In the past, the white horse stock Shenzhen O-film Tech Co., Ltd. fell to the limit after being fermented by news about the Apple industry chain, impacting the consumer electronics sector. Luxshare, known as the "Fruit Chain", also suffered a brief blow. On March 17, Luxshare opened lower, and then the decline expanded to more than 4%. As of the time of publication, Luxshare's decline has narrowed to less than 1%, with the stock price at approximately 38.26 yuan and a total market value of approximately 269.1 billion yuan. Since January 14 this year, Luxshare has fallen from the highest point of the year of 63.26 yuan to 36.79 yuan. In just two months, the stock price fell by about 41.8%, and the total market value evaporated by more than 180 billion yuan. Luxshare has grown nearly 7 times in the past two years, but Luxshare's share price has weakened this year, which has been linked to the U.S. 337 investigation, analysts lowering AirPods shipment forecasts, Apple moving production capacity to India via the Internet, and reducing the holdings of important shareholders related factors.
It is worth noting that luxury stocks were once rated as one of the top ten golden stocks in 2021. Many brokerages are making great progress, with the target price rising to 70 yuan. As Luxshare's share price fell, the brokerage agency's forecast was "inaccurate." K-line data shows that Luxshare has risen from about 8 yuan at the beginning of 2019 to 63.88 yuan, and the stock price has increased nearly 7 times in just two years. However, since January this year, luxury stocks have briefly rebounded to 63.26 yuan, and the stock price has turned downward. After sorting out, the reason for the low stock price of Luxshare is mainly related to four factors.
The first factor is the 337 investigation in the United States, which makes investors cautious. In December last year, Amphenol Company of the United States accused Tesco and its subsidiary Dongguan Tesco of infringing its patent rights and requested the U.S. International Trade Commission to issue a limited injunction and restraining order. Soon, the U.S. International Trade Commission officially launched a Section 337 investigation against ZJS Precision Company. Although Luxshare issued an announcement on January 24 this year, it failed to completely eliminate market concerns. On January 25, the opening price of luxury stocks fell by more than 9%. At present, the 337 investigation has not yet produced results, and investors are waiting for news.
The second factor is analysts' downward revision of AirPods shipment forecasts. Recently, Tianfeng International analyst Guo Mingpi released a research report, lowering the forecast for AirPods shipments in 2021 by 30%–35% to 75 million–80 million units, a year-on-year decrease of 10%–15%. Luxshare's stock price has surged in recent years, mainly due to Apple's Airpods wireless headphones. If AirPods shipments decline as analysts predict, it could affect the performance of consumer electronics companies such as Luxshare.
The third factor is the transfer of Apple production to India through the Internet. According to foreign media reports, Apple plans to transfer 7-10% of its production capacity from mainland China to India, and Hon Hai's factory in Tamil Nadu will be responsible for the production of iPhone 12. Some market participants believe that the "moat" of domestic consumer electronics companies is not particularly high. Most domestic consumer electronics companies are in labor-intensive fields with low technical content, rely heavily on Apple, and are highly substitutable.
The fourth factor is the reduction of important shareholders. Public data shows that since the beginning of 2020, Li Xun Co., Ltd. and Wang Laisheng have carried out five large-scale reductions in holdings, with a total cash of 18.36 billion yuan. Generally speaking, when important shareholders reduce their holdings significantly, it will suppress investor confidence to a certain extent. We also note that public funds have significantly reduced their positions in Dexun Precision. In the fourth quarter of 2020, Luxshare was the company that reduced its holdings by the largest amount by public funds, with the amount reduced reaching 14.2 billion yuan. In the second quarter of 2020, luxury stocks were the stocks with the second largest market value among public funds, second only to Kweichow Moutai.
Among the large shareholder groups, some investors said, "Lukesai is still one of the top ten gold stocks touted by brokers at the beginning of this year. Now shareholders are speaking out, and Li Xun has turned green." . Data shows that one of the hot topics recommended by brokerage institutions in 2021 includes the electronics industry, and Luxshare is among them.
But judging from this year's stock price performance, Luxshare seems to have "dislocated" brokerage institutions. In addition, in January this year, analysts from securities companies such as China Merchants Securities and CICC sang many songs in public, with the highest target price being 70 yuan. Compared to the current share price, Luxshare needs to rise more than 40% to reach the target price. We also found that in the fourth quarter of 2020, the number of shareholders of Luxka was 322,600, and as of February 28, 2021, the number of shareholders surged to 443,000. This shows that during the decline of Luxshare, approximately 120,400 shareholders were added. Some financial media believe that small shareholders may be "buying the dip."