On Thursday, the official website of the China Securities Regulatory Commission showed that the Foxconn prospectus had entered the “pre-disclosed update†status on February 22, which was only two weeks before its pre-disclosure.
On February 9, the China Securities Regulatory Commission disclosed a prospectus for initial public offering of shares of Foxconn Industrial Internet Corporation (hereinafter referred to as “Foxconnâ€).
On Friday, an investor who was interviewed by the Beijing News reporter said:
The IPO of the enterprise first pre-discloses the prospectus, which indicates that the company has officially started lining up. This is the process that everybody calls one or two years of queuing. Then before the meeting is about to happen, the company will make a round of pre-disclosed updates on the prospectus. One month later, the review conference is often held, which means that it will enter the conference stage.
Foxconn's pre-disclosure is so short as to skip the queuing process. In the end, it is not right to discuss the issue. General corporate pre-disclosure is also to allow the outside world to supervise it. If the time is so short, what is the significance of pre-disclosure?
From the financial data, Foxconn, a subsidiary of Hon Hai Precision Industry Co., Ltd., realized revenue of 354.544 billion yuan in 2017. According to statistics from Kong Lingfei, only 13 of the A-share listed companies in 2016 exceeded this figure. .
Supporting Foxconn's huge revenues in addition to its large-scale labor force, it also benefits from its market share ahead of its peers and its strong soft and hard power.
What business has supported Foxconn's huge revenue?
The company's revenue in 2017 was 354.544 billion yuan, and only 13 of the companies listed in 2016 exceeded this figure. The Company's 2015-2017 operating income compound annual growth rate (CAGR) was 14.00%, and its parent's net profit CAGR was 5.16%. From 2015 to 2016, the company achieved operating revenue of 272.8 billion yuan, 272.713 billion yuan, and 354.544 billion yuan respectively; net profit attributable to the mother was 14.35 billion yuan, 14.366 billion yuan, and 15.868 billion yuan respectively.
The company's comprehensive gross profit margin for 2015-2017 remained at around 10%, with the highest gross profit margin for precision tools and industrial robots in its main business. From 2015 to 2017, the company's comprehensive gross profit margin was 10.50%, 10.65%, and 10.14% respectively, which was lower than the gross margin of the communications equipment industry. The company has formed a long-term cooperative relationship with its customers. Large orders, relatively stable sales and procurement prices, and relatively stable gross profit margin.
In terms of breakdown, from 2015 to 2017, the gross profit rate of communication network equipment was 14.74%, 15.88%, and 13.65%, and the gross profit margin of cloud service equipment was 4.96%, 4.64%, and 4.65%, respectively, and the gross profit margin of precision tools and industrial robots. It is 41.46%, 47.61%, 49.23%. Huatai Securities pointed out that precision tools and industrial robot products are mostly high-end customized products with high technological content and high gross margins.
In terms of expenses, the company’s expenses during the period increased year by year, mainly due to the rising costs of R&D and staff remuneration. As a typical labor-intensive company, the increase in labor costs has significantly increased the company’s salary expenditure.
What are the advantages of Foxconn?
Huatai Securities believes that Foxconn’s strong soft and hard power has built up its core competitiveness and its industry has a competitive advantage.
Rich customer resources, long-term and stable strategic partnership, deep technical reserves and leading R&D strength, experienced management team, leading vertical integrated business model and supply chain management capabilities are the company's soft power; advanced automation technology And intelligent equipment, massive industrial data resources, perfect industrial data storage and analysis system, and stable integrated production operation system are examples of the company's hard power.
The company integrated the advantages of the electronic engineering background mode including EMS and ODM, and the two modes of mechanical engineering based on molds and components, and established the business model of "electronic integration, component and module photovoltaic vertical integration services". "("eCMMs"). eCMMs is a vertically integrated software and hardware solution for Opto-Electronics. It can provide customers with opto-electronics one-time purchase of the total solution and global assembly delivery, as well as common design, joint development, global operations and after-sales service. The company has excellent R&D and design capabilities, precision molds, new product development, small-scale pilot production, mass production, global logistics, and engineering services. Through this, it strengthens its global presence and vertically integrates design, manufacturing, and business models. The shortest supply chain in the global 3C electronics industry.
At present, Foxconn is far ahead in the field of intelligent manufacturing of electronic devices. According to Huatai Securities, citing IDC data, in 2016, Foxconn accounted for more than 40% of global output value in global server and storage equipment manufacturing; Foxconn accounted for more than 30% of global output value in global network equipment manufacturing; Foxconn accounted for global telecommunications equipment manufacturing. Global output value is more than 20%.
The First Case of Listed Companies in Taiwan Split Asset A-shares
The parent company of Foxconn is Taiwan-listed company Hon Hai Precision Industry Co., Ltd. Founded in 1974, Hon Hai is the world's largest international group of 3C foundry services. Hon Hai was listed in Taiwan in 1991.
The proposed Foxconn shares to be listed on the A-share market will be established by the conversion of Fuming Technology as a company limited by shares. Fusmith Technology was established on March 6, 2015. It specializes in the production and sales of multifunctional industrial robots, peripheral automation fixtures, and machined parts and components. On March 27, 2017, Fortune Technology made the first capital increase and introduced the shareholder Shenzhen Hong Fujin. After the restructuring, Robot Holdings owns 75% equity of Fuming Technology and Shenzhen Hongfujin holds 25% equity of Fuming Technology. Robot Holdings and Shenzhen Hongfujin are wholly-owned subsidiaries of Hon Hai. After the reorganization, the main business of Fortune Technology was changed to the manufacture and sales of motherboards, graphics cards, and industrial computers. On July 10, 2017, Fuming Technology held a general meeting of shareholders, and through the overall change of the relevant proposal, the name of Fuming Technology was changed to “Foxconn Industrial Internet Co., Ltd.â€.
The company's controlling shareholder is Zhongjian Company, and there is no actual controller. Hon Hai Precision indirectly holds 100% of the equity of Zhongjian Company. Zhongjian Company directly holds 41.14% equity, and indirectly holds 28.00% equity of the issuer through its wholly-owned subsidiaries, Shenzhen Futaihua and Zhengzhou Hongfujin, and holds a total of 69.14% equity of the issuer, which is the controlling shareholder. Hon Hai Precision Co., Ltd. indirectly owns 100% equity of Zhong Jian Company through Foxcom (FarFast) Limited, which is the parent company of the company. Shenzhen Futaihua directly holds 24.62% equity of the company and indirectly holds 0.51% of the company's shares (15% × 3.3728%) through Hongfujin Precision Industry (Zhengzhou) Co., Ltd., and is the second largest shareholder. AmbitCayman directly holds 10.73% of the company's shares, and is the third largest shareholder. Shenzhen Hongfujin holds 9.23% of the company's shares and is the company's fourth largest shareholder.
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