On February 14, Luxshare Precision Industry Co.Ltd(002475) (002475, SZ; yesterday’s closing price was 41.9 yuan) had the largest intraday increase of more than 5%. As of the closing of the day, the company’s share price had increased by 2.07%.
On the news, on February 11, Luxshare Precision Industry Co.Ltd(002475) announced that the company and Chery group had signed the strategic cooperation framework agreement. On the basis of this agreement, the company and Chery new energy intend to jointly establish a joint venture, specializing in the R & D and manufacturing of new energy vehicles. The controlling shareholder of the company, Lixun Co., Ltd., purchased 19.88% equity of Chery holdings, 7.87% equity of Chery shares and 6.24% equity of Chery new energy held by Qingdao Wudaokou with RMB 10.054 billion.
Subsequently, Luxshare Precision Industry Co.Ltd(002475) stressed in the record of investor relations activities that in this strategic cooperation with Chery, the company did not build cars, but cooperated with Chery to develop the ODM (original design manufacturer) model of the whole vehicle. In terms of business, Chery is good at vehicle business. The joint venture will be led by Chery and Luxshare Precision Industry Co.Ltd(002475) will coordinate in business, customers and other aspects.
For Luxshare Precision Industry Co.Ltd(002475) layout of the automotive business, Puyin International Securities believes that the electronic manufacturing capacity of consumer electronics companies is very much needed in the intelligent process of new energy vehicles, and automotive electronics is expected to promote the growth of Luxshare Precision Industry Co.Ltd(002475) in a longer time dimension.
the core goal is to become a Tier1 manufacturer
At the conference call on the afternoon of February 13, Luxshare Precision Industry Co.Ltd(002475) chairman and general manager Wang Laichun said that smart EV is the once-in-a-century opportunity for Chinese Autobots. The opportunities it brings include not only the whole vehicle, but also Tier1 (the first-class supplier of the depot) with stronger vitality. The market scale of Tier1 itself is almost 70% of the total output value of all automobile enterprises, but at present, there are only 8 Chinese enterprises among the top 100 Tier1 manufacturers in the world.
Wang Laichun further explained that Lixun Co., Ltd. is an investor of Chery holdings, Luxshare Precision Industry Co.Ltd(002475) does not manufacture complete vehicles, but cooperates with Chery new energy to develop ODM business of making good cars for others. The company aims to seize the opportunity window and strive to become the world’s leading Tier1.
When talking about Luxshare Precision Industry Co.Ltd(002475) cooperation mode and development strategy with Chery, The management of the company said: “For a long time, the company’s core goal in the automotive field has been to become a leading Tier1 manufacturer in the industry, and is also looking for a platform that can exercise its Tier1 core parts ability. This strategic cooperation will rapidly develop the Tier1 business of listed companies, realize dynamic entry and rapidly improve the company’s core parts integration as a Tier1 manufacturer on the basis of building an ODM model of cooperative car manufacturing Ability to cooperate. “
It is understood that the ODM business of Luxshare Precision Industry Co.Ltd(002475) has a relatively clear landing project, which will be put into operation in the next 12 ~ 18 months.
For the main target business of the joint venture, Luxshare Precision Industry Co.Ltd(002475) responded: “it is expected to be the business of foreign traditional brand car enterprises and the business of China’s new smart EV brand.”
When it comes to Luxshare Precision Industry Co.Ltd(002475) , the most impressive thing to the outside world is the “fruit chain” faucet. Early, Luxshare Precision Industry Co.Ltd(002475) cut into the apple system from the connection line supply of MacBook, and then smoothly entered the lightning connection line of iPhone, thus occupying a leading position in the connection line business of personal computers and smartphones. From 2017 to 2019, Luxshare Precision Industry Co.Ltd(002475) began to expand into the internal parts of iPhone, and successfully obtained the business of wireless charging, acoustic devices, LCP antenna, linear motor and other parts, thus rapidly promoting the growth of the company’s revenue.
In fact, in addition to the core field of consumer electronics, Luxshare Precision Industry Co.Ltd(002475) has already begun to layout the automotive field, and has formed four categories of automotive products, including automotive appliances, automotive harness, connectors and connecting wires. According to the semi annual report of 2021, the operating revenue of the company’s automotive interconnection products and precision components was 1.774 billion yuan, with a year-on-year increase of 38.99%, accounting for 3.68% of the company’s operating revenue.
many fruit chain companies aim at cars
At present, the shipment growth of mobile phone market is weak. According to IDC data, the global mobile phone shipments in Q3 / Q4 in 2021 were 3.312 million and 3.624 million respectively, with year-on-year growth rates of – 6.33% and – 6.09% respectively. The annual shipments in 2021 increased by 4.84% over 2020, but decreased by 1.18% compared with 2019 before the epidemic. The overall mobile phone shipments continued the downward trend since 2017.
When mobile phones encounter growth bottlenecks, new energy vehicles maintain a strong growth momentum. In January this year, the data released by the Ministry of industry and information technology at the press conference on the development of automobile industry in 2021 showed that the annual sales volume of new energy vehicles in 2021 exceeded 3.5 million, and the market share increased to 13.4%. The Federation of passengers expects that the number of new energy vehicles is expected to exceed 6 million in 2022, and the penetration rate of new energy vehicles will reach about 22%.
New energy vehicles have brought a series of opportunities and attracted many fruit chain enterprises. Among them, Foxconn is one of the typical representatives.
In August 2021, Foxconn Industrial Internet Co.Ltd(601138) chairman Li Junqi said, “the company will cut into the new energy vehicle track and enter Foxconn‘s system from three paths: auto parts, vehicle related products and lighthouse factory.” Foxconn established the electric vehicle software and hardware open platform (MIH) in 2020 to integrate the resources of the global vehicle related supply chain.
As for the progress of Foxconn Industrial Internet Co.Ltd(601138) ‘s “car building”, Zheng Hongmeng, then general manager of Foxconn Industrial Internet Co.Ltd(601138) , said that under the background of the increase of the computing power of new cars, the automatic driving central control module ACU and electric vehicles produced by the company tend to strengthen the function of automatic driving / unmanned driving, the source of sensing data increases, the data of camera and millimeter wave radar is expanded, and the computing power and demand of ACU will increase. Meanwhile, ACU has derived new business areas, and the company also expects to ship relevant sensing products to customers. In addition, the data center computing power and autopilot computing power related products of the world’s top customers are expected to achieve mass production and shipment in 2022.
In addition to Foxconn, Shenzhen Everwin Precision Technology Co.Ltd(300115) entered the field of new energy vehicles in 2016 and acquired 70% of the shares of Suzhou kelent by means of equity acquisition and capital increase in 2016 and 2017. Suzhou kelent’s main business is busbar (high voltage connector busbar) products, which are widely used in new energy vehicles, communications, military radar, ship manufacturing and other fields. Collent is also a supplier of well-known brand automobile manufacturers, providing services for major new energy automobile manufacturers in Europe and America, and has in-depth cooperation with new energy automobile manufacturers and pack manufacturers outside China.
At present, the layout of Shenzhen Everwin Precision Technology Co.Ltd(300115) for the new energy vehicle industry includes power cell cover sector, busbar, precision automotive electronics, charging equipment, heavy-duty connector, hydrogen fuel cell, automobile interior decoration, etc.
The fruit chain enterprise Lens Technology Co.Ltd(300433) of the mobile glass track chose to expand into the field of vehicle glass and photovoltaic glass.
Since 2015, Lens Technology Co.Ltd(300433) has begun to deeply layout the new energy vehicle market, and became a global first-class core supplier of Tesla in 2017. In the 2021 semi annual report, Lens Technology Co.Ltd(300433) positioned its development goal in the field of new energy vehicles as “providing one-stop automotive electronic services and solutions for new energy vehicle customers”.
For upstream enterprises, being able to join Apple’s supply chain system means recognition of their technology or market position. However, once it is eliminated by apple, it is bound to face the risk of sharp decline in performance. On the other hand, with Apple’s strong bargaining power, many apple supply chain enterprises are also in the dilemma of increasing revenue without increasing profits. The profit margin of the new energy track will point out a new direction for electronic supply chain enterprises.
Last October, Luxshare Precision Industry Co.Ltd(002475) released the financial report for the third quarter of 2021, which showed that the net profit of the company in the first three quarters was 4.69 billion yuan, a year-on-year increase of 0.21%, of which the net profit in the third quarter was 1.6 billion yuan, a year-on-year decrease of 25.28%. Coincidentally, Lens Technology Co.Ltd(300433) recently released performance forecast shows that the net profit attributable to shareholders of Listed Companies in 2021 is expected to be about 2.007 billion ~ 2.399 billion yuan, a year-on-year decrease of 51% ~ 59%.
Part of the view is that fruit chain enterprises are expected to get rid of the long-term “low profit” dilemma through cross-border, which is also conducive to laying the foundation for the follow-up Apple automobile OEM business; However, there are also views that the current new energy vehicle track is crowded, and the shuffle in the future is inevitable.
