Lixun Precision: A Disciple Of Shenzhen Manufacturing Industry

Recently, two of the top precision manufacturing companies in China are once again in the same frame and get attention.

According to media reports, Foxconn, an apple foundry, has set up a task force to cope with the growing influence of Lixun precision. Because Foxconn believes that Lixun precision poses a serious threat to its dominant position.

Subsequently, Foxconn responded: "this is not true news." And Foxconn said in a statement that the company "did not hold meetings or other discussions" and "the management team did not take other special actions."

Whether there is a special group or not, the competition between Foxconn and lichen precision is more prominent. The reporter learned that Foxconn also attaches great importance to lichen precision. In recent years, Lixun precision has risen strongly and become a new force in Shenzhen's manufacturing industry. It is normal for Foxconn to take a stand by attitude in the face of the challenge of "disciples".

In terms of volume, the total market value of lichen, which has two major customers, apple and Huawei, has exceeded 400 billion yuan on October 29, which is comparable with Hikvision, the security leader. From 2010 to the end of 2019, the company's revenue increased from 1.011 billion yuan to 62.52 billion yuan, and net profit increased from 116 million yuan to 4.714 billion yuan. Lichen precision has become the leading connector and OEM leader in China.

According to the latest financial report, in the first three quarters of 2020, Lixun precision achieved an operating income of 59.528 billion yuan, an increase of 57.33% over the same period of last year, and realized a net profit of 4.680 billion yuan attributable to shareholders of listed companies, an increase of 62.06% over the same period of last year.

On the one hand, the strong growth of lichen precision is on the other hand, Foxconn is exploring transformation. In the process of survival of the fittest in the industry, the domestic OEM market has opened a new pattern.

The challenge of "disciples"

Lixun's precise growth is inseparable from the soil of Shenzhen and the cultivation of Foxconn. In the 1980s, Shenzhen, as the forefront of reform and opening up, attracted a number of entrepreneurs. Gou seized the opportunity to establish Foxconn. In order to develop the manufacturing industry, Shenzhen continues to release dividends and attract people from all walks of life to enter Shenzhen. Wang Laichun, founder of Lucent precision, has become an employee of Foxconn, moving from an assembly line employee to an independent entrepreneur.

However, the starting point of lichen precision is similar to that of Foxconn, both of which start from connectors. Foxconn has become a big customer of lichen at the beginning, which is also the key factor for the rapid development and growth of lichen precision in the early stage. According to its prospectus, from 2007 to 2009, the company's revenue from selling products to Foxconn accounted for 47.73%, 56.46% and 45.38% of the current operating income respectively.

At the same time, Lixun precision began a series of acquisitions. The target list includes Jiangxi Boshuo, Kunshan liantao, Zhuhai win-win, kertong, yuanoptoelectronics, Suk, Fengdao electronics, Guangbao optics, Meite acoustics, Jiangsu Weichuang and Kunshan Weixin. After the acquisition and integration, the company has gradually entered the notebook connection line, automotive electronic connection line, mobile phone connection line, communication field, headset, wireless charging, and the latest iPhone assembly field, and entered the industrial chain of apple, Huawei, Lenovo, ASUS, Sony, Microsoft, Google and other industry leaders.

Among them, lichen precision OEM Apple's wireless headset airpods is widely known, which has also become a label of lichen precision. In the view of the industry, the large number of OEM of airpods marks the strength of lichen precision in high complexity and precision intelligent hardware manufacturing and scale production, and also makes the breakthrough from parts to complete machine OEM.

Today, Lixun precision has grown from "disciple" to Foxconn's new challenger, and has gone out of the line of differentiation. Recently, the competition between the two sides is intensified by the information that needs to be assembled into the iPhone after the acquisition of lichen precision. The business coverage of the two enterprises has become higher. However, in terms of business, Foxconn's product line is obviously larger. In addition to the precise consumer electronics, automobile, communication and connector fields, there are also home appliances, panels, servers, etc.

From the perspective of revenue, the consolidated financial report of Hon Hai Precision in fiscal year 2019 shows that its operating revenue is 5.3428 trillion Taiwan dollars (about 1.25 trillion yuan), an increase of 1%; the net profit decreases by 11% year-on-year to 115.3 billion Taiwan dollars (about 27.061 billion yuan); the annual report of Lixun precision in 2019 shows that its operating income is 62.5 billion yuan, with a year-on-year increase of 74.38%; the net profit attributable to shareholders of listed companies is 47.1% Billion yuan, a year-on-year increase of 73.13%. According to the revenue calculation in 2019, the revenue of Lixun precision is only 5% of that of Hon Hai Precision, and its net profit is 17.4% of that of Hon Hai Precision. Sun sun is still looking for ways to make profits.

Lixun's precise ambition

An industry insider pointed out to the 21st century economic reporter: "there is a relatively benign competition between lichen precision and Foxconn. If the coverage ratio of the two companies increases, Foxconn may accelerate the reform because of the new challenges. However, the differentiation of Lucent precision reflects the evolution of manufacturing industry in Shenzhen, and also represents the trend and possibility of undertaking higher-end manufacturing. We expect to see more lichen precision, from assembly, to core precision, and even to chips, step by step towards real high-end manufacturing. "

And Apple's product expansion continues to drive the growth of Foxconn, Lucent precision, lens technology and other related industrial chain companies. Xinda electronics said that Lixun precision acquired Jiangsu Weichuang and Kunshan Weixin to enter the iPhone assembly business; LANs technology acquired Kesheng Taizhou and Keli Taizhou to enter the iPhone middle frame business. It can be seen that the general trend of Apple's whole machine and parts transferring from Taiwan to mainland suppliers remains unchanged. In terms of iPhone 12, it will no longer be effective to promote the sales of new iPhone pods.

Among them, Lixun precision forecasts that the performance of this year will continue to grow. The financial report shows that it is expected to achieve a net profit of 7.071 billion-7.306 billion yuan in 2020, with a year-on-year growth of 50% - 55%; among them, the net profit in the single fourth quarter is expected to be 2.391 billion-2.626 billion yuan, with a year-on-year growth of 25.71% - 38.07%.

China Merchants Securities pointed out in the report of Lixun precision that in the fourth quarter, the company will usher in a large volume of all kinds of products. On the one hand, Apple's new mobile phone parts and accessories will contribute more to Q4. After the wired headset and transformer are not in box, the volume of accessories such as wireless headset airpods and wireless charging transmitter will be promoted. We judge that the overall sales volume of airpods in the whole year will be 9000 In addition, the company is expected to supply wireless charging transmitter exclusively this year. In addition, the company will fully introduce Apple watch new products and sip system in the autumn and occupy a higher share. It is expected to contribute to Q4 after going through climbing losses in the first three quarters.

While the assembly of airpods and iPhones brings room for growth, the company is also speeding up its global layout. Besides expanding its production capacity, it can also prepare for the risk of trade friction.

Lixun, a wholly-owned subsidiary of Lixun, announced on May 28 that it plans to expand its overseas subsidiary, such as Lixun, to increase its capital by US $920000. Lixun is a wholly-owned subsidiary of a listed company. It mainly produces connecting devices, wireless communication antennas, mobile phone computer peripherals and acoustic equipment.

Everbright Securities said that after the completion of the capital increase, Lixun precision will improve the operation capacity and production capacity of India's lucent to meet the growing market demand, while helping the company reduce the risk of changes in international trade situation and further improve the global strategic layout.

?