On February 2, 2024, the day when Apple Vision Pro was officially released in the United States, Luxshare Precision's stock price also hit bottom on the same day, and started to soar in April. In just three months, its market value soared by more than 120 billion yuan. The "king of OEM" of that year is back. On October 13, 2020, the share price of Luxshare Precision, the "king of Apple's OEM", reached a record high of 63.88 yuan per share (unadjusted), and the total market value hit a record high of 440 billion yuan. After that, the share price of Luxshare Precision entered a downward oscillation cycle. From 2021 to 2023, Luxshare Precision fell for three consecutive years. It was not until February 2, 2024 that Luxshare Precision's stock price bottomed out at 24.88 yuan per share and showed signs of stabilization. On April 22, it rebounded from 25.92 yuan per share to 43.30 yuan per share in July. Interestingly, the stock price of 43.30 yuan per share has already set a record high in the past 52 weeks. In about three months, Luxshare Precision's market value has soared by more than 120 billion yuan. "Digital Intelligence Research Society" found that February 2, 2024 is exactly the day when Apple's blockbuster technology hardware product Vision Pro is officially released in the United States. Because the pre-order on January 19 was very popular, the inventory was sold out in 18 minutes, reflecting the market's high optimism about Apple's MR products. As Apple's most important OEM company, Luxshare Precision has once again attracted market attention. Consumer electronics no longer sees high growth When the time comes, heaven and earth will work together, but when the luck is gone, heroes will be helpless. In the torrent of the times, the development of any enterprise cannot be isolated. Similarly, the boom in the consumer electronics industry over the past few years has made Luxshare Precision the "king of OEM". In 2016, Apple launched the first generation of AirPods. From 2017 to 2021, global shipments of wireless earphones reached a record high of 300 million units, becoming the super single product of consumer electronics at the time. As the king of consumer electronics, Apple firmly holds the absolute dominance of the TWS market, with a market share of more than 40%. Benefiting from Apple's orders, Luxshare Precision's performance has started to soar. Revenue increased from 5.404 billion yuan in the first quarter of 2018 to 76.03 billion yuan in the fourth quarter of 2023. Revenue is growing, but the revenue growth rate has been declining since it hit 87.58% in the second quarter of 2019. By the fourth quarter of 2022, the revenue growth rate has slowed down significantly, falling to around 33.6%. "Digital Intelligence Research Society" believes that after the rapid increase in the penetration rate of TWS headphones, the industry growth rate has slowed down significantly. Luxshare Precision's growth rate has also declined year by year. From the 2023 annual report released by Luxshare Precision, it was found that among Luxshare Precision's four major businesses, consumer electronics business accounted for about 85% of revenue, but the revenue growth rate has dropped to single digits; communications and interconnection products and precision components accounted for 6% of revenue, automotive interconnection products and precision components accounted for less than 4% of revenue, and computer interconnection products accounted for about 3.2%. Because it is extremely dependent on the consumer electronics business, Luxshare Precision's revenue growth rate fell to single digits for the first time in 2023, setting a new low since its listing. The core customer of the consumer electronics business is Apple. In the past 2023, Apple's new iPhone 15 series was sniped by Huawei, resulting in a year-on-year decline in shipments of about 6.5% and a decline in sales of nearly 9 percentage points. At the same time, the sales of products such as AirPods, Mac and iPad also showed a year-on-year decline. The poor sales of Apple's hardware products have been transmitted to Luxshare Precision. By the first quarter of 2024, Luxshare Precision's revenue growth rate has further dropped to less than 5%. In addition, as the consumer electronics industry as a whole returns to rationality, Luxshare Precision can no longer continue to achieve rapid growth by relying solely on Apple. At the same time, Luxshare Precision's business is getting bigger and bigger, and the new business increment is difficult to drive the overall growth rate of Luxshare Precision. At the same time, geopolitical uncertainties and high domestic labor costs have caused investors to become increasingly concerned about Apple's move of production lines to India, which has also become an important reason for Luxshare Precision's stock price to come under pressure. Apple addiction is hard to solve Leaning against a big tree brings you shade. Since 2016, Luxshare Precision has successively received OEM orders for AirPods, iPhone and other products. From 2015 to 2022, Luxshare Precision's consumer electronics operating income increased from 4.416 billion yuan to 197.1 billion yuan. With Apple orders pouring in, Luxshare Precision has also become a well-known "Apple supply chain" company both at home and abroad. With the support of the "Apple chain", Luxshare Precision's stock price also began to soar. On October 13, 2020, Luxshare Precision's stock price hit a record high, and its market value also exceeded the 440 billion yuan mark. Luxshare Precision, which continues to increase its Apple OEM business, is becoming more and more dependent on Apple. By 2023, Luxshare Precision's revenue from its largest customer, Apple, will reach a record high of 75.24%. In fact, Luxshare Precision is the world's second largest iPhone OEM after Foxconn, the largest OEM for AirPods and Apple Watch, and the exclusive supplier of Vision Pro. Apple is both a success and a failure. This example is right next to us. After being kicked out of the "Apple supply chain", OFILM has never recovered. Therefore, Luxshare Precision has also been examining the potential risks of Apple as a single major customer. Luxshare Precision CEO Wang Laichun publicly stated that "the ideal state is that a single customer will contribute no more than one-third of Luxshare Precision's performance in 10 years." In order to get rid of its over-dependence on Apple, Luxshare Precision has continuously increased its investment in communications, automotive and industrial businesses in the hope of opening up a second growth curve. Judging from the operating conditions in 2023, the revenue of Luxshare Precision's new businesses such as communications and automotive will only account for more than 20%. Although the revenue growth rate of the automotive business is as high as 50%, its contribution to the total revenue is still negligible. However, Luxshare Precision is indeed determined in the automotive business and has set a goal of entering the top ten global first-tier suppliers of automotive parts. At the same time, Luxshare Precision has also cooperated with automakers. In 2022, Luxshare Precision established a joint venture with Chery New Energy. In 2023, Luxshare Precision cooperated with GAC Group to establish a joint venture mainly engaged in automotive parts manufacturing. However, according to the "Digital Intelligence Research Society", Luxshare Precision's layout in the automotive business is pure "much ado about nothing". Although the revenue growth rate of the automotive business jumped from 20% to 50% from 2020 to 2023, the total volume is less than 10 billion yuan, which is really insignificant compared to the entire 230 billion yuan market. To put it bluntly, if it takes a little more orders from Apple, it will be worth tens of billions. What is even more despairing is that the gross profit margin of the automotive business is less than 16%, which means that Luxshare Precision's overall gross profit margin level will be difficult to return to its previous level. Luxshare Precision is very determined to "de-Appleize", but the road is not easy at all. From Digital Intelligence Research Society |
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