"Apple dependence" is difficult to get rid of, spending tens of billions of dollars to lay out ODM to build cars, can Luxshare Precision catch up later?

In 2022, cross-border car manufacturing is still surging.

On February 11, fruit chain giant Luxshare Precision (002475. SZ) announced that the company and Chery Group jointly signed the "Strategic Cooperation Framework Agreement" and intend to jointly establish a joint venture with Chery New Energy to lay a strategic partnership for both parties.

On the day of the signing of the agreement, Lixun Precision's controlling shareholder, Lixun Limited, spent 10 billion yuan to buy 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 New Energy Automobile Industry Fund Enterprise (Limited Partnership), the largest shareholder of Chery Holdings.

"'Car building' is a new skill tree for Luxshare Precision." Pan Helin, executive dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, said in an interview with the China Times reporter, "With this as a springboard, Luxshare Precision will march from the consumer electronics industry to the automobile manufacturing industry." ”

So, how will Luxshare Precision break through in the crowded track when it enters a new field? The reporter of this newspaper sent a letter to Lixun Precision for an interview on the relevant issues, but as of press time, it has not received a reply.

As of the close of trading on February 18, Luxun Precision reported 43.55 yuan / share, down 1.67%.

Tens of billions of cars to get rid of the fruit chain bundle?

Founded in 2004, Luxshare Precision is an important accessories supplier in Apple's industry chain, and was successfully listed on the Shenzhen Stock Exchange in September 2010. The company's main business is connectors, cables, motors, wireless charging and electronic modules and other products research and development, production and sales, high-frequency product development, products are mainly used in 3C (computer, communications, consumer electronics), automotive and communications and other fields.

In 2020, Luxshare Precision achieved sales revenue of 92.501 billion yuan, an increase of 47.96% over the same period of the previous year, and net profit attributable to the owners of the parent company of 7.225 billion yuan, an increase of 53.28% over the same period of the previous year. Among them, the first largest customer Apple achieved sales of 63.8 billion yuan, accounting for 69.02%.

For the problem of relying on Apple, the company has also expressed concerns. In the 2021 semi-annual report, Luxshare Precision said: "At present, the company's customer concentration is relatively high, and in the short term, it is mainly concentrated in the field of consumer electronics. Although the relevant customers are the top customers in the industry, have strong and leading market competitiveness, and maintain a stable cooperative relationship with the company for many years, if serious business problems occur with important customers, the company will also face certain operational risks. ”

In 2021, the performance of Luxun Precision showed a downward trend. According to the financial report data, The single quarter revenue of Luxun Precision in the third quarter of 2021 was 32.887 billion yuan, an increase of 42.42% year-on-year, but the net profit was only 1.6 billion yuan, down 25.28% year-on-year. As of the third quarter of 2021, the company's gearing ratio is close to 60%.

In response to the poor performance in the third quarter of last year, Luxun Precision explained: The external environment continues to be complex and changeable, in addition to the continuous recurrence of the epidemic situation at home and abroad, the shortage of upstream materials, rising prices, declining transportation capacity and rising transportation costs, etc., but also caused a certain impact on the company's profitability and the shipment of some products.

Or affected by the pressure on performance, Luxshare Precision also has the action of opening up new markets at this time. The announcement shows that during the reporting period, the company once again launched an equity incentive plan to further deepen the talent development strategy and successfully slot new markets while consolidating the existing business advantages.

On the other hand, for Luxshare Precision, which is backed by Apple, the mention of "car building" will remind people of Apple's Apple Car project. Judging from the announcements disclosed so far, Luxshare Precision did not mention the relevant information involved in Apple's car manufacturing.

However, on February 13, Wang Laichun, chairman and general manager of Luxun Precision, said in the institutional conference call that Luxun Precision will take 3-5 years to become the world's leading manufacturer of auto parts Tier 1 (Tier 1 supplier). It is foreseeable that after becoming a world-class Tier1 manufacturer, Luxshare Precision also has the possibility of eating the "big cake" of Apple Cars.

Under the ODM mode, cross-border car manufacturing opportunities and challenges coexist

With the entry of a large number of cross-border players, some new car-making models have gradually appeared in the public eye. A few days ago, When Accepting an institutional survey, Lixun Precision said that the strategic cooperation with Chery, the company does not build cars, but cooperates with Chery to develop another new industry - to build a good car for others, that is, the vehicle ODM model.

ODM refers to original design manufacturing, where one company designs and produces products according to another company's specifications. This model can reduce the development time of the demand side and further reduce the threshold for car manufacturing.

Luxun Precision said that this strategic cooperation will rapidly develop the company's Tier 1 business on the basis of creating a cooperative car-making ODM model, achieve dynamic entry, and quickly improve the company's core components comprehensive capabilities as a Tier 1 manufacturer. In terms of business, Chery is good at the vehicle business, the joint venture company will be led by Chery, and Luxshare Precision will coordinate in terms of business and customers.

"Since new energy vehicles do not require engines, this kind of capacity translation is generally feasible and allows ODM companies to achieve more diversified businesses." Pan and Lin pointed out.

In addition to Luxun Precision, Huawei also previously said that "Huawei does not build cars, focuses on ICT technology, and helps car companies build good cars", proposing to provide car companies with the core components of intelligent networked vehicles based on Huawei's ICT capabilities, and further upgrade to the vehicle ODM mode.

Pan and Lin told this reporter that the current consumer electronics industry enterprises have the ability to expand horizontally in the supply chain, with the multiplier of the new energy vehicle manufacturing supply chain, the threshold for the construction of new energy vehicles has gradually decreased, such as Luxun Precision, Foxconn (Hon Hai Group), etc. have run into the field of new energy vehicle foundry, extending the competition in the supply chain of consumer electronics to the field of automobile manufacturing.

In fact, entering 2022, cross-border car manufacturing is no longer new. With the advent of the new energy vehicle boom, giants in various fields have become "new players" to pour into the automotive field. At present, the new energy vehicle track is crowded, and from the perspective of entry time, Luxshare Precision is obviously a "latecomer".

For the newly entered cross-border enterprises, He Qi, senior analyst of the automotive travel industry at Analysys, told this reporter that China's auto market is still in the blue ocean market, which is enough to accommodate more competitors.

However, building a car is not a simple task, and these entrants also face difficult problems that are difficult to ignore. He Qi believes that the main challenges are two points: first, to break into the core supplier system of car companies, and second, to do a good job in products, to make brands bigger, and to achieve self-hematopoiesis. In terms of manufacturing, channel construction, etc., it mainly depends on whether the strategic direction of the enterprise is sustained and stable, which is the basis for overcoming challenges, high-quality product strength is the core, and whether there is my hematopoietic ability is the foundation of the long-term stable development of the enterprise and the recognition of capital.

Responsible Editor: Xu Yunqian Editor-in-Chief: Gong Peijia