Apple supplier GoerTek has lost a major order to produce the AirPods Pro 2 last week. As a result, many analysts believed that the order would be transferred to Luxshare Precision, a Chinese electronic components manufacturer. On November 13, the company launched a 2022 stock option incentive plan to boost its share price.
Luxshare Precision plans to grant 172 million stock options at 30.35 yuan ($4.29) per share to 3,759 employees. To obtain the stock options, they must meet the company’s performance indicators and individual merit pay appraisal requirements.
Luxshare Precision’s performance requirements at the company level are that its revenues in 2023, 2024, 2025, 2026 and 2027 should be no less than 230 billion yuan, 260 billion yuan, 290 billion yuan, 320 billion yuan and 350 billion yuan respectively. The company avoided any assessment of net profits.
The new requirements have certain challenges. In 2021, Luxshare Precision achieved revenue of 153.9 billion yuan. If the company’s revenue scale reaches 350 billion yuan in 2027, it means that the company’s revenue growth will have topped 127%.
In the first three quarters of 2022, Luxshare Precision garnered a revenue of 145.252 billion yuan, a year-on-year increase of 79.30%, while the net profit attributable to shareholders was 6.4 billion yuan, a year-on-year increase of 36.48%. At the same time, the company expected its net profits to be about 9.545 billion yuan to 9.899 billion yuan in 2022, up 35% to 40% year-on-year.
Luxshare Precision’s main business is consumer electronics, communication and data centers, automotive electronics and medical care, covering components, modules and system assembly. In terms of consumer electronics, the company is widely known as a key assembler of the AirPods and iPhone for Apple.
Like GoerTek, Luxshare Precision also has the problem of relying on major customers. After GoerTek lost the recent order, investors worried about Luxshare Precision’s development.
According to the announcement issued by Luxshare Precision in early October this year, the sales revenue of its top five customers accounted for 77.04%, 82.03% and 83.41% of the operating income respectively from 2019 to 2021.
For Apple suppliers, due to Apple’s harsh pursuit of product quality, it is recognized in the industry that entering Apple’s supply chain means that enterprises have reached the top level in technical strength and product quality. However, Apple can support other manufacturers and even replace suppliers.
In May this year, Wang Laichun, chairman of Luxshare Precision, responded to the problem of relying on a single major customer, saying that the ideal state is that a single customer will not contribute more than one third to Luxshare Precision’s revenue in 10 years’ time.
In order to achieve this goal, in recent years, Apple suppliers including Luxshare Precision are looking for other growth points outside the consumer electronics industry. At present, the company is actively deploying its efforts into the fields of automobiles and communications.
In February this year, Luxshare Precision said that it would set up a joint venture with Chery New Energy to specialize in the R&D and manufacturing of new energy vehicles. At present, the JV has formed product lines of automotive wiring harness, connectors, intelligent consoles and more.