Changying Precision (300115.SZ) is preparing to build a factory in Daxing Civil Engineering, Vietnam.
A reporter from China Business News learned from people who know Changying Precision that this Shenzhen-based company has leased land in Nghe An province in central and northern Vietnam, and the construction of the plant is expected to be completed next year. Changying Precision’s main products are precision parts and modules required for consumer electronics such as mobile phones and computers. The structural parts produced by its factory in Vietnam will first be supplied to Samsung Electronics in South Korea.
Samsung has gradually closed its manufacturing base in China and increased investment in Vietnam. Vietnam is now one of Samsung's largest consumer electronics production bases, which has driven some domestic companies to transfer production capacity to Vietnam. Everwin Precision has been cooperating with Samsung for nearly a decade, and its factory in Nghe An Province, Vietnam is not far from the Samsung factory.
Vietnam's relatively low labor costs and more favorable tariff policies for exports to Europe and the United States are attractive to the production and manufacturing of consumer electronics. Prior to Everwin Precision, some manufacturing companies had already landed in Vietnam, including Goertek, Lens Technology and Foxconn.
It is not yet clear whether Changying Precision's investment in Vietnam means a reduction in China's domestic production capacity.
In the past 2018 and 2019, Changying Precision's revenue growth has almost stagnated. Everwin Precision's revenue in 2017 was 8.43 billion yuan, an increase of 2.3% to 8.62 billion in 2018, and an increase of only 0.34% to 8.65 billion in 2019. After reducing non-recurring gains and losses, Everwin Precision was at a loss in 2018 and 2019. The technology of
consumer electronic products is updated quickly and the iteration cycle is short. Established in 2001, Everwin Precision has experienced the replacement of its main products. Its next transformation direction is new energy auto parts. It recently completed a non-public additional issuance, and about 900 million of the 1.9 billion it raised was used for the Shanghai Lingang new energy vehicle component project. Changying Precision's Lingang project mainly produces high and low voltage electrical connectors, power battery structural parts, etc. Tesla is one of its potential customers.
China's new energy vehicle development is encouraged by policies, and the growth rate and market size of the industry have exceeded that of most countries, which may help Changying Precision to get out of the current income stagnation.
