Apple supplier Luxshare plans to raise US$2.1B for expansion plans

Highlights

• Apple supplier Luxshare plans to issue a total of 2.1 billion shares to up to 35 investors.
• The new share issue is subject to shareholders and regulatory approvals.
• The company will use the money to manufacture intelligent wearable devices and upgrade its electric vehicle component production.

Shenzhen-listed Luxshare Precision Industry Co is looking to raise up to 13.5 billion yuan (US$2.13 billion or AU$2.95 billion) through a private share placement.

According to a filing with the Shenzhen Stock Exchange on Monday (21 February 2022), the company plans to issue up to 2.1 billion shares to up to 35 investors. These investors include trusts, mutual funds, insurers, securities firms, finance companies and foreign institutional investors.

Shares of Luxshares were trading at 41.61 yuan apiece today (22 February 2022), down a little over 3% from its previous close at the time of writing this article. The stock is underperforming CSI 300 Index which was 1.3% down at 4574.15.

The statement said that new share issue is subject to shareholders and regulatory approval. The statement also stated that it would be subject to a six-month lock-up period.

The statement noted that if the fundraising happens, it should not be more than 30% of the firm's total share capital before the placement.

Also Read: How Apple Watch rescued a Sydney Woman from a life threatening illness?

How does Luxshare plan to use the money?

Luxshare, an Apple products supplier, will use the money to manufacture intelligent wearable devices and upgrade its electric vehicle component production.

The company intends to spend CNY 6.2 billion of the total capital on the building or renovation of facilities and technology relevant to the production of intelligent wearable gadgets. It plans to invest almost CNY 2 billion in the development of electric vehicle parts, and the funds would also be utilised to supplement working capital to the tune of CNY 3.55 billion.

What does Luxshare do?

Luxshare, founded in 2004, creates cable assembly and connection system solutions for consumer, automotive, cloud, and enterprise applications worldwide. The company develops connector cables for the iPhone and MacBook and has recently become a fast-growing supplier for Apple Inc.

Luxhsare purchased two iPhone assembly factories from Taiwan-based Wistron in 2020.

Bottom Line

Apple has achieved a top position in the wearable market. The manufacturing plan of intelligent wearable devices will help Luxshare generate more revenues as it is already a supplier to Apple.

On the other side, investing in the development of electric vehicle parts will help Luxshare in the long run.

Also Read: Are electric vehicles really eco-friendly?