Shulou(Shulou.com)11/24 Report--

Recently, a rumor about "the defective rate of Apple headphones manufactured by GE shares was faked and fined by customers" circulated on the Internet.

The content of the online biography can be summarized as follows: the AirPods defect rate of Gale shares was falsified for three years; Gale shares lost orders, and Lixun Precision, as a competitive product, got an order of 80% AirPods; the fine may be huge.

In response to the above rumors, Gale shares responded on November 8.

That night, Gale shares issued a risk warning notice that the company recently received a notice from a major overseas customer to suspend production of one of its intelligent acoustic machine products. At present, the cooperation with other product projects with this customer is still under normal development.

Gale predicts that this business change is expected to affect its operating income of no more than 3.3 billion yuan in 2022, accounting for about 4.2% of the company's audited operating income in 2021.

From the announcement, Gale shares did not mention the major customers involved, related products, and the reasons for customers to suspend orders. The false defect rate and the huge fines mentioned in the rumors need to be further confirmed.

According to the Securities Times, Gale responded again on November 9 that rumors such as "kicking out the fruit chain" were rumors that the company only suspended one of its customers' products in response to demand, and the rest of the projects were working together normally. Rumors, including the amount of billions of dollars in fines, are false information, and the company is still assessing the specific losses and will announce them in a timely manner.

In the early morning of the same day, Guo Mingyi, an analyst at Tianfeng International Securities, said that the intelligent acoustics product suspended by Gale may be AirPods Pro 2, and the suspension may be due to production problems rather than demand problems.

AirPods Pro 2 source: Guo Mingyi, Apple's official website, mentioned that in order to fill the production gap, Lixun Precision has expanded production and won all orders for AirPods Pro 2, making it the exclusive assembler of AirPods Pro 2. Shipments of the AirPods Pro 2 are expected to be about 20 million units in the fourth quarter of this year.

In this regard, Lixun Precision told the media that it would not comment.

Interestingly, at the same time, Lixun has thrown an olive branch to the "beaters" of the Gore factory. According to the box lunch financial report, 20, 000 to 40, 000 people have left the factory in Weifang, while Zhejiang Jiashan Lixun Electronics is still recruiting people, and said it can pick up people from Weifang free of charge.

1. What's the impact? "Gore does have orders, and some of our people who serve them have stopped working these days. The exact amount is not known yet." A "fruit chain" told all-weather technology.

The above-mentioned fruit chain people also confirmed to all-weather technology that the reason why Gale's shares were cut was due to the problem of yield.

With regard to the problem of yield, some market analysts interpreted: "the production yield required by overseas customers is very high, in fact, it is very difficult to achieve it all the time, or it costs too much to do it." the actual production yield is generally lower, so all kinds of data are sometimes whitewashed. "

As for when Gore will resume production of AirPods Pro 2? Will the impact of this be extended to Gore's Apple orders or other Apple product orders next year? Guo Mingyi's answer is: it is not clear yet.

But the capital markets have given the answer with their feet about the impact of the "suspension of orders" on the company.

In early trading on November 9, Gore shares fell by the limit at the start of trading at 20.72 yuan per share. Another rumored protagonist, Lixun Precision, opened up 4.62%, then fluctuated repeatedly to close at 32.08 yuan / share, up 0.22%.

In the announcement on the 8th, Gale shares said that the "suspension of orders" incident is expected to affect 2022 operating income, accounting for about 4.2% of the company's audited operating income (78.221 billion yuan) in 2021, which does not seem to be large.

"the material impact may be more than that." Fei Zhichao believes that Changqiao dolphin investment and research.

Due to the low gross profit margin and low actual profit contribution of Gale's intelligent acoustics products, this incident has little impact on the overall performance of Gale for the whole year of 2022. However, this incident may have a medium-and long-term impact on Gale's overall performance.

"since the impact of the shutdown of AirPods Pro 2 is November and December, no more than 3.3 billion yuan also refers to the impact of two months. If the shutdown continues in the future, the impact on the company's revenue in 2023 will reach more than 10 billion yuan." Fei Zhichao analysis.

In response to Apple's order-cutting move, more than one market analyst believes that the problem of yield is a common problem in contract manufacturers. As you may lose money to fully meet Apple's high requirements, it is common for people to ship goods on the edge of good rates. And the Gore incident is Apple "set an example" to improve the yield.

In addition, the outbreak of the problem could affect Gale's cooperation with Apple in other businesses. After all, Apple has suspended orders for the Gore AirPods Pro 2 in the short term, and may then reduce its share of wireless headphones.

"in the future, Gore's trust in Apple will certainly decline, and the share of products and accessories other than wireless headphones may be affected." In Fei Zhichao's view, the impact of this incident on Gale shares is significant, directly affecting the basic trading of the company.

Misfortunes never come alone. As the leader of consumer electronics, Gore has been heavily positioned by the agency. But since the beginning of this year, due to its weak share price, the organization as a whole has reduced its positions in Goyle shares. At the same time, due to the decline in overall demand for consumer electronics, the payment ability of downstream customers has weakened. Judging from the changes in the overall position of the industry, the market value of shares in the electronics industry held by public funds accounted for 4.6% of the fund's net value in the third quarter, down 0.3% from the previous quarter.

After Apple uncovers this problem, it may cause other manufacturers in the industry that work with Gore shares to look for second supply to spread the risk and put pressure on Gore in terms of yield or price.

For Gale shares, "short-term loss of orders, performance damage; medium-and long-term share will be tested, may be further under pressure from the brand." Fei Zhichao summed up.

2. Rely on OEM AirPods to "reach the top" at present, Gale's main business includes precision components business, intelligent acoustics machine business and intelligent hardware business. Among them, the whole business of intelligent acoustics focuses on the product direction related to acoustics, voice interaction, artificial intelligence and other technologies, the main products include TWS intelligent wireless headphones, wired / wireless headphones, intelligent speakers and so on.

In 2001, the 36-year-old Jiang Bin started his second business, co-founded Yilida Diansheng (the name of Gale shares when it was first founded) with his wife. The company's earliest products mainly include miniature microphones, miniature speakers and receivers. With its technical excellence, the company has a stable customer base and has become the first in the domestic microphone industry in just a few years.

Over the next few years, Gale has been working in areas such as miniature speakers / receivers for mobile phones and Bluetooth products. And landed in the capital market in 2008.

Over the past decade, the "fruit chain", like a magical and noble label, has become a symbol of wealth in the consumer electronics field.

In 2010, Gore shares received an olive branch from Apple and officially became one of them. For many years since then, the ups and downs of Apple products and performance have always affected Gale shares. Gale shares each round of performance experience "top", "bottom" can not be separated from Apple.

In 2018, the market value of Gale shares plummeted, wiping out more than 60%, revenue fell and profits halved due to the failure of iPhone sales as expected. That year, Gore shares suffered their first difficulties after a decade of rapid growth.

Fortunately, Gore entered Apple's Airpods supply chain in 2019. In that year, global shipments of TWS headphones soared to 129 million, of which AirPods accounted for half of the country. In this context, the operating income of Gale shares ushered in explosive growth, especially the intelligent acoustics business represented by TWS.

According to the financial report, Gale's total revenue in 2019 was 35.148 billion yuan, an increase of 47.99% over the same period last year. Intelligent acoustics machine business grew by 117.58%, and revenue accounted for 42.17% of the company's total revenue, up from 28.68% the previous year, making it the largest source of revenue for Gore shares.

Touyuan: Wind financial terminal benefits from TWS headphone consumption craze, Gale shares ushered in a highlight moment, Gale shares rose more than 450% in the year from 2019 to 2020. At the end of 2021, the share price of Gale shares reached a new high of 58.43 yuan per share, an increase of nearly eight times from 6.56 yuan per share at the beginning of 2019.

As a result, Jiang Bin became the richest man in Shandong with a fortune of $3.2 billion (22.6 billion yuan) on the Forbes Global Billionaires list in 2020.

3. "de-fruit" self-help Apple's supply chain policy is to find more "spare tyres" to prevent a supplier from dominating and taking full initiative in bargaining.

So the "fruit chain" is like a besieged city, companies outside the city want to come in, and companies in the city do everything possible to "get rid" of the risk of a single major customer from Apple.

After all, once the cooperation is terminated, the performance of the "fruit chain" will suffer a collapse.

The most typical example is Oufeiguang, a manufacturer of mobile phone lens modules. In March last year, the Ofeiguang announcement confirmed that it had ended its partnership with Apple. Since then, Ofeiguang's market value and performance have "plummeted." According to the 2021 financial report, the operating income of Ofeiguang during the reporting period was 22.844 billion yuan, and the net profit and loss attributed to the shareholders of the listed company was 2.625 billion yuan. The impairment loss of assets related to Apple is as high as 2.58 billion yuan.

The key client strategy is also a consistent style of play by Gale shares. 'Business income from a small number of core customers accounts for a large share of the company's overall revenue, 'Goyle wrote on more than one occasion. If the main customers fluctuate their business activities due to the influence of various factors, it is possible to bring corresponding fluctuations and risks to the company's business.

Aware of the crisis, Gale shares are also trying to change, trying to reduce "Apple dependence" by occupying the VR market and other ways.

Take this "involved" product intelligent acoustics machine product as an example. In the first half of this year, the revenue of intelligent acoustics products was 12.338 billion yuan, accounting for 28.30% of the total revenue of Gale shares. However, the share of the business segment's revenue in the company's total revenue has declined year by year in the past three years.

Figure source: Wind financial terminal, while the smart hardware business represented by VR virtual reality, intelligent home video game consoles and accessories is gradually increasing. In the first half of this year, smart hardware business revenue accounted for more than half of the total revenue of Gore shares.

"thanks to the company's active layout of smart hardware business other than smartphones in recent years, the growth of the emerging smart hardware product market has promoted the sustained and healthy growth of the company's related business. In particular, rapid growth has been achieved in the areas of VR virtual reality, smart home video game consoles and accessories." Gore shares mentioned in the mid-2022 report.

In fact, as early as a decade ago, Gale began to expand its smart hardware business represented by VR by virtue of its technological advantages; in 2016, it became the exclusive agent for Sony PSVR; and in 2020, Gale won the exclusive supply of Meta Quests2, the leader of VR. At present, Gale has become the core contract manufacturer of VR products of Meta and Pico.

Now it seems that after that, Gale's emerging business needs to bear further pressure on the company's performance.

"Meta has not launched consumer-grade products at the end of this year, and the Pico 4 has not met market expectations. MR, which was originally expected in the field of virtual reality, may not be the first choice in Apple's supply chain because of this accident." Fei Zhichao believes that Gale shares short-term performance is gone, medium-term pressure, long-term can only count on the explosion of new VR products in the second half of next year.

This article comes from the official account of Wechat: all-weather Technology (ID:iawtmt) author | Yu Huiru Editor | Luo Lijuan

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