Yangtze River Business Daily reporter Shen Yourong
Deeply tied to Apple, Luxshare Precision (002475. SZ) was still not at ease and officially decided to walk on "two legs".
On the evening of February 21, Luxun Precision disclosed the pre-increase plan, which intends to raise no more than 13.5 billion yuan for the industrial layout of the two major tracks of "fruit chain" and new energy vehicles.
Previously, Luxshare Precision announced two actions, investing 500 million yuan to form a joint venture with Chery, specializing in the research and development and manufacture of new energy vehicles. In addition, hk$1.104 billion was invested in the acquisition of Hong Kong-listed convergence technology, a supplier of custom wire interconnection solutions.
The reporter of Changjiang Business Daily found that the industrial layout of Luxshare Precision is more than this. In addition to the continuous layout of the fruit chain industry, the action in the field of new energy vehicles is not small, and the company's controlling shareholder, Lixun Limited, has also participated in it. Luxun Limited spent 10.054 billion yuan to invest in Chery Holdings, Chery Shares and other Chery-related companies in an attempt to deeply bind with them.
The joint venture, acquisition, fixed increase in capital, and equity participation, Luxun Precision and its controlling shareholders have invested a total of more than 25 billion yuan to try to complete the dual industrial layout of "fruit chain" and new energy vehicles to reduce the risk of dependence on Apple's industrial chain.
As the actual controller of Lixun Precision, Wang Laichun and Wang Laisheng brothers and sisters have long been prepared. According to the rough statistics of the Yangtze River Business Daily reporter, since 2013, the brothers and sisters have accumulated about 24 billion yuan in cash to support the company's industrial layout.
However, the "two-front" operation, whether Luxshare Precision will be very difficult, and whether Wang Laichun can achieve expectations, are all risks that cannot be ignored.
Gamble on car building to create a second main business
Perhaps learning from the A-share company OFILM's previous experience, Luxun Precision deeply cultivated the Apple industry chain and announced a high-profile cut into a new track.
Since the Spring Festival this year, Luxshare Precision's actions have suddenly increased, and on February 11, this day, the company completed two major actions.
According to the announcement, Luxshare Precision invested HK$1.104 billion to acquire a 74.67% stake in Hong Kong-listed company Convergence Technology. Convergence Technology is a customized wire interconnection solution provider, with more than 20 years of industry experience, the main products are used in telecommunications, data centers, industrial equipment, medical equipment and network wire and other fields, with the corresponding R & D technology accumulation and operation management experience, and Luxshare Precision in subdivision products, customer service and other aspects have a strong complementarity.
For this acquisition, Luxshare Precision said that it will improve the strategic layout of interconnected products in the fields of communications, medical treatment, automotive, and industry. In the future, the company will empower each other with convergence technology in precision manufacturing, digital management, business philosophy and customer resources, and continue to enhance strategic synergy.
This is the company's second industrial chain layout. On the same day, Lixun Precision joined hands with Chery Group, and Chery Holdings, Chery Shares, chery New Energy jointly signed the "Strategic Cooperation Framework Agreement", the company and Chery New Energy jointly established 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 Lixun 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. Luxun Precision invested 500 million yuan, accounting for 30% of the equity of the company.
Luxun Precision's 500 million shares are just appetizers, and its controlling shareholder, Lixun Limited, is a big deal.
On the same day, Luxun Limited signed the Equity Transfer Framework Agreement with Qingdao Wudaokou New Energy Automobile Industry Fund Enterprise (Limited Partnership) (hereinafter referred to as "Qingdao Wudaokou"), in which Luxun Limited invested 10.054 billion yuan to purchase 19.88% of chery Holdings, 7.87% of Chery and 6.24% of Chery New Energy from Qingdao Wudaokou. After the completion of the transaction, Luxshare Limited controls the above three. Before the equity transfer, Qingdao Wudaokou held 46.77% of the equity of Chery Holdings, making it the largest shareholder.
With an investment of 10 billion yuan, Lixun Limited and Chery Holdings have achieved deep bundling. The company said that it will make full use of Chery Group's deep technology precipitation and terminal brand resources in the field of new energy vehicles to strengthen the strategic layout of the company's automotive business in an all-round way.
Together with Chery, Luxshare Precision and Luxshare Limited spent a total of 10.554 billion yuan.
Luxshare Precision has further actions.
On February 21 this year, Lixun Precision disclosed that it intends to issue shares to no more than 35 specific investors and raise no more than 13.5 billion yuan.
Up to 13.5 billion yuan of fundraising, Luxshare Precision is still in the Apple industry chain and car manufacturing layout. Specifically, 1.5 billion yuan was raised for the construction of the production line of the new energy vehicle high-voltage connection system product, and 500 million yuan was used for the construction of the intelligent automobile connection system product line project. The company said that the intelligentization of traditional cars and the gradual popularization of new energy vehicles will add a large number of upstream precision electronic devices and components to the production capacity demand.
Public information shows that as early as 2012, Luxshare Precision has been involved in the field of automotive electronics. The company said that in the automotive business sector layout for more than ten years, has been equipped to provide customers with high voltage, high current and other automotive power solutions and related automotive wiring harness, electronic modules and other products and services capabilities.
However, at present, the proportion of automotive business revenue is relatively low, in the first half of 2021, the company's automotive interconnection products and precision components achieved revenue of 1.774 billion yuan, accounting for about 3.68%.
Luxun Precision cross-border car manufacturing has aroused great concern in the market. Since February, the company's two conference calls have attracted a total of 440 institutions. Luxun Precision said that the ODM business of the newly established joint venture company has a relatively clear landing project, and it will be put into production in about 12-18 months. The main target business of the joint venture will be the business of foreign traditional brand car companies and the new SmartEV brand business in China.
In the future, the automobile industry will become the second largest main business of Luxshare Precision.
Deduction of non-net profit declined for the second consecutive quarter
The large-scale cross-border entry into the field of new energy vehicles is also related to the ceiling of Luxun Precision's Apple industry chain business.
On February 21, public information said that Luxun Precision is expected to get the basic iPhone14 assembly order, but it will not be able to do the high-end iPhone 14 with higher FOUNDry profits.
The consensus of the market is that although Apple's current market share in the field of smart phones is relatively stable, the future growth is limited, but with Apple's horizontal product diversification, the layout of smart wearables to smart homes and other smart Internet of Things fields, as well as the addition of other downstream suppliers, even in terms of consumer electronics foundry production, Luxun Precision's large-scale layout of this fundraising is expected to get more orders in the future. However, compared with the company's annual revenue of 100 billion, orders from Apple may be difficult to support the company's rapid growth.
In addition, the global trade environment is complex, and the former "fruit chain" enterprises have been kicked out of the supplier list, which is a risk worth warning. Although Luxshare Precision is already a consumer electronics foundry leader deeply bound to Apple, there is also a risk of being kicked out of the "fruit chain".
Luxshare Precision's operating performance is already declining. From 2017 to 2020, Luxshare Precision's operating income, net profit attributable to shareholders of listed companies (referred to as net profit), and net profit after deducting non-recurring gains and losses (hereinafter referred to as non-net profit) have achieved sustained and rapid growth, with an average annual growth rate of more than 40%.
However, in 2021, the company's operating performance showed signs of changing face. According to the third quarterly report, in the first three quarters, the company achieved operating income of 81.013 billion yuan, an increase of 36.09% year-on-year, and net profit of 4.690 billion yuan, a slight increase of 0.21% year-on-year.
Operating income increased by more than 30% year-on-year, net profit growth rate was only 0.21%, and the increase in revenue was obvious. Previously, in the first three quarters of 2019 and the first three quarters of 2020, its net profit growth rate was 74.26% and 62.06% year-on-year, respectively, all of which were high growth.
Net profit stalled sharply, and deduction of non-net profit directly turned into negative growth. In the first three quarters of last year, Luxshare Precision achieved a non-net profit of 3.994 billion yuan, a year-on-year decrease of 217 million yuan, a decrease of 5.15%.
From a single quarter, in the first two or three quarters of last year, the company's operating income was 21.019 billion yuan, 27.128 billion yuan and 32.866 billion yuan respectively, an increase of 27.29%, 36.06% and 42.42% year-on-year. The corresponding net profit was 1.350 billion yuan, 1.740 billion yuan and 1.6 billion yuan, a year-on-year change of 37.44%, 11.81% and -25.28%. The non-net profit after deduction was 1.167 billion yuan, 1.355 billion yuan and 1.472 billion yuan respectively, with a year-on-year change of 30.14%, -5.99% and -21.40%.
The data shows that in the three quarters, the operating income continued to grow rapidly, and the year-on-year growth rate of net profit and deduction of non-net profit fell quarter by quarter, and the decline of more than 20% occurred in the third quarter.
Market analysis, the deduction of non-net profit in the second and third quarters has declined for two consecutive quarters, which is related to Apple's pricing strategy of "increasing the volume and reducing the price" of the new iPhone 13 series mobile phones. The high dependence on Apple customers may be an important reason for the decline in its net profit.
Getting rid of the dependence on Apple's supply chain may be the main reason for Luxun Precision's large-scale layout of the new energy automobile industry.
However, the large-scale layout of the automobile industry, whether Luxshare Precision can meet expectations, it still needs time to test.
The reporter of Changjiang Business Daily found that the controlling shareholder, Lixun Limited, has been actively supporting the industrial layout of Lixun Precision. Since 2013, Lixun Limited, which has a total of 100% shareholdings held by Wang Laichun and Wang Laisheng, has reduced its holdings through a total of 12 times, and has cashed out a total of 24 billion yuan. The company previously said that the controlling shareholder reduced its holdings, mainly to support the company's industrial layout.
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