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Foxconn IPO behind: Foundry giant transformation difficulties

via:博客园     time:2018/3/4 22:31:34     readed:762

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Foxconn Technology Group (hereinafter referred to as "Foxconn"), which marched on the mainland for 30 years, finally decided to go public at home on the eve of the Spring Festival in 2018.

On February 1, Foxconn Industrial Internet Co., Ltd. (hereinafter referred to as "Foxconn Shares") formally submitted the draft prospectus to the CSRC, opening the process of landing A shares.

"China Business" reporter noted that as the world's largest electronics foundry, Foxconn brand in many times in recent years to find a way to transition, but with the exception of Sharp acquisition, the rest of the many initiatives are not satisfactory. The successful IPO of Foxconn will also help it break through the long-standing transformation dilemma with its domestic capital markets.

IPO take the express train

Since the Foxconn shares reported to the prospectus, its "flying all the way" IPO speed has been subject to market concerns.

February 1, Foxconn shares submitted for prospectus draft; February 9, the Commission announced the draft prospectus and feedback, the data show that it is listed on the Shanghai Stock Exchange, the sponsor for the CICC; February 11, Foxconn Shares submitted for the second draft; February 22, prospectus into the "pre-disclosure update" status.

Under normal circumstances, the domestic A-share listing process to go through the declaration, admissibility, prior disclosure, feedback, feedback and update the pre-disclosure, preliminary review, the issuance examination committee, approved the issuance of a series of processes, IPO queuing time is also the main Consumption was disclosed in advance between feedback and update the previous disclosure. In general, the queuing time is basically six months to a year or so, but the Foxconn shares only took half a month to complete the process. Insiders said the next move is the Foxconn shares on the haircut, and then routinely received the SFC approval, the fastest in March.

This seems to confirm the rumor that regulators have opened up a fast track to the new economy IPO. February 28, there is news that the Securities and Futures Commission will be issued on the cover, including biotechnology, cloud computing, artificial intelligence, high-end manufacturing these four new areas of the economy to be listed companies, the market value reached a certain scale "Unicorn" Enterprises, relaxed approval time and profitability standards.

Founded on March 6, 2015 Foxconn shares not only meet this standard, the threshold of its establishment less than three years also received special approval from the relevant departments.

According to "the initial public offering of shares and the Listing Management Measures", "the issuer since the establishment of limited liability company, the continued operation of time should be more than 3 years, except with the approval of the State Council". Foxconn shares prospectus submitted on February 1, 2018, from the establishment of its full three years and a month, however, advance declaration of Foxconn shares still enter the IPO audit fast track. Its prospectus also shows: "As of the date of this prospectus issued, the company continued to operate less than three years, the company has been the case for the right to apply for exemption. & rdquo;

Related information shows that there are also preceded by operating hours did not meet the special approval of the listing, but this special batch of enterprises more crowned "in the prefix", such as China Power Construction, China Construction and other large central enterprises, Foxconn shares also become The first batch of private enterprises to get special approval

Low net profit and dilemma

As a foundry leader in the global electronics industry, Foxconn has a huge revenue performance. In 2016, Foxconn achieved a revenue of 932.769 billion yuan. Even the split-listed Foxconn shares exceeded the majority of A-share listed companies in revenue.

Information released from the prospectus, 2015-2017, Foxconn shares were as high as 272.8 billion yuan revenue, 272.712 billion yuan, 355.544 billion yuan, an average annual compound growth rate of 14%. According to the 2017 revenue data, only 13 out of the A-share listed companies in 2016 surpassed this figure. It can be said that after the success of the IPO, Foxconn will become another big player in the A-share market.

Despite its 100 billion-dollar revenue, Foxconn's gross profit margin and net margin are not up to the mark due to the current low-margin market for electronics manufacturing. Prospectus data show that from 2015 to 2017, Foxconn net profit attributable to parent company 14.35 billion yuan, 14.366 billion yuan and 15.868 billion yuan, an average annual compound growth rate of 5.16%, net profit margin hovering around 5%. The consolidated gross profit margin for the company in 2017 was approximately 10.14%, of which the communications network equipment business and cloud service equipment business accounted for 60.5% and 33.96% of the Company's revenue, respectively, but the gross profit margin of the two businesses was only 13.65% and 4.65% respectively; Precision tools and industrial robot business gross margin as high as 49.23%, but because the business accounted for only 0.27% of total revenue, so Foxconn shares gross margin pull is not obvious.

In addition, Foxconn shares there is also an objective there is no actual control, related party transactions, peer competition and other issues of technical level, despite the rapid access to the IPO channel, but the market for the smooth IPO Foxconn shares are still in the wait and see. In this regard, Foxconn stake stakeholders told the "China Business" reporter, the company is currently in the silent period of listing, in addition to the prospectus, there is no additional information to be disclosed.

Difficult road to transition

Foxconn had previously had many branded layout, but this time IPO of Foxconn shares pass, but will focus on the goal of intelligent manufacturing in this area.

Foundry computer started Foxconn had tried to create the early "Foxconn" brand, the product involves the computer chassis, power supply, motherboards, but the brand response is not optimistic about the market. Subsequently, Foxconn has also acquired Cyber ​​Computer City, intends to march into the computer market under the line, and in 2010 the establishment of Jiaxing, Zhejiang Pentium Pentium Trading Company, hoping to open 10,000 under the digital franchise stores.

With the popularity of online e-commerce, Foxconn finally sold its shares in 2013, laying plans for the construction of 10,000 digital stores. In turn, 3Com's online shopping platform Fu Lian Net has been set up. However, due to the fact that domestic electricity providers have basically been divided up by several big oligarchs, the rich network that has been established so far is still difficult to accomplish anything. In the same year, Foxconn even introduced the phone of the InFocus brand. At present, except for the successful acquisition of Sharp in 2016, the rest of the brand transformation of Foxconn has basically failed.

Insiders told reporters that the brand transformation of foundries are often very difficult to the upstream industry chain integration and the need to have a certain scale advantage; compared to the downstream promotion, Foxconn layout in the upstream to build a series of panels, molds, Connectors and other components manufacturers have saved Foxconn a lot of costs, but the current upstream industry chain is still large, Foxconn integration is also very difficult.

This is one of the reasons Foxconn shares the IPO investment project locked in the field of industrial Internet and intelligent manufacturing, and intelligent manufacturing is one of the key points. As early as 2011, Gou shouted the slogan of deploying one million robots. However, according to media reports, Foxconn installed 40,000 robots at major production sites in China, a figure far below the target of Gou.

Prospectus shows that the Foxconn shares to be raised 27.3 billion to build eight platforms for smart manufacturing, raising funds involved in the field of intelligent manufacturing alone reached 17.3 billion yuan, accounting for 63% of the total funds raised; the rest of the industrial Internet platform to build , Cloud computing, Internet of Things and other projects will also help Foxconn shares full intelligent network plant, cloud-based, platform. The implementation of a series of projects will not only improve the company's technological level, research and development strength and production efficiency, but also help to alleviate the Foxconn shares are difficult to meet the labor and labor costs and other issues. In fact, the direct labor costs of Foxconn shares only reached 16.562 billion yuan in 2017, which even exceeded the current year's net profit.

The industry insiders told reporters that the market generally agreed that the application of high-volume industrial robots will lead to an increase in employee unemployment, for this layer to consider, so Foxconn industrial robots in recent years to promote slow, in fact, this is not the main reason; The key is that due to the current rapid technological upgrading of electronic products, standardized production is more difficult because there is no mature solution to respond to the rapidly changing technology updates. However, the investment in industrial robots is very huge, so the enterprises are facing the cost of not yet recovering the automation equipment Need to update the dilemma, so the current industrial robot just to do a very simple standardization, not as flexible as manual operation, which is why Foxconn still maintains millions of employees.

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