Wentai Technology'S "Ambition" And "Hidden Worry" Of 2.42 Billion Yuan Entering Apple'S Industrial Chain

Although OphiLight has confirmed that it has been removed from the industrial chain by Apple, Wentai Technology has a certain ambition to acquire the assets of OphiLight "providing camera related business to specific overseas customers".

On the evening of March 29, Wentai Technology announced that it had signed relevant agreements with OphiLight on the same day and planned to purchase 100% of the equity of Guangzhou Delta Imaging Technology Co., Ltd. and relevant equipment owned by Jiangxi Jingrun Optics Co., Ltd. with 2.42 billion yuan in cash.

Wentai Technology said that the target assets can only be re ordered after the completion of the transaction after passing the factory audit by specific customers, and there is still uncertainty about whether the order can be finally obtained. However, from the market news, it is very likely that the target assets will re-enter the Apple industrial chain.

It is reported that Wentai Technology has fully communicated with Apple before acquiring the aforesaid assets; After the acquisition of relevant assets of OFIG, the supply of front cameras to Apple will be restored soon, and the supply of rear cameras is also being promoted.

Wentai Technology is a leading enterprise of mobile phone ODM. In 2019, it became famous through the "snake swallowing elephant" acquisition of Anshi Group, a world-famous semiconductor company. After the acquisition, Wentai Technology has extended from ODM to the upstream semiconductor device field.

The purpose of this acquisition is also very clear, which is the behavior of Wentai Technology to further extend the industrial chain.

However, at a time when the overall Apple industry chain is in a downturn, it is still full of uncertainty whether Wentai Technology will acquire a target that has been rejected by Apple.

6 Purchase at a discount to improve the industrial chain

The acquisition of an object with 2.42 billion yuan may contribute 10 billion yuan in revenue. From this point of view, this acquisition is absolutely cost-effective for Wentai Technology.

According to the Acquisition Intention Agreement disclosed earlier, both parties agree that the pricing principle of target assets is: acquisition price=10 × A+B, and the transaction price is tax inclusive (A is the audited net profit of Guangzhou Delta in 2020. B is the transaction price of operational assets).

The latest announcement shows that the audited net profit of Guangzhou Delta in 2020 is 339 million yuan, and the net value of relevant equipment of Jiangxi Jingrun is 638 million yuan in total. According to the above method, the transaction price is about 4.028 billion yuan. The final transaction price was 2.42 billion yuan, 60% of the original price.

Among them, 100% equity transaction price of Guangzhou Delta is based on the assessed value, which is determined to be 1.7 billion yuan through negotiation; The transaction price of the subject equipment owned by Jiangxi Jingrun is determined to be 720 million yuan (tax included) based on the assessed value through negotiation.

However, it is worth noting that Guangzhou Delta, formerly known as Sony Electronics South China Co., Ltd., was acquired by Ophigo in 2016 at a price of 234 million US dollars (equivalent to about 1.58 billion yuan at the then exchange rate). Compared with the transaction price at that time, there was still a premium for the sale of Ophigo.

As far as Wentai Technology is concerned, once the Apple business owned by OphiLight is included, it is expected to achieve a revenue increase of 10 billion yuan.

According to the public information disclosed by OphiLight, after audit, OphiLight's operating income from specific customer related businesses in 2019 was 11.698 billion yuan, accounting for 22.51% of the total audited operating income in 2019 and 30% in 2020. In the first three quarters of last year, the revenue of Wentai Technology was 38.3 billion yuan, and the net profit was 2.26 billion yuan. After the inclusion of the aforementioned subject, the revenue scale of Wentai Technology is expected to go to a higher level.

More importantly, from the business level, Wentai Technology will expand from product integration business to upstream electronic components strategy and build the customer service capability of the whole industry chain through the acquisition of related assets of Ofei Optical.

"On the basis of comprehensively coordinating the development of the product integration business segment and the semiconductor business segment of the Anshi Group, the company can further extend to the upstream of the industrial chain through this acquisition, and carry out the layout and integration of the industrial vertical fields, so as to better seize the development opportunities of the rapid growth of demand in the 5G, IoT, and smart car fields, and promote the long-term sustainable growth of the performance of listed companies. ”Wentai Technology said.

"With the acquisition of specific customer assets of OFIG by Wentai, the company will open a new camera module business segment in 2021. As one of the components with the largest single unit value, the camera module has 10 billion market space. With the guarantee of follow-up orders from major customers, Wentai is expected to open up new markets in the optical field." Chen Hang, an analyst in the electronics industry of Founder Securities, pointed out.

Lin Zhi, chief analyst of Witdisplay, believes that Wentai Technology's acquisition of camera module business in Deerta, Guangzhou, can make up for the shortage of Wentai Technology's supply chain, reduce the cost of OEM and obtain greater profits. "Moreover, the current core selling point of smart phones is the camera function, that is, camera module, image sensor, etc. The acquisition of Guangzhou Delta is equivalent to seizing one of the core of the mobile phone industry."

Is Apple still popular?

So, how likely is the above target acquired by Wentai Technology to re-enter Apple's supply chain system?

Many market participants believe that Wentai Technology probably communicated with Apple before acquiring Guangzhou Delta.

"The target assets can only be re ordered after the completion of the transaction through the factory audit of specific customers, and there is still uncertainty about whether the order can be finally obtained." Wentai Technology said.

This also means that after Wentai Technology takes over, as long as it passes Apple's evaluation, it is still expected to continue to obtain orders.

On March 30, the reporter called Wentai Technology several times to try to inquire about the progress of the negotiation with Apple, but the phone was never connected.

According to media reports quoting insiders, there are two processes for supplying to Apple. First, you need to enter Apple's supplier list to get "tickets", and then specific products need to do NPI (new product introduction). Having obtained the "ticket" is actually the premise of Wentai Technology's acquisition of assets, but specific to the product, the NPI introduction is also required for the proactive and the proactive.

The insider said that the introduction process was highly deterministic with the support of specific customers. It was expected that the supply would resume soon after proactive action. It was reasonably estimated that the time to re obtain orders from specific overseas customers would be within 4 months after the completion of equity delivery.

The 21st Century Business Herald reporter learned that Wentai Technology itself also supplies Apple. He once said on the interactive platform that the company's shipments to Apple are mainly products in the field of mobile and wearable devices.

However, the problem that follows is that with the experience of Ophigo being "withdrawn" from the group, the market people's doubts about the business uncertainty of the fruit chain target are also increasing. Investors are worried that even if Wentai Technology enters the fruit chain, will it face the same risks as OphiLight?

"As long as Apple's supply chain is at risk of being abandoned by Apple, Wentai Technology has no irreplaceable core technology. If you enter Apple's supply chain, the focus is not on making profits, which may help the stock price even more." Lin Zhi said in an interview with the 21st Century Business Herald.

From the performance of the secondary market, since the announcement of the acquisition of Taiji Technology on the evening of February 7, the stock price has indeed risen in a short period of time, and even got a ceiling on the second trading day. But more than a month later, the stock price has fallen back to the previous level. On March 30, Wentai Technology's share price opened high, closing at 99.53 yuan/share, up 1.15%.

Wentai Technology reminded investors that after the completion of this transaction, in addition to the risks of factory review and re obtaining orders, the target assets may suffer from continuous losses and asset impairment, and may face risks from various uncertainties such as intensified market competition, technology research and development unable to meet customer requirements, and changes in domestic and international political and economic environment.