Flower Finance Original
The car-making track has added new Ding, and the fruit chain giant announced that it has thrown tens of billions of dollars.
Following Foxconn's announcement of car manufacturing, Luxshare Precision, which is the top OEM supplier of the fruit chain, has also entered the automotive field, and it is tens of billions of dollars in one shot.
Lixun Precision recently announced that it acquired 19.88% of the shares from Qingdao Wudaokou, the largest shareholder of Chery Holdings, for 10.054 billion yuan, and obtained 7.87% of the equity of Chery and 6.24% of Chery New Energy.
As an Apple foundry giant, this move is particularly eye-catching with the announcement of Luxun Precision's entry into the car manufacturing field. However, from the current point of view, Luxun's investment of 10 billion yuan may only be a ticket to the park. For the protracted battle of car building, the company may not necessarily be able to become famous.
Most importantly, Luxun, which refers to the hot track of new energy vehicles, shows excessive dependence on Apple in its operation, and as electronic products such as mobile phones are close to saturation, how can companies get rid of their worries?
Throw tens of billions of dollars to turn around and build cars
The 100 billion market value fruit chain giant builds a car, starting from an announcement.
According to the announcement of "On Signing the Strategic Cooperation Framework Agreement" issued by Lixun Precision, on February 11, 2022, the company signed the "Strategic Cooperation Framework Agreement" with Chery Holdings, Chery Shares and Chery New Energy in Wuhu to lay a strategic partnership for both parties.
It is understood that the agreement stipulates that Lixun Limited will purchase 19.88% of the equity of Chery Holdings, 7.87% of the equity of Chery Holdings and 6.24% of the equity of Chery New Energy held by Qingdao Wudaokou, the largest shareholder of Chery Holdings, for 10.054 billion yuan.
On the basis of this agreement, Luxshare 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, providing cutting-edge R&D design, mass production platform and sea exit for Luxshami Precision'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 Tier 1.
For the cooperative subsidiary, it is proposed to adopt the shareholding structure of Party A (Lixun Precision) to subscribe 500 million yuan to hold 30% of the registered capital, and Chery New Energy to subscribe 1.167 billion yuan and hold 70% of the registered capital.
It is reported that Chery Holdings and its affiliated subsidiaries have been deeply engaged in the automotive industry for many years, and they own chery automobiles, Xingtu Automobile, Jietu Automobile and other automobile brands. In January this year, chery Holdings terminal sales of 107,710 units, an increase of 20% year-on-year. Among them, overseas exports of 26,900 units, an increase of 60.9% year-on-year; sales of new energy vehicles 20,635 units, an increase of 179.6% year-on-year.
Lixun Precision said that it signed a strategic cooperation framework agreement with Chery Holdings and its affiliates to strengthen the strategic layout of the company's automotive business in an all-round way, realize the diversification and large-scale development of the company's core components, and lay a solid foundation for the company's future sustainable development.
The car builders are not full of money
However, since Luxshare Precision announced its entry into the car-making track, this track has actually been very crowded.
According to the data of enterprise investigation, from the perspective of industry development in the past decade, the industry began to enter a period of rapid development in 2014, and the number of enterprise registrations increased by 105% year-on-year, and by 2020, the number of registrations reached a new high, reaching 78,600, an increase of 70.8% year-on-year.
At the same time, Foxconn, which is also a fruit chain foundry company, has also announced its car-making plan early. In October last year, Foxconn demonstrated its determination to build cars by announcing for the first time three self-developed electric vehicle Models C SUV, Model E sedan and Model T electric buses through the pure electric vehicle brand Foxtron.
However, the seemingly bright and promising new energy vehicle track actually requires a very heavy capital investment. Every time a new entrant is asked, "How much money is prepared?" On this answer, Weilai Li Bin said at least 40 billion yuan, He Xiaopeng said more than 30 billion yuan, and Xiaomi plans to invest 10 billion US dollars in 10 years.
So, is Luxshare's precision ammunition depot sufficient?
Judging from the financial reports over the years, Luxshare Precision, which has long relied on financing, does not seem to have an overly thick family foundation.
Since its listing in 2010 for decades, the company has conducted multiple rounds of financing. Among them, in 2014, the company raised 2.010 billion yuan through the issuance of additional A shares, in 2016, it raised 4.589 billion yuan through the issuance of additional A shares, and by 2020, the company raised 2.985 billion yuan through the issuance of convertible bonds.
As of the end of September 2021, although the company's monetary funds on the account reached 15.668 billion yuan, its short-term borrowings were also as high as 16.687 billion yuan. In addition, the overall upward trend of the company's debt level is also very obvious, which reflects the company's financial pressure. From 2016 to 2020, the company's asset-liability ratio was 42.11%, 48.21%, 54.24%, 55.95% and 55.86% respectively.
Over-reliance on a single customer
The public is well known that Luxshare Precision is the "fruit chain brother" in China, but over-reliance on Apple OEM, recession may also arise.
Looking back at the history of Luxshare Precision's fortunes, the company's founder Wang Laichun was one of the first 150 employees recruited by Foxconn's Shenzhen factory in 1998. With this relationship, Wang Laichun later successfully got the care of Foxconn at the beginning of founding Luxshare Precision, and for a long time, the deep binding with Foxconn was the core face of Luxshare Precision.
According to the prospectus, from 2007 to 2009, the company's revenue from the sale of products to Foxconn accounted for 47.73%, 56.46% and 45.38% of the current operating income, respectively. In 2009, a year before the listing of Luxshare Precision, Foxconn's Fugang Electronics even invested 40 million yuan, becoming its third largest shareholder.
However, with the listing of Luxshare Precision successively purchased a number of companies, cut into Sony and Microsoft game consoles, as well as Apple, Huawei, Emerson and other companies in the industrial chain, by 2012, Foxconn business accounted for 22.4% of Luxshare Precision's revenue.
For Luxshare Precision, the company's counterattack comes from an unexpected encounter with Apple. In April 2011, Luxshare Precision became the controlling shareholder of Kunshan Liantao electronics Co., Ltd. by acquiring 60% of the equity of Kunshan Liantao Electronics Co., Ltd., and officially entered the Apple supply chain.
Backed by a big tree for cooling, Luxshare Precision naturally harvested huge fruits by continuously expanding the apple industry chain. In 2010, Luxshare Precision's revenue was only 1.011 billion yuan, corresponding to a net profit of 116 million yuan, but by 2020, the company's revenue has risen to 92.501 billion yuan, and profit has risen to 7.225 billion yuan.
A company rockets up, but in fact, the risks behind it are not small. Compared with similar enterprises, Luxshare Precision's dependence on Apple is very high. In 2020, Apple accounted for 69% of Luxun Precision's revenue, which is much higher than goertek and Lens Technology, which are also Apple suppliers.
With such a high level of dependence on a single customer, the unknown risk of Luxshare Precision is not small. It is worth mentioning that in March 2021, OFILM was excluded from the Apple industry chain, and its stock price plummeted. According to the 2021 annual performance report released by OFILM, it is expected that the net loss in 2021 will be between 1.9 billion yuan and 2.7 billion yuan.
Therefore, for Lixun Precision, carrying out diversified business is itself a way to share risks, but with tens of billions of investment in cross-border crowded new energy vehicle tracks, how far it can go in the future is still a mystery.