Female billionaire Zeng Fangqin with a net worth of 38 billion continues to invest in the automotive industry chain.

The queen of the fruit chain with a net worth of 38 billion yuan, Zeng Fangqin, has made another move.

According to the announcement released by Lingyi Intelligent Manufacturing, the company plans to purchase 66.46% equity of Jiangsu Kodaster Automotive Technology Co., Ltd. through the issuance of convertible corporate bonds and cash payment, and raise supporting funds. The transaction price is 332 million yuan. Looking back, this is also the second time Lingyi Intelligent Manufacturing has crossed into the automotive field in recent years. In 2021, it acquired Zhejiang Jintai for 38 million yuan, entering the new energy track.

However, judging from the recent stock price trend of Lingyi Intelligent Manufacturing, the capital market's attitude towards this acquisition is relatively cold.

On the first trading day after the announcement, the stock price of Lingyi Intelligent Manufacturing fell slightly by 1.42%, and the trend was not active. As of the close on July 22, the stock price of Lingyi Intelligent Manufacturing was 9.08 yuan per share, with a total market value of 63.6 billion yuan. Compared with the highest point of 14.68 yuan per share in 2020, the stock price of Lingyi Intelligent Manufacturing has shrunk by nearly 40% in more than four years, and the market value has evaporated by more than 39 billion yuan.

As one of the giants of the fruit chain, the capital market's choice to vote with their feet shows investors' wait-and-see attitude towards the transformation of fruit chain enterprises. However, even if the market is not optimistic about this acquisition, Lingyi Intelligent Manufacturing actually has no other choice. On the one hand, the current geopolitical situation is extremely unstable, and the potential risks of the global consumer electronics industry are increasing. On the other hand, in recent years, Apple and the global consumer electronics industry have encountered growth bottlenecks, and the performance growth of Lingyi Intelligent Manufacturing has also begun to slow down, especially in terms of net profit growth. In 2024, its net profit growth rate was -14.5%, which is the second time since 2021 that Lingyi Intelligent Manufacturing has experienced negative net profit growth.

In fact, the Apple industry chain is like a "besieged city": external companies are eager to get a share, while internal players are anxious to escape single dependence. Lingyi Intelligent Manufacturing, which continues to increase its investment in the automotive industry chain, is obviously the latter.

Escape from the "besieged city"

In 2006, Zeng Fangqin resigned from her position as an executive at an electronic company in Silicon Valley, USA, and founded Ling Sheng Electronics (the predecessor of Lingyi Intelligent Manufacturing) in Dongguan.

In the early days, Ling Sheng Electronics mainly focused on the production of mobile phone shielding parts and metal structural parts, successfully entering the supply chains of Nokia and Motorola with its experience in the field of precision molds.

Around 2007, Apple began to look for supply chain networks globally, and China became one of the important layout locations for the supply network. At this time, Lingyi Intelligent Manufacturing successfully opened the door to the fruit chain with Macbook as the entry point.

According to data, to meet Apple's stringent requirements for the flatness of metal parts surfaces, Lingyi Intelligent Manufacturing independently developed the "multi-station continuous mold" process, increasing the yield rate from 85% to 99%. It was with this moat that Lingyi Intelligent Manufacturing later secured orders for iPhone structural parts and gradually expanded to products such as iPad, Apple Watch, Apple Vision Pro, and AirPods.

In 2017, Lingyi Technology was valued at 20.73 billion yuan and acquired Jiangfen Magnetic Materials through a backdoor listing. The restructuring was completed in March of the following year. After the backdoor listing, Lingyi Technology was renamed Lingyi Intelligent Manufacturing, and Zeng Fangqin became the actual controller of the listed company. After listing on the A-share market, although it once encountered performance fluctuations due to historical issues such as the inability to recover advance payments and unmet performance commitments, Lingyi Intelligent Manufacturing quickly emerged from the predicament and subsequently began to expand significantly through mergers and acquisitions.

According to media statistics, in 2018, Lingyi Intelligent Manufacturing acquired Shenzhen Cheng Yue Feng, a supplier to domestic mobile phone brands such as OPPO and Huawei, for 60 million yuan. In 2019, it acquired Salcomp Plc, a global leading developer and manufacturer of chargers and adapters, for 678 million yuan. Also in 2019, Lingyi Intelligent Manufacturing acquired LITE-ON-MOBILE INDIA PRIVATE LIMITED, an Indian company specializing in mobile phone molds, for 29.91 million US dollars, as well as several domestic companies including Saierkang, Mianyang Weiqi, and Mianyang Weilian. As the number of acquired companies increased, the revenue of Lingyi Intelligent Manufacturing also rose significantly.

However, although the business scope has become increasingly broad, the "fruit chain" has always been an important label on Lingyi Intelligent Manufacturing. Like most "chain enterprises", Lingyi Intelligent Manufacturing also has a very obvious dependence on major customers. In 2024, the top five customers of Lingyi Intelligent Manufacturing achieved sales of 24.773 billion yuan, accounting for 56.04% of the operating income. Among them, the sales of the largest customer were 9.758 billion yuan, accounting for 22.07% of the operating income.

In fact, these major customers have always been an important driving force for the performance growth of Lingyi Intelligent Manufacturing. In 2020, the top five customers of Lingyi Intelligent Manufacturing achieved sales of 12.456 billion yuan, and four years later, the top five customers achieved sales of 24.773 billion yuan. Simple calculations show that the sales of the top five customers of Lingyi Intelligent Manufacturing increased by 12.317 billion yuan in four years, an increase of 98.9%. Among them, the sales of the largest customer increased from 5.958 billion yuan in 2020 to 9.758 billion yuan in 2024, an increase of 63.8%. During the same period, the revenue of Lingyi Intelligent Manufacturing increased from 28.134 billion yuan to 44.211 billion yuan, an increase of about 57%.

Of course, while leveraging major customers to drive rapid revenue growth, Lingyi Intelligent Manufacturing also has to face the common problems of "chain enterprises". For example, due to low bargaining power, the gross profit margin is constantly being squeezed. As of the end of the fourth quarter of last year, the gross profit margin of Lingyi Intelligent Manufacturing's "AI terminal" was only 17.43%, while in 2020, the gross profit margin of its "manufacturing industry" was still 22.23%. From the overall profit margin data, in the first quarter of this year, the gross profit margin of Lingyi Intelligent Manufacturing was 15.15%, and the net profit margin was 4.94%. It is worth noting that at the end of the first quarter of 2023, its gross profit margin was still 20.49%, and the net profit margin was 8.95%.

Seeking the second growth curve

In fact, compared with Luxshare Precision, another giant of the "fruit chain", Lingyi Intelligent Manufacturing is in a much better situation.

According to data, in 2024, the top five customers of Luxshare Precision achieved sales of 211.024 billion yuan, accounting for 78.5% of the revenue. Among them, the sales of the largest customer were 190.139 billion yuan, accounting for 70.5% of the revenue. In contrast, in 2024, the top five customers of Lingyi Intelligent Manufacturing achieved sales of 24.773 billion yuan, accounting for 56.04% of the revenue. Among them, the sales of the largest customer were 9.758 billion yuan, accounting for 22.07% of the revenue.

However, although the dependence on major customers is not as high, due to the business mainly focusing on the consumer electronics field, Lingyi Intelligent Manufacturing still faces considerable pressure.

The content above mentions that one of the common problems of the "fruit chain" is low gross profit margin, which is actually a problem faced by all consumer electronics industry chain enterprises. In addition to low gross profit margin, to meet the technical requirements of downstream mobile phone manufacturers, Lingyi Intelligent Manufacturing needs to invest a large amount of funds in research and development. In 2024, the research and development expenses of Lingyi Intelligent Manufacturing were 1.975 billion yuan, while in 2019, the research and development expenses were 1.14 billion yuan. In terms of inventory, due to its position in the upstream of the consumer electronics industry chain, Lingyi Intelligent Manufacturing needs to reserve a large amount of inventory. In recent years, its inventory has been rising all the way, reaching 5.859 billion yuan in 2024, while in 2020, it was 4.175 billion yuan.

Overall, although Lingyi Intelligent Manufacturing has grown and developed with the consumer electronics industry chain, it is also under considerable pressure. It is worth mentioning that the growth of the consumer electronics industry has already peaked. According to IDC data, the global smartphone market shipments in 2023 decreased by 3.2% year-on-year, to about 1.17 billion units. The domestic market in China saw shipments of 271 million units, the lowest in nearly 10 years. In this context, Lingyi Intelligent Manufacturing does not want to focus solely on the consumer electronics field. The recent acquisition of 66.46% equity of Jiangsu Kodaster Automotive Technology Co., Ltd. is an important exploration for its second growth curve.

According to media reports, the main products of Jiangsu Kodaster are automotive dashboards, sub-dashboards, door panels, pillars, and other automotive trim parts. In the automotive trim business, Jiangsu Kodaster will bring important customers such as Chery Automobile, SAIC Group, BYD, Li Auto, Geely Automobile, and JAC Motors to Lingyi Intelligent Manufacturing. The car trim products it produces can cover models such as "Zhijie S7", "Arrizo 8", "Star Era ES", "Denza D9", "BYD Xia", "BYD Seal", "Li Auto L7/L8/L9", etc. After acquiring Jiangsu Kodaster, the coverage of Lingyi Intelligent Manufacturing's "car chain" business will also be significantly expanded.

In fact, as early as 2021, Lingyi Intelligent Manufacturing acquired Zhejiang Jintai, successfully entering the new energy vehicle track. According to reports, the company has currently established production bases in Huzhou, Suzhou, and Fuding, vigorously deploying battery cell aluminum shells, cover plates, transition pieces, and other battery structural parts, as well as flexible soft connections, injection parts, and other automotive-related precision structural parts. The automotive business is booming. However, according to the financial report, in 2024, the "automotive and low-altitude economy" business of Lingyi Intelligent Manufacturing achieved revenue of only 2.117 billion yuan, accounting for 4.79% of the revenue.

Compared with the core consumer electronics business, it is clear that it will take a long time for Lingyi Intelligent Manufacturing to build the automotive business into a second growth curve.