source / e company official Weibo author Meng Qingjian
Over the past many years, Apple concept stocks have become a unique landscape in the capital market, and its performance and stock price have grown up and down along with the sales of iPhone mobile phones. As the mobile phone market pattern changes and Apple's sales fall short of expectations, Apple's supply chain companies are also looking for new growth points.
In fact, in the years when Apple was at its peak, A-share Apple supply chain companies were generally more dependent on the iPhone, and the net profit margin was declining year by year, indicating a lack of risk resistance. Many A-share Apple concept stocks suffered double losses in performance and valuation in 2018.
But not all Apple supply chain companies are sensitive to fluctuations in iPhone sales. Companies that can enter Apple's multi-product matrix are more resistant to fluctuations, while companies that break through the consumer electronics path and enter areas with higher thresholds such as communications still maintain better performance increase.
Suppliers’ net profit margins dropped
In the fourth quarter of last year, after Apple released its new iPhone products, sales of Apple mobile phones, which were overpriced and lacked product appeal, declined. As a result, supply chain companies continued to hear news of cutting orders.
In November last year, Apple announced its fourth quarter financial results. While revenue exceeded expectations, it also revealed hidden worries-the sales of hardware products were lower than expected. iPhone sales in the quarter were 46.889 million units, which was basically the same as the 46.677 million units in the same period last year and failed to meet expectations. During the quarter, iPad sales fell 6% year-over-year. Mac sales fell 2% year over year.
With new products “cutting orders”, many A-share Apple concept stocks suffered a double loss in performance and valuation in 2018, and Apple concept stocks that had been prosperous in the past showed signs of weakness.
Apple sneezes and the supply chain catches a cold. According to statistics from Securities Times e Company reporters, in addition to new companies entering Apple’s supply chain camp, the net profit margins of many of Apple’s important long-term suppliers have been declining year by year. In 2018, when Apple's performance was bleak, some supply chain companies behaved sensitively.
January 19th, Goertek shares announced that it has revised its expected performance for 2018. The expected net profit for the whole year of 2018 will fall by 50% to 60%. The main reason is that due to the intensified competition in the smartphone industry, the gross profit margin of the electroacoustic device business decline. Last year's interim financial report showed that this part of the business accounted for 65% of the company's total revenue.
Goertek became an important supplier of acoustic components to Apple in 2011, and subsequently its stock price increased several times. In 2011, Goertek's net profit margin reached the highest level of 13.64%, and then fluctuated downwards. In 2017, the net profit level dropped to 8.25%. The net interest rate level in 2018 was even lower, with net interest rates in the first three quarters being 4.48%, 5.75%, and 5.84% respectively. Goertek's transition to VR has not been smooth, which has also dragged down its performance. At the same time, is competing in the acoustic field with companies such as , AAC Technologies, , and Luxshare Precision. The current share price of Goertek has dropped by nearly 70% from the high in late 2017.
Another company suffering from a severe cold is Lens Technology controlled by Zhou Qunfei . Compared with the high stock price in November 2017, the market value of Lens Technology has evaporated by 80 billion. On January 31, Lens Technology announced that its net profit in 2018 would drop by 55% to 70% year-on-year. The company explained that it was mainly due to intensified competition in the consumer electronics industry, customers’ higher requirements for product quality and technology, and the company’s labor costs, Depreciation expenses and financial expenses increased, causing the company's profit margin to decline compared with the same period last year.
As an important glass cover supplier for Apple, Lens Technology also has a relatively single category. The financial report shows that its net profit margin dropped from 20.50% in 2011 to 8.54% in 2017. The net profit margin in the first three quarters of 2018 was 2.13%. ,5.33%,7.30%.
In addition, among Apple's long-term suppliers, Desai Batteries, whose revenue from Apple accounts for about 70% of total revenue, saw its net profit margin fall from about 7% in 2011 to 2.91% in 2017; since 2008, Apple's Anjie Technology became the largest customer. In 2012, Anjie Technology's net interest rate was as high as 30.30%. Later, the fluctuations declined, and the net interest rate dropped to 14.32% in 2017.
Apple's traditional suppliers' net profit margins have been on a downward trend in recent years. " Apple is accustomed to supporting new suppliers to weaken the profit margins of original suppliers in order to reduce costs. Parts and products that lack a technical moat can easily be cut off by new suppliers.Relatively speaking, mainland Apple supply chain companies generally lack technology accumulation. Compared with Apple supplier Largan Guang, the net profit margin has remained above 40% for four consecutive years. Maintaining profitability requires a shift toward high-value products. " a brokerage analyst told a reporter from Securities Times e Company.
value from low to high material number from one to many
However, with sales falling short of expectations and the market looking down on the Apple industry chain, Luxshare Precision bucked the trend and revised its 2018 performance upward. Last year's profit will reach 2.6 billion to 2.789 billion yuan, a year-on-year increase of 55% to 65%. The company said that last year's short, medium and long-term market, product and customer planning were relatively complete, and internal operation and management were well-organized. Smart manufacturing continues to improve, the growth is relatively obvious, and it is relatively easy to resist adverse factors in the growth of individual markets and products.
Luxshare Precision is an important supplier of iPhone mobile phones. It is also affected when iPhone places revised orders for new products, but with good performance. Product structure, new product volume boosted Luxshare Precision's performance. When iPhone sales declined, Luxshare Precision's shipments of Apple AirPods exceeded expectations, and the yield rate increased. At the same time, the new entry of iPhone acoustics. The significant increase in device volume and share offset the impact of declining sales. In addition, the release of non-consumer electronics business performance also boosted the company's performance.
As the most stable Apple core supplier, Luxshare Precision's material number has increased from one to one. Many, a typical example of value rising from low to high.
Luxshare Precision started with Apple Macbook internal cables in the early days and continued to expand its categories around Apple. In 2013, it obtained the qualification to supply power cords such as iPhone lighting cables; in 2014, it obtained the Apple Watch Exclusive orders for wireless charging modules; received orders for iPhone audio adapters in 2016; entered Airpods module OEM in 2017; in 2018, the company obtained iPhone acoustic component material numbers, entered linear motor supply, and entered LCP antenna back-end processing
from connection. From wires and connectors to wireless charging modules, acoustic components, linear motors and antennas, the value of Luxshare Precision’s products supplied to Apple has gradually increased from low to high. Since this year, Luxshare Precision has supplied a variety of products covering iPhone, iWatch, Mac and Airpods. Precision has become the most favored Apple concept stock by foreign investors. The proportion of outstanding shares held by Shenzhen Stock Connect has increased to 3.23%, and the company's stock price has bucked the trend and has risen by nearly 15%.
is similar to Luxshare Precision in terms of cooperation with Apple. There is also OFILM Technology, whose supply to Apple has gradually extended from traditional touch fit to camera modules and fingerprint modules, and its value has continued to increase.
There are also some Apple supply chain companies that are gradually expanding their supply of Apple products. Coverage, such as USI Electronics, in addition to providing system packaging for the iPhone, has also entered into Apple's iWatch products. The growth of Apple's wearable products has boosted the company's performance. In addition, Lens Technology provides Apple with more material numbers, compared with the previous ones. Glass cover began to provide glass chassis.
embraces " Huawei " people
As the Android and Apple mobile phone camps gradually separate, seizing domestic brand customers is an important choice for Apple supply chain companies to find growth, such as the growing Huawei, OPPO, and vivo. Attracting high-quality suppliers to cooperate. Data released by
IDC shows that Huawei’s shipments in 2018 reached 206 million units, a year-on-year increase of 33.6%, approaching Apple’s 208 million units, with the latter’s shipments falling 3.2% year-on-year; in addition, domestic mobile phone brand Xiaomi’s mobile phone shipments were 1.226 100 million units, a year-on-year increase of 33.2%; OPPO mobile phone shipments were 113.1 million units, a year-on-year increase of 1.3%.
At the end of last year, Huawei announced its gold medal supplier list. Many Apple supply chain companies are also Huawei's gold medal suppliers, such as Luxshare Precision, BOE, AAC Technology, Goertek, etc.
As one of Apple’s main suppliers of acoustic devices, AAC Technologies is also actively embracing Huawei. AAC Technology is an important acoustic supplier for Huawei's Mate 20 series. It is reported that before this, AAC's speakers and earpieces have been used in Huawei Mate 9, Mate 10 Pro and other mobile phones. In the future, it is possible to apply a variety of products including acoustics to Huawei's mid-range mobile phones. In addition, the company is also an acoustics supplier for mobile phone brands such as Xiaomi, , and Lenovo .
Lens Technology is also gradually increasing the proportion of customers in the Android camp. The prospectus submitted by Lens Technology at the end of 2014 showed that Apple and Samsung accounted for more than 80% of orders. Over-reliance on Apple caused Lens Technology's performance to fluctuate with the sales of Apple mobile phones. Currently, the customer structure of Lens Technology is also changing. An important aspect is to cooperate with brands such as Huawei, OPPO, vivo, and Xiaomi to make up for the losses in the international market. According to the 2017 financial report, the top two customers accounted for approximately 65%.
In addition, Lens Technology issued convertible bonds to raise funds to invest in the "Window Protective Glass Construction Project" in Songshan Lake, Dongguan, which is mainly used to produce 2.5D and 3D protective glass, with a designed production capacity of 70 million pieces per year. When communicating with investors, Lens Technology revealed that the customers of this project are domestic brands, mainly OPPO.
Goertek said in an institutional survey in the second half of last year: "In response to the upgrade of the acoustic market, the company launched the SBS speaker solution for the Android platform, which has been recognized by many customers. The future growth is very significant, especially in the Android field. In 2019 The average selling price of acoustic products on the Android platform will increase, and competition will be more benign in the future.
Of course, many supply chain companies that have deployed Android have experienced worse than expected. Anjie Technology acquired Weibo Precision in 2017, which is Huawei. , OPPO, vivo's main supplier of small metal parts. On January 18, Anjie Technology announced that it is expected that Weibo Precision will not be able to complete the promised performance during the acquisition in 2018, and the difference is large, and it plans to accrue assets to Weibo Precision. The impairment is 230 million yuan. It is estimated that Weibo Precision's 2018 annual performance is expected to be 70 million to 100 million yuan, which is significantly different from the 420 million yuan promised at the time of acquisition. The difference is 320 million yuan to 350 million yuan.
Horizontal development layout 5G Communications, automotive electronics
Apple's top suppliers are also looking for horizontal development into highly relevant communications or automotive electronics fields.
For example, Luxshare Precision is developing communications and automotive electronics in addition to consumer electronics. To open up long-term growth space, through mergers and acquisitions, Luxshare Precision has formed a layout in base station filters, Massive MIMO, and integrated antennas.
In a recent institutional survey, Luxshare Precision stated that the company is engaged in business in the communications and automotive fields. It has been many years. The communication business has grown rapidly in the first half of 2018, and some products have begun to be traded with customers. In the next few years, communication products will still achieve rapid growth. company has a professional team engaged in the fiber optic field. Work. For 400G products, samples have been sent to many data centers, and some have passed the test and started to be delivered in small batches.
CITIC Construction Investment Research believes that the proportion of Luxshare Precision’s 5G-related business is expected to reach 2020. About 20%, which is equivalent to rebuilding half of Luxshare in 2017.
In addition, AAC Technology is also laying out 5G, including the "5G medium and high frequency communication massive MIMO antenna" in the "2018 Industrial Base Strengthening Project" of the Ministry of Industry and Information Technology in 2018. "In the project bidding, AAC Technology and Tongyu Communications won the bid at the same time. AAC Technology previously announced that the newly built R&D center in Tampines, Singapore, is mainly engaged in the design and R&D of high-end optical devices and MEMS, and will expand to 5G in the future. Millimeter wave research and development.
Dongshan Precision’s PCB and filter businesses are expected to benefit from 5G. The company completed the merger of Multek in August last year. Its main customers include Samsung, Ericsson , Nokia, Cisco and other communication equipment manufacturers. ; In 2018, Dongshan Precision subsidiary Aifu Electronics' dielectric filter was supplied to Huawei. Aifu Electronics is one of the few domestic manufacturers that can mass-produce ceramic dielectric filters. Ceramic dielectric filters are expected to become the mainstream of 5G base stations.
Automotive electronics is also an important direction of transformation. On February 11, Xinwangda board secretary Zeng Hao said at a conference call organized by brokers: "The biggest highlight of the company's business growth is power batteries, which should be a relatively rapid development starting from the second quarter of this year. In the process of cargo climbing, you can see a rapid improvement process. This is a process from 0 to 1, so the flexibility is very high."
Pacific Securities recently released a research report stating that Sunwanda power batteries have been supplied to Geely Automobile and have signed strategic cooperation frameworks or memorandums of cooperation with five new energy vehicles including Liuzhou Automobile, Xpeng and Yundu. Power battery cells Small batch supply has begun in 2018, and power batteries are expected to turn losses into profits and contribute profits this year.
