Guo Taiming splits the Honghai Empire new materials business listed on the mainland

Although the stock market has been oscillating recently, it does not hinder the enthusiasm of OTC companies for A-shares, including Hon Hai Group, which is implementing the spin-off strategy.

A few days ago, the chief of the foundry giant, Guo Taiming, said at the shareholder meeting of Foxconn's Taiwan parent company, Hon Hai Precision, that it is considering the listing of the subsidiary in the mainland in the next three to five years. In the meantime, it also showed "vinegar": Earn 1 yuan, which is different in Taiwan and mainland China. "Taiwan Hongxun Technology is an automatic controller for plastic injection machines. It is not a particularly advanced technology. However, Hongxun Technology has abandoned Taiwan and chose to list on the mainland stock market. The price has soared to over 30 billion Taiwan dollars." Guo Taiming on the scene Shareholders said so.

Once the news is fermented, it has caused a lot of attention. Nearly Foxconn people told China Business News that in the past two years, Hon Hai has successfully split a number of businesses. At least one more subsidiary will land in the capital market this year. In addition, the mainland's investment projects are year after year. With the increase, new materials, big data, and companies in the field of e-commerce and trade will also be able to become the "small golden chicken" that has been incubated.

In 2013, Hon Hai announced the resolution to reorganize its business structure and plans to reduce its reliance on Apple's product foundry to help Hon Hai out of the dilemma of slower revenue.

Mainland business listing speculation Although Guo Taiming did not elaborate on the current spin-off of the Hon Hai business at the shareholders meeting, in fact, the spin-off plan is in full swing.

Judging from the past spin-off, Hon Hai Precision's chip packaging business, Signal Technology, was listed on the Taiwan Stock Exchange in January this year. In addition, Hono Precision's ODM subsidiary, Ennoconn, which manufactures industrial PCs, produces EsonPrecision for housing and machine parts, AdvancedOptoelectronic for LED components, and wireless chips. The packaging company ShunShinTechnology has already landed or queued to land in the Taiwanese capital market.

"We also have a lot of companies in the mainland... We also line up. It has also been our turn in the past few years. We have a lot of small companies, some companies in our surrounding units, and also spin-offs. Companies with local turnover. It is listed locally, just like our semiconductor packaging and the industrial computer Huahan, I think these things are growing very well.” Hon Hai wrote this in the email to the “First Financial Daily”. Road.

It is understood that Hon Hai Precision Group's business in mainland China is mainly OEM manufacturer Foxconn, engaged in the manufacture of 3C products such as computers, communications, and consumer electronics. According to the data, Foxconn began investing in mainland China in 1988 and currently has millions of employees. In 2014, the total import and export volume accounted for 3.5% of China's total import and export volume. With the acceleration of the transition, Foxconn has also increased its investment in the mainland in recent years.

At the end of March last year, Hon Hai announced that it had added nine investment plans to the mainland with a total investment of US$182 million. From the main business items announced, Hon Hai plans to invest in mobile phones, tablet computers and game console accessories, electronic components and software development, multi-function industrial robots, automation equipment, servo motors, precision CNC machining. Development and manufacturing services for high-speed superhard tools, plastic pellets, metal or metal carbides with injection molds or compression molds, precision components.

In the seemingly complicated investment case, Hon Hai still has only three main lines. Taiwan's Hon Hai insiders told the "First Financial Daily" reporter that on the one hand, it is focused on the basis of foundry, looking for more mainland customers, this part has already made great progress; the second aspect is deep-rooted e-commerce, Big data marketing is the starting point of the group's future; the third aspect is to develop in 4G and other businesses, putting the combination of soft and hard in the first place.

"In the mainland business that may be listed, it will focus on big data marketing and new materials including OEMs." People close to Foxconn told reporters that the foundry business is currently listed in Hong Kong and Taiwan. The company, and the e-commerce business is still in its infancy, so the possibility of listing new materials is even more likely.

“Before the carbon nanotube technology of Honduyuan, a subsidiary of Hon Hai, is the first company in the world to commercialize and profit from carbon nanotubes. In the previous spin-off process, it was specially arranged by Guo Taiming. Batch splitting." The above-mentioned people close to Foxconn said.

According to the public information of the “First Financial Daily” reporter, Tianjin Funa Yuanchuang Technology Co., Ltd. was established in 2011. After the establishment of the carbon nanotube touch screen, the monthly production scale exceeded one million, and it was successfully Huawei. Cool, ZTE and other mobile phone packages. Last year, the company's operating income increased by 238% year-on-year.

Guo Taiming once said that Hon Hai's application of carbon nanotubes includes all touch screen products. The company has obtained 2,000 patents in this respect. In the field of NB touch, there will be a large number of new products listed before the end of 2013, not only the revenue contribution, but also the revenue contribution. It will also be profitable by the end of the year. Therefore, Guo Taiming is extremely optimistic about this business and believes that it can continue to spin off 5 to 10 listed companies in the future.
Hon Hai said to this reporter that these (splitting companies) Hon Hai have a certain proportion. For Hon Hai, an aircraft carrier leads a group of combat ships, which are planned on the mainland, three or five years later. There must be a harvest.

The foundry aircraft carrier accelerates to turn around whether it is the mainland or Taiwan, and Hon Hai, who has been pursuing Guo Taiming’s “dictatorship for the public”, is accelerating the speed of spin-off.

In this way, Guo Taiming hopes to transform the group from an "aircraft carrier" into an "air battle group" for joint operations by sea, land and air. In the spin-off, the original business group was upgraded to 12 sub-groups and independent subsidiaries were listed in Taiwan, Hong Kong, China, and the United States, with a total of 100 companies.

DIGITIMES internal report said that as early as a few years ago, Guo Taiming had said that he would develop Hon Hai Foxconn in the direction of the holding company through the spin-off and listing, and in the 2011 shareholders meeting, stressed that the group would be "in the sky." Flying, floating, and underground drilling are pushed onto the countertops. In addition to demonstrating their respective values, they can further achieve a high degree of integration in the industry.

However, Apple's good business did not accelerate the pace of the giant transformation, which directly caused the share price in 2013 to fall, Hon Hai's share price fell 64.39%.

At the eight-hour general meeting of shareholders two years ago, Guo Taiming apologized to shareholders and announced the resolution to restructure the business structure, reducing dependence on Apple's product manufacturing, focusing on developing new technologies and knowledge. Property rights and e-commerce. Guo Taiming said that Hon Hai plans to divide the entire company into independent subsidiaries after three years, and hopes to achieve revenue growth.

According to Guo Taiming's plan, the organizational structure of Hon Hai in the future will no longer be based on M&A expansion, but on mature products, industries or business units, after separation, decentralization and separation, each sub-group will be healthy. Grow up without being affected by Hon Hai's low P/E ratio. In each sub-group, a president will be born. At the same time, the financial, patent and other parts will still be controlled by the parent company of the group.

In Hon Hai's spin-off plan, the business group has been upgraded to a sub-group, and the highest position of the top leaders of each business group has also risen from the group vice president to the president, which means that the group leaders will have greater The independent decision-making power, Guo Taiming's influence will be weakened.

According to industry analysts, Hon Hai’s annual revenue exceeds 100 billion US dollars, and the volume is too large. The centralized management of “aircraft carrier” is inefficient, and the decentralized management of “air battle group” is more targeted and can also stimulate the group’s Enthusiasm to increase the overall sales of the group. The analysts of a foreign-invested securities company directly pointed out that Guo Taiming may have begun to retreat for himself and consider gradually realizing the transition to a collective leadership system.

Indeed, from a small factory that has never been seen before, to an international foundry giant with an annual revenue of NT$4 trillion, Hon Hai’s 40 years of success has been inseparable from Guo’s “parental-style” management, industry insiders commented. The spin-off may be the best way for Hon Hai to turn around after becoming a Big Mac.

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