The market value soared by 30 billion yuan in two days, and Wang Laichun and his "foundry empire" found a new way out.
On February 11, the "fruit chain" giant Luxun Precision issued an announcement that the company and Chery Group jointly signed the "Strategic Cooperation Framework Agreement" to jointly establish a joint venture with Chery New Energy to lay a strategic partnership for both sides.
On the day of the signing of the agreement, Lixun Precision's controlling shareholder, Lixun Limited, also spent tens of billions of 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 Industry Fund Enterprise (Limited Partnership), the largest shareholder of Chery Holdings, respectively, spending tens of billions of cross-border vehicles, which shows its determination to enter new energy vehicles.
Looking back at history, as one of the leaders of the "fruit chain", Luxshare Precision once achieved brilliant results by virtue of OEM for Apple, and even surpassed Foxconn for a time; however, with the slowdown in the development of the smart phone industry, coupled with the downturn in the electronic consumer industry, Luxshare Precision also began to encounter the ceiling, the stock price has been sideways for more than a year, and the performance has also shown signs of decline.
Nowadays, Luxshare Precision has spent tens of billions of yuan to announce its entry into the new energy automobile industry, its stock price has also risen by more than 8% in two days, and its market value has soared by more than 30 billion, as the leader of the "fruit chain", can Luxshare Precision break the ceiling with new energy vehicles? Is new energy vehicle really the antidote to Luxshare Precision?
From assembly line workers to 400 billion "foundry empire"
Behind The Precision of Luxshare is the story of a counterattack by an assembly line female worker.
In 1976, Wang Laichun, the founder of Luxun Precision, was born in a poor family in Chaoshan, Guangdong Province; because the family was too poor, his brother ran to Shenzhen to work very early, and seeing that his brother could already share the pressure for the family, Wang Laichun, who was still in junior high school at the time, slowly also had the idea of going out to work, but because he was too young, his parents did not agree to Wang Laichun going out to work.
In 1988, Wang Laichun, who was 21 years old at the time, saw Foxconn recruiting female workers in Chaoshan by chance, and Wang Laichun ran to apply without a moment's hesitation and became one of foxconn's first assembly line employees.
However, Wang Laichun's part-time work experience was not smooth, due to the development of the times, the factory environment at that time can be described by the word "bad", less than a year, almost all of the 149 female workers recruited from Chaoshan at that time were gone, only Wang Laichun stayed; and because of his strong personality, Wang Laichun was also quickly promoted, became a grassroots manager, and in the next ten years, he was promoted to three levels in a row, all the way to the position of section chief.
However, after becoming the head of the class, Wang Laichun knew that he did not have much room to rise, so in 1999, Wang Laichun, who had been working at Foxconn for more than ten years, submitted his resignation and opened his own entrepreneurial road, and the direction she chose was the same as Foxconn - it was also the business of oem processing and production connectors, because Wang Laichun, who had been working hard at Foxconn, knew that due to the low price of domestic labor, there was still a lot of potential behind this market.
Although he and Foxconn have become peers, what they did not expect was that Wang Laichun was supported by Gou Anderson. When Wang Laichun's entrepreneurial funds were insufficient, Gou Taiming also poured out his help, and after the establishment of Wang Laichun Company, Foxconn also gave a lot of orders to Wang Laichun's company, and At that time, Lixun Precision was even once called "Little Foxconn".
With the deep binding with Foxconn, Luxshare Precision has also developed very rapidly, and Luxshare Precision, which was only established from Shenzhen in 2004, successfully landed on the A-share market in only 6 years and was listed on the Shenzhen small and medium-sized board.
After the listing, because of regulatory requirements, Luxshare Precision no longer oem for Foxconn, but through the acquisition of equity in a number of companies, it successfully cut into sony and Microsoft game consoles, as well as Apple, Huawei, Emerson and other companies in the industrial chain, and later even became one of the leading enterprises of the "fruit chain".
In October 2021, as the stock price continued to rise, Luxun Precision hit a record high of 63.77 yuan, with a market value of 450.8 billion, as Wang Laichun said in an interview, it must be Junbird who can fly with the phoenix. There is no doubt that Wang Laichun has created a myth.
Success or failure is due to Apple, the hidden worry behind Luxshare Precision
The success of Wang Laichun and Luxshare Precision is inseparable from two companies, Foxconn and Apple.
From the perspective of development history, Luxshare Precision is best at learning and imitation, which first became foxconn's "apprentice", and then became Apple's "student", just as the so-called strict teacher out of the high apprentice, phoenix with handsome birds, and this is also the key and secret of Luxshare Precision's success in such a short period of time.
Regarding Foxconn, the large number of orders it provided for Luxshare Precision allowed Luxshare Precision to quickly go public; after the listing, Luxshare Precision was able to grow rapidly, and the credit behind this was due to cooperation with Apple.
In 2011, in order to successfully cut into the Apple industry chain, Luxshare Precision spent a large amount of money to acquire Kunshan Liantao Co., Ltd., after the successful acquisition, Luxun Precision's operating income and net profit in that year created the highest and only triple-digit increase between 2008 and 2020, reaching 152.89% and 185.33% respectively.
However, although it successfully cut into the "fruit chain" in 2011, but because Foxconn still occupied a large number of apple foundry business at that time, the business volume of Luxshare Precision was not too much, and in the next few years, although Luxshare Precision maintained double-digit growth, but compared with 2011, its development speed was not very fast.
This situation has been until 2019, with the outbreak of Apple's wireless headphones, Luxshare Precision, as a foundry, has also ushered in a big explosion.
According to the data, after being identified as Apple OEM AirPods in 2018, the performance and stock price of Luxun Precision both broke out, the most obvious of which was the performance, Luxun Precision achieved revenue of 62.52 billion yuan in 2019, a substantial increase of 74.38% over 2018; and achieved a net profit of 4.714 billion yuan, a substantial increase of 73.13% over 2018.
With the explosive growth of performance, in the secondary market, the stock price of Luxshare Precision has also continued to rise. According to statistics, on January 2, 2019, the closing price of Luxshare Precision was only 8.13 yuan; in October 2020, its stock price hit 63.77 yuan, and the stock price doubled nearly 8 times in less than two years.
However, although Apple has brought Luxshare Precision to the top, the deep binding of Apple has also made it fall off the altar.
After 2020, with the introduction of other brands of wireless headphones, Apple's Airpods market share was divided. According to the research report released by the agency, the average annual compound growth rate of global TWS headphone shipments from 2019 to 2020 will exceed 50%, but from 2020 to 2024, the average annual compound growth rate of TWS headphones will drop back to 19.8%.
As an Airpods foundry, Luxshare Precision naturally bears the brunt of it. From the performance point of view, according to the data of the third quarter report last year, Luxshare Precision achieved revenue of 81.013 billion yuan in the first three quarters, an increase of 36.09% year-on-year, and achieved a net profit of 4.69 billion yuan, an increase of 0.21% year-on-year, and the growth rate of net profit slowed down significantly.
From the data point of view, in the top 5 customers of Luxshare Precision, the marketing volume of the first largest customer accounted for 69.02%, and the largest customer is naturally Apple. And such a high proportion of marketing is already an obvious "big customer dependence", and this is the biggest hidden worry of Luxshare Precision - if there is any problem with Apple, Luxshare Precision is naturally "one prosperity and one loss".
Will entering the new energy vehicle be the antidote to Luxshare Precision?
On February 11, 2022, Luxshare Precision announced that the company and Chery Group jointly signed the Strategic Cooperation Framework Agreement 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, also spent tens of billions of yuan to buy 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 New Energy Industry Fund Enterprise (Limited Partnership), the largest shareholder of Chery Holdings.
Spending tens of billions of yuan to enter the new energy automobile industry is enough to prove the determination of Lixun Precision; and after the announcement, the stock price of Lixun Precision also ushered in a brief sharp rise, and the stock price rose by more than 8% in just two days, and it is clear that the large funds are also optimistic about Lixun Precision's entry into the new energy automobile industry.
So, will entering the new energy vehicle really be the antidote to Luxshare Precision? From the current point of view, the uncertainty behind this is very large.
First of all, in terms of difficulty, compared with mobile phones, from mobile phone accessories to auto parts, from mobile phone OEM to vehicle OEM, car OEM is more complex, structural common production requirements are higher, before Tesla CEO Musk has bluntly said, "Compared with mobile phones or smart watches, cars are very complicated, you can't go to suppliers like Foxconn, and then say 'build me a car'." ”
Therefore, whether Luxshare Precision can successfully enter the new energy automobile industry is still very uncertain.
In addition, compared with the mobile phone industry chain, although new energy vehicles have greater opportunities and broader development space, they are also more "burning money" in comparison, and many media have also analyzed that "10 billion is just the beginning".
From the current point of view, Luxshare Precision's entry into new energy vehicles is undoubtedly a correct choice, but also the trend of the times; however, for Lixun Precision, cooperation with Chery is only the beginning, it is difficult to change the current trend of declining performance, And the road that Lixun Precision and Wang Laichun will take in the future is probably still very long.