Investment plan

Apple’s Chinese supplier Luxshare drops after $2.1 billion investment plan for wearables and NEVs

(Yicai Global) Feb 22 — Shares of Chinese Apple supplier Luxshare Precision Industry fell after the company announced plans to raise up to 13.5 billion yuan ($2.1 billion) to invest in portable devices and the production of new energy vehicles.

Luxshare share price [SHE: 002475] opened 4% lower at CNY41.20 ($6.50). Stocks are down almost 20% this year.

The electronics component maker will issue no more than 2.123 billion new shares to as many as 35 investors, the Shenzhen-based company said in a statement yesterday. The price per share must not be less than 80% of the average price recorded during the last 20 trading days preceding the day on which the price is determined.

Proceeds from the private placement will be used for packaging and testing, as well as display modules. Part of the funds will be used to produce parts and assemble smartphones, wearables and smart cars. In addition, part of the sum will be used to replenish Luxshare’s working capital to optimize the company’s capital structure and reduce its financing costs, he added.

Demand for electronic devices and components has increased in the era of fifth-generation wireless mobile phones, the company said. The value of global smartphone shipments is expected to reach nearly $600 billion in 2022 and that of wearables is expected to reach $632 million in 2024, he added.

The scale of the global automotive electronics market is expected to expand by more than four-fifths to reach $400.3 billion by 2028, from $217.9 billion in 2020, with a compound annual growth rate around 8%, Luxshare wrote, citing Statista’s forecast. .

The major player in the iPhone supply chain has had its eye on smart cars recently. On Feb. 12, Luxshare announced it would invest 10.1 billion yuan in Chery Holding Group, becoming the Chinese automaker’s fourth largest shareholder, while marking Luxshare’s first entry into the NEV market.

It is necessary for Luxshare to seize development opportunities to improve its product offering and business in consumer electronics and automotive electronics through private placement, he said.

Editor: Emmi Laine, Xiao Yi