Company Reports

Luxshare's June-quarter net profit was CNY 4.18 billion, up 16% year on year and slightly lower than the midpoint of guidance. Automotive sales for the first half soared 274% to CNY 32 billion, making up 19% of total sales, and carried the firm's quarterly gross margin up 17 basis points to 11.8%.

Since its public listing in 2010, Luxshare Precision has increased its presence in Apple's supply chain. Apple accounted for a mid-50s percentage of Luxshare’s revenue in 2024, up from less than 10% in 2011. Over the past 15 years, the company has built up a solid track record at Apple, which has enabled Luxshare to expand its footprint beyond cables and connectors for iPhones and MacBooks to acoustic, haptic, and assembly services for AirPods and Watch. Despite often entering into Apple’s competitive supply chain as a second- or third-sourced player, Luxshare has managed to maintain an average gross margin of 13% between 2020 and 2025. This has contributed to the firm’s average return on invested capital of 18% over the same period.

We initiate coverage of Luxshare Precision's H-shares. Luxshare is now dual-listed on the Shenzhen and Hong Kong bourses. It raised about HKD 24 billion (CNY 20.6 billion) at HKD 63.28 per share, the top of the IPO price range.

Since its public listing in 2010, Luxshare Precision has increased its presence in Apple's supply chain. Apple accounted for a mid-50s percentage of Luxshare’s revenue in 2024, up from less than 10% in 2011. Over the past 15 years, the company has built up a solid track record at Apple, which has enabled Luxshare to expand its footprint beyond cables and connectors for iPhones and MacBooks to acoustic, haptic, and assembly services for AirPods and Watch. Despite often entering into Apple’s competitive supply chain as a second- or third-sourced player, Luxshare has managed to maintain an average gross margin of 13% between 2020 and 2025. This has contributed to the firm’s average return on invested capital of 18% over the same period.

Luxshare's March-quarter net profit was CNY 3.66 billion, up 20% year on year and near the lower end of management guidance. The midpoint of June-quarter net profit guidance is CNY 4.3 billion, also up 20% year on year.

Since its public listing in 2010, Luxshare Precision has increased its presence in Apple's supply chain. Apple accounted for a mid-50s percentage of Luxshare’s revenue in 2024, up from less than 10% in 2011. Over the past 15 years, the company has built up a solid track record at Apple, which has enabled Luxshare to expand its footprint beyond cables and connectors for iPhones and MacBooks to acoustic, haptic, and assembly services for AirPods and Watch. Despite often entering into Apple’s competitive supply chain as a second- or third-sourced player, Luxshare has managed to maintain an average gross margin of 13% between 2020 and 2025. This has contributed to the firm’s average return on invested capital of 18% over the same period.

Luxshare's December-quarter sales were up 22% year on year to CNY 111 billion, and operating margin was up 40 basis points to 3.7%. Luxshare guides March-quarter net profit to grow 21% at the midpoint to CNY 3.68 billion.

We assess Luxshare, Sunny Optical, and Q Technology's outlook amid the war in the Middle East and persistently high memory costs.

Luxshare's September quarter sales were up 31% year on year to CNY 96.4 billion and gross margin was up 109 basis points to 12.8%. Luxshare guides December quarter net profit to grow 26% at the midpoint to CNY 5.3 billion.

Since its public listing in 2010, Luxshare Precision has grown its presence in Apple's supply chain. Apple accounts for over 70% of Luxshare’s revenue in 2024, up from less than 10% in 2011. Over the past 15 years, the company has built up a solid track record at Apple, which has enabled Luxshare to expand its footprint beyond cables and connectors for iPhones and MacBooks to acoustic, haptic, and assembly services for AirPods and Watch. Despite often entering into Apple’s competitive supply chain as a second- or third-sourced player, Luxshare has managed to maintain an average gross margin of 14% between 2019 and 2024. This has contributed to the firm’s average return on invested capital of 20% over the same period.

Since its public listing in 2010, Luxshare Precision has grown its presence in Apple's supply chain. Apple accounts for over 70% of Luxshare’s revenue in 2024, up from less than 10% in 2011. Over the past 15 years, the company has built up a solid track record at Apple, which has enabled Luxshare to expand its footprint beyond cables and connectors for iPhones and MacBooks to acoustic, haptic, and assembly services for AirPods and Watch. Despite often entering into Apple’s competitive supply chain as a second- or third-sourced player, Luxshare has managed to maintain an average gross margin of 14% between 2019 and 2024. This has contributed to the firm’s average return on invested capital of 20% over the same period.

Luxshare's second quarter of 2025 results were up 22.5% year on year to CNY 62.7 billion, and gross margin was down 65 basis points to 12%. Luxshare guides September-quarter net profit to grow 22% year on year at the midpoint to CNY 4.47 billion.

Since its public listing in 2010, Luxshare Precision has grown its presence in Apple's supply chain. Apple accounts for over 70% of Luxshare’s revenue in 2024, up from less than 10% in 2011. Over the past 15 years, the company has built up a solid track record at Apple, which has enabled Luxshare to expand its footprint beyond cables and connectors for iPhones and MacBooks to acoustic, haptic, and assembly services for AirPods and Watch. Despite often entering into Apple’s competitive supply chain as a second- or third-sourced player, Luxshare has managed to maintain an average gross margin of 14% between 2019 and 2024. This has contributed to the firm’s average return on invested capital of 20% over the same period.

Luxshare reported the full-year 2024 and first-quarter 2025 results. Revenue for the six months ended March 2025 was CNY 153 billion, up 19%, and gross margin was 9.2%, down 178 basis points from the same period last year. Luxshare expects its June-quarter net profit to grow 22% at the midpoint.

On April 2, US President Donald Trump announced reciprocal tariffs, imposing 46% tariffs on Vietnam, 34% on China, 26% on India and 24% on Malaysia. Smartphone component suppliers in our coverage tanked double digits on April 3 Asia trading. Semiconductor foundries fell 3%-6% in the US aftermarket.

Since its public listing in 2010, Luxshare Precision has grown its presence in Apple's supply chain. Apple accounts for 75% of Luxshare’s revenue in 2023, up from less than 10% in 2011. Over the past decade, the company has built up a solid track record at Apple, which has enabled Luxshare to expand its footprint beyond cables and connectors for iPhones and MacBooks to acoustic, haptic, and assembly services for AirPods and Watch. Despite often entering into Apple’s competitive supply chain as a second- or third-sourced player, Luxshare has managed to maintain an average gross margin of 15% between 2019 and 2023. This has contributed to the firm’s average return on invested capital of 20% over the same period.

Luxshare Precision is buying the original design manufacturing and original equipment manufacturing operations of Wingtech for CNY 6.3 billion through three agreements. The price includes more than CNY 5.2 billion in debt settlements.

We maintain our fair value estimate on Luxshare Precision at CNY 40 per share following unsurprising third-quarter results. Luxshare is fairly valued in our view, after rallying more than 20% over hopes of fiscal stimulus in China. Apple's premature wind down of Vision Pro production hampers proliferation of extended reality devices, adding uncertainty to Luxshare's growth prospects in consumer electronics. Its plan to integrate German supplier Leoni AG is also marred by regulatory and financial risks.

Consumer electronics component suppliers Sunny Optical, AAC Technologies, and Luxshare Precision have reported first-half earnings beyond our expectations, but management’s comments are mixed for the next few quarters. We leave our fair value estimates for Sunny and Luxshare unchanged at HKD 60 and CNY 40 per share, respectively, and raise our valuation on AAC to HKD 31 from HKD 23. Sunny is our pick among the three as the narrow-moat firm has a track record of applying its intellectual property to different industries (like cars), and we see Sunny as best-positioned to profit from more powerful cameras equipped on midrange and premium phones. AAC and Luxshare are fairly valued, in our view, as smartphone recovery has been priced in, and growth in automotive segments is less visible than for Sunny.

We cut our fair value estimate for Luxshare Precision to CNY 40 from CNY 41.50 per share after modeling a milder five-year revenue compound annual growth rate, or CAGR, in the consumer electronics segment to 10.8% from 15.3%, partly offset by faster growth in other segments. Luxshare has become more cautious in consumer electronics capital expenditure, which we think makes reversing its multiyear decline in gross margins more probable. Shares of Luxshare are undervalued, in our view, as the company benefits from demand for faster data transmission speeds on artificial intelligence, or AI, servers and some other supporting functions.