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

The main points of this article

When Gore meets an apple, it is like a tiger with wings.

The two sides of a coin

Looking for a diversified way out

Fruit chain business earthquake, the veteran fruit chain one of the big three Gore shares, this month has been shrouded in a dark shadow.

On December 2, Gale shares issued a revised announcement on its annual performance forecast of 2022. It is estimated that the net profit belonging to shareholders of listed companies in 2022 will be 1.71 billion yuan to 2.137 billion yuan, down 50% from the same period last year. Previously, the net profit was expected to be 4.06 billion yuan to 4.7 billion yuan.

Net profit halved, all due to a "breakup" with Apple.

On November 8, Gale issued a risk warning notice that it had recently received a notice from a major overseas customer to suspend production of one of its intelligent acoustic machine products. As the three giants of the fruit chain, the orientation of "overseas big customers" is quite obvious, so as soon as the news comes out, it has aroused widespread concern.

Guo Mingyi, an analyst, said through an investigation that Gale halted production of Apple's AirPods Pro 2 headphones this time, and that the suspension was more likely due to production problems than demand problems. He also revealed that Lixun Precision filled the production gap.

Gale shares said publicly that due to the impact of the incident, the company's direct losses and asset impairment losses were about 2 billion-2.4 billion yuan, which had a significant impact on operating results in 2022, so there was a significant reduction in net profit expectations.

A notice blew up the plight of Gore shares like a depth bomb.

On the one hand, layoffs exposed before the company's risk announcement were quickly interpreted to be related to the loss of Apple orders.

On Nov. 7, a Douyin video showed a large number of people leaving a factory-style place with their luggage, with the caption: "Gore's order hasn't been talked down and people are starting to be laid off." According to the reply of the blogger, the shooting address is Gore Xinchang factory area. According to people familiar with the matter, 20, 000 to 40, 000 people left the Gore Weifang factory. A Douyin labor blogger said in a video that more than 2000 job leaflets had been handed out at the gate of the Geer factory on an afternoon on November 8.

In a video on November 7, netizens revealed that Gore had not yet specifically responded to the wave of layoffs, and when replying to relevant questions from investors, he only said: "Please take the relevant announcement issued by the company as standard." Internet rumors, please pay attention to identify the true and false. " However, some Gore employees said on a job platform that almost all those who were laid off were temporary workers.

It never rains but it pours. Gale shares, which were pushed to the forefront of the storm, began to face the Waterloo of their share prices. On November 9, Gale shares fell by the limit, and on December 14, their shares plunged to close at 17.31 yuan.

In fact, many investors have lost confidence in the consumer electronics industry since the beginning of 2022, and Gale shares have suffered a bear all the way, down about 65%. But break up with Apple, "fruit chain" abandoned son rumors everywhere, Gale shares of the problem is stark display.

Success is apple, failure is apple. In recent years, fruit chain companies such as Ofeiguang and Lixun Precision have been trying to reduce "Apple dependence". For companies that are still in the honeymoon period with Apple, there is still some time to find out the answer. Once such as Ofeiguang, Gale shares encountered a "sudden breakup", the pressure will be unimaginable.

"Apple created Gore, and then Apple didn't want Goyle." As a shareholder of Gale shares, Wang Lei looked at the loss and sighed: "Gore is really cut this time." Relative to Wang Lei's negativity, Li Fang is optimistic: "18 yuan a share, time will tell the answer, opportunities outweigh risks, such a big company will not go bankrupt."

Forced to break through the "fruit chain siege", the time left for Gore shares is very tight.

The genetics of GE'er shares in the past 20 years has something to do with its big clients.

In 2001, the original technology research and development in the electro-acoustic field was still dominated by foreign countries. If the rising stars want to overtake in a corner, it is always difficult to match each other quickly through the path of the forerunners, so the positioning of Gale shares was very clear at the beginning of its establishment.

"as enterprises that do technology applications, since they are unable to be original in many areas, what we need to do is to integrate their most advanced technologies and then combine them with the market for in-depth development." Jiang Bin, chairman of Gale Co., Ltd., called the integration process of this kind of technical resources "bridge repair", which is the core competitiveness of Gore.

It is difficult to fight bayonets on original technology, but the size of the market can allow a start-up to grow rapidly, which is also Gore's strategy, and for a start-up, the most influential market strategy is to "hug the thigh". In 2004, Jiang Bin put forward the big customer strategy of "first-class talents make first-class products and serve first-class customers", "be big customers if you want to do something" and "do something not to do".

In order to win big clients, Gale shares also had a "history of blood and tears".

According to media reports, at the beginning of his business, Jiang Bin used Panasonic as a benchmark for learning. in the face of a shortage of funds, he personally squeezed out hundreds of thousands of dollars to equip the company with advanced silencing rooms and testing equipment for research and development.

With the ultimate pursuit and tenacious persistence, Gale has gradually won big customers such as Samsung, Hewlett-Packard and Foxconn. Panasonic, once the learning benchmark, has also been included in the list of big customers, and it has also become a leader in the domestic acoustic industry. Samsung once commented on Gore shares: "your products determine our confidence in Chinese manufacturers."

In 2008, Gale shares were officially listed on the Shenzhen Stock Exchange, once again verifying the success of the "key customer strategy".

In 2010, Gore, which is already well-known in the industry, won an olive branch from Apple and successfully joined the "fruit chain family" to supply Apple with products such as speaker modules, microphones and wired headphones.

Partnering with Apple not only brings a direct dividend to Gale shares, but also affects its subsequent sustainable development. First of all, the most direct dividend is soaring performance, with revenue growth of more than 800% and net profit growth of more than 700% between 2010 and 2017. In addition to the bumper harvest of the business, partnering with Apple has also promoted Gale's ability to lay out the TWS headset market.

After the listing of AirPods in 2016, Gale shares ushered in a new growth point. In 2018, Gore won 30% of the contract manufacturing share of Apple's AirPods headphones, gradually becoming the second largest contract manufacturer of AirPods in the world.

Oriental Securities analysts have commented: with the arrival of TWS headphones, Gale is expected to continue to increase its share and production capacity among overseas customers, maintain a high profit margin and maintain a leading position among Android customers.

Deepening cooperation with Apple not only brings stable orders and anti-risk ability, but also extends Gale's ability to quickly occupy high ground in new markets.

From 2019 to 2020, the share price of Gale shares rose from about 6 yuan to about 50 yuan, and the strategic achievements of major customers set a new record in the past 20 years, which may also become history.

Being stuck in a tight period of high returns often means high risk. There are also "side effects" that can not be ignored behind the huge interests of the major customer strategy.

"relying on a single customer is a high risk, and a single core business without monopoly power is also a high risk." Huang Jing, an analyst, believes that both of these points are invisible mines buried at the foot of GE'er shares.

First of all, the large customer model often means that a single customer has a high degree of dependence, so the enterprise has low bargaining power.

According to the data, from 2013 to 2021, the largest customer of Gale shares accounted for more than 40% of the total annual sales, and the top five customers accounted for more than 86% of the total sales. Obviously, its major customers have become parents of food and clothing and have the power of life and death. For example, Oufeiguang, also a fruit chain company, suffered heavy losses from 2020 to 2021 after Apple terminated its cooperation, which led to a decline in performance.

After being locked in the throat of fate, it is inevitable for enterprises to "compromise". It often happens to make profits, in order to ensure the continuous stickiness of big customers. Gale's sweetest month with Apple, for example, coincided with a period of rapid decline in gross margins: from 22% in 2017 to 14.13% in 2021.

OEM for major customers, their own profit space is limited, the position is also relatively passive, it is difficult to find alternative customers in a short period of time, which is one of the reasons why public confidence in Gore shares plummeted after it was rumored to be "kicked out of the fruit chain".

OEM earns hard money, but with the disappearance of China's labor dividend, it is difficult to earn hard money, and many big technology giants have moved their production centers to Southeast Asia.

OEM has great substitutability, and only hard-core technological innovation is a high barrier.

In recent years, Gore has also continued to increase its investment in scientific research, with financial reports showing that its R & D spending in the first three quarters of 2022 was 3.491 billion yuan, an increase of 40.05% over the same period last year. However, the proportion of overall R & D investment is not outstanding. According to the data, the proportion of R & D spending in the first nine months of 2018 and 2022 is between 4% and 6.5%, and has gradually declined since 2020.

The problem with the key account strategy highlights that it has now been suddenly "abandoned" by Apple, which has dealt a heavy blow to Gore shares, because it is difficult for it to have new business to stand up quickly and top the OEM revenue gap.

The search for key strategic issues for the next decade highlights the urgent need to reduce "Apple dependence". Fruit chain companies are rubbing their hands, hoping to put eggs in multiple baskets to find a way out.

In February this year, Lixun Precision and Chery New Energy signed a "Strategic Cooperation Framework Agreement", saying that they would jointly form a joint venture company, and the relevant officials even said harshly that they would "enter the top 10 Tier1 in the world in the next decade."

Lance Technology has also started the new energy vehicle business early. It is reported that it has established long-term strategic cooperation with more than 20 new energy vehicle customers, such as Tesla, BMW, Mercedes-Benz, Volkswagen, ideal, Xilai and so on.

Ofeiguang also turned to smart driving, based on optical lenses and cameras, and extended to millimeter wave radar, lidar and other products. Although it is a new challenge, it is at least in line with the mainstream development of the current market, and cross-border is also easy to become a good story for a while. The revenue of its smart car business increased by 78.22% in the first half compared with the same period last year.

Smart cars are seen as the next hot spot for consumer electronics, so they should be the next target for fruit chain companies.

Touyuan: Gale shares official website compared with smart cars gradually mature, and the commercial value has begun to take shape, Gale shares bet on the field of VR / AR, betting heavily on the universe.

Gale has been involved in the VR field since 2012, and added AR in 2016, and gradually established cooperation with Sony, HTC and others.

After historical precipitation, Gale shares is a VR / AR manufacturer with rich mass production experience. With rich software and hardware integration technology, combined with mature automation and precision manufacturing capabilities, it can provide overall solutions for multi-form VR / AR head displays and related equipment. Gore can also provide cutting-edge optical technology solutions such as folded optical paths and diffracted optical waveguides matched with VR / AR machines.

According to the data, Gale shares account for 80 per cent of the global market share of mid-and high-end VR.

According to reports, as the "chain master" of the VR industrial chain, Gale shares, on the one hand, emphasizes strengthening industry-university-research cooperation to promote the joint formulation of "meta-universe" standards, on the other hand, it also plans to build a characteristic manufacturing model and digital factories to promote the common development of the VR and AR industrial chains.

However, there are still questions about Gore's emphasis on meta-cosmic strategy.

One is whether the meta-universe can solve the urgent needs of Gore shares. Despite the meta-universe fire this year, commercial applications are not yet mature and the cycle may be long. Distant water cannot put out a near fire, so it may be difficult for meta-universe to bring big growth quickly, but maybe the new story brings a new imagination, which can at least stabilize market confidence and save the stock market.

The second is whether Gore shares will have a chance to renew its relationship with Apple in the future when it enters Meta Universe. Meta CEO Zuckerberg believes that Meta and Apple are in a "very deep philosophical competition" in building a meta-universe. At present, Apple, which has quietly sold in the field of VR, how to play Yuanyuan Universe in the future, and whether fruit chain enterprises have found the third growth point after mobile phones and headphones?

There are many possibilities for the future, but it may be more important for Gore to find a very persuasive new story to help tide over the current difficulties.

* the interviewees in this article are all under aliases.

* this article is based on public information, is for information exchange only, and does not constitute any investment advice.

This article is from the official account of Wechat: value Planet Planet (ID:ValuePlanet), author: Zhang Yi, Editor: Tang Fei

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