.
To a large extent, this shows that Qingdao has no intention of withdrawing from Chery Investment - taking a step back, Qingdao Wudaokou Fund still holds 26.89% in Chery Holdings, which is also a large proportion in itself. Combined with the report of Qingdao Daily, although Qingdao city has insufficient financial strength, it has a strong willingness to introduce Chery's projects through investment, and it is unlikely to "exit" at a critical moment.
The latest information from the Government of Qingdao Jimo District shows that Chery Automobile's Qingdao base has ushered in the latest progress, on January 29 this year, the main structure of the project painting workshop and assembly workshop has been capped, and the four workshops have all completed the main construction, and it is planned to introduce process equipment in April this year. According to the data, Chery Automobile Qingdao Base started construction on February 26, 2021, and the project includes four workshops of stamping, welding, painting and assembly, which is Chery's fifth production base in China.
The above-mentioned market analysts who did not want to be named told the 21st Century Business Herald reporter that from the public statements of all parties, Qingdao is still very important to Chery, but there may be some differences in the specific plan of shareholding, such as a party may hope to unify the ownership of the "Chery system" as the Identity of Qingdao Wudaokou Fund, but the other party may prefer to hold the shares separately, which may also be the reason why Chery Automobile and other companies have delayed changing the equity structure and other industrial and commercial information.
According to the mixed reform bidding announcement issued three years ago, Chery's hard requirements for investors are: for a single entity, do not accept the capital increase of the consortium, and do not accept the entrustment (including implicit entrustment) to increase the capital. The scale of Chery's mixed reform and capital increase part exceeds 14 billion, plus the supporting equity transfer part, the overall volume is close to 20 billion, and it is not easy to fully meet the above requirements. From this point of view, Qingdao's introduction of more partners has actually laid the groundwork for a long time.
This issue is edited by Si Chen, Intern Zhan Huinan