Luxshare Precision Profitability May Improve Slower Than Revenue on Higher Assembly Mix

Since its public listing in 2010, Luxshare Precision has successfully penetrated into the supply chain of Apple, whose share of Luxshare’s overall sales has increased to about 70% in 2021 from less than 10% in 2011. Over the past eight 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 18% between 2017 and 2021. This has contributed to the firm’s average return on invested capital of 20% over the same period.