Those who know are good at planning, not as good as at that time.
The meaning of this sentence is that the wise man is good at planning, but it is better to seize the good moment. For investors, the importance of timing is self-evident.
Since the beginning of this year, the opportunities in the market have been good, such as BYD's price reduction to drive the new growth of new energy vehicles, as well as the recovery of consumer electronics and semiconductor industries, but to say that the most noteworthy thing has to be AI.
As we have analyzed before, mobile phones and PCs are the two most suitable carriers for combining with AI, and the daily use of mobile phones is more than that of PCs.
This corresponds to the concept of AI+ mobile phone, which is now being done by many mainstream mobile phone manufacturers, but it is not as big as Apple's AI.
So, why is Apple's AI phone so successful?
1. Seize the moment.
The global penetration rate of AI phones is expected to reach 47% by 2027, and by 2026, the cumulative shipment of AI phones worldwide will exceed 1 billion units. It is expected that by 2028, the compound growth rate of AI phones will reach a staggering 63%.
Not only that, but about 63% of consumers around the world are very interested in AI phones, especially in China and India.
More importantly, it is expected that by 2025, 55% of the world's AI mobile phones will be mobile phones with Apple operating system, and Apple will almost be able to dominate the global AI mobile phone market and enjoy the dividends.
With positive signals from both the market and consumers, it is still wise for Apple to launch Apple AI at this time.
2. The brand advantage is obvious.
As one of the world's most valuable brands, Apple has attracted a large number of consumers with its superior craftsmanship, design, outstanding performance, strong ecosystem and flawless user experience.
Moreover, Apple users usually have a high brand loyalty, and once the iPhone is used, it is difficult for many users to switch to other brands, which not only comes from Apple's product quality and user experience, but also from Apple's unique brand charm and cultural identity.
Take global smartphone shipments in 2023 as an example, Apple accounts for seven of the top ten mobile phones, and the top five are all Apple mobile phones.
Therefore, Apple is still the same apple, although it will take a long time for the domestic market to cultivate the next apple, but it does not mean that we cannot share the dividends brought by Apple.
Joining Apple's supply chain is a way to share the dividends.
In fact, there are a lot of domestic enterprises squeezed into the fruit chain, and not every one of them is an industry giant or a big bull, and we have to pay attention to the "first brother".
So, who is the real "first brother of the fruit chain" in China?
Logically speaking, "one brother" generally meets two characteristics.
The first is that the company has strong growth and rapid growth in its subdivisions. The second is that the company has a high valuation, a large revenue scale, and a deep moat.
Being able to enter Apple's supply chain has proven that the company's business ability is good, and the growth will not be bad, so in the fruit chain, who has the deepest moat?
It is undoubtedly Lixun Precision.
Lixun Precision is a leading precision manufacturing company in China, ranking in the TOP100 list of new entity enterprises in 2023, and its business involves consumer electronics and automobile interconnection, and the track is a good track.
As of June 30, the total market value of Lixun Precision was 282.66 billion yuan, the second in the industry, and the moat was extremely deep.
So, let's talk about the moat of Luxshare Precision
When it comes to moats, what can't be escaped is the profitability of the company.
So first of all, let's take a look at the performance of Lixun Precision.
A little longer, we can clearly see the growth rate of Lixun Precision.
In the five years from 2019 to 2023, Lixun Precision Optics' operating income increased from 62.516 billion yuan to 231.905 billion yuan, an increase of 170 billion yuan, an average annual increase of more than 30 billion yuan, and an annual increase of 60 billion yuan from 2020 to 2022.
You must know that there may be some companies with a revenue of less than 30 billion yuan a year, which shows the large scale and rapid growth rate of Lixun Precision's revenue. This also attracted 689 institutions to scramble.
Looking at the net profit, although the net profit of Lixun Precision is not as fast as the growth rate of operating income, the performance is also very good, and this year is the first year that the company's net profit has exceeded 10 billion yuan.
What is the concept of Luxshare Precision's net profit exceeding 10 billion yuan, like the well-known pharmaceutical king Mindray Medical, which is also the first time that the net profit will exceed 10 billion yuan in 2023, to a certain extent, Luxshare Precision and Mindray Medical have stood in the same echelon.
Secondly, let's look at the relationship between Lixun Precision and Apple.
There are many companies that can call Apple their biggest customer, but there are few companies that can use Apple as one of their moats.
Luxshare Precision is one of them.
During the 12 years from 2011 to 2023, Luxshare Precision has successfully cut into Apple's supply chain, to the main supplier of MacBook computer cables, to the overall production of Air Pods Pro, through the acquisition of Liantao Electronics, Suzhou Meite, Huizhou Meilu, Shanghai Meilu and other enterprises.
At present, Luxshare Precision has obtained the iPhone mobile phone OEM business. At the same time, Luxshare Precision also realizes independent supply of parts such as watch assembly, motors, acoustics, structural parts, and SiP packaging.
So far, the vertical integration layout of Lixun Precision in the field of consumer electronics has been completed.
Finally, let's look at the second growth point of Lixun Precision.
In addition to consumer electronics, Lixun Precision also lays out the automotive business.
In 2023, the revenue of Luxshare's precision automotive business will be 9.252 billion yuan, a year-on-year increase of 50.46%, which is the company's fastest-growing business at present.
The general trend of automobile electrification and intelligence has become a foregone conclusion, so the automobile is also the most deterministic business of Luxshare Precision.
Lixun Precision itself is also full of confidence in the automotive business, and plans to achieve a revenue scale of 200 billion yuan in about 10 years. From the perspective of profitability, the gross profit margin of the company's auto parts business has basically remained at about 16% in recent years, and the performance is also stronger than that of the consumer electronics business.
In other words, even in the consumer electronics industry, the competitiveness of Luxshare Precision has declined, and the automotive business can also be used for the company. One traditional and one new, two businesses are enough to escort the future development of Lixun Precision.
To sum it up
Lixun Precision is located in the core circle of Apple's supply chain, has a close relationship with Apple, and has a large revenue scale, rapid growth rate and a deep moat. In addition, Lixun Precision has also expanded new automotive business, and the future development trend cannot be underestimated.
The above analysis does not constitute specific trading advice, the stock market is risky, and investment should be cautious.
Follow Feijing Investment Research (id: Feijingtouyan) and receive the most valuable "Growth 20: 20 Companies with the Most Growth Potential in 2024" investment report now!
Source: Flying Whale Investment Research