Apple has changed the world time and time again, and it has also brought huge returns to many investors around the world. Today, Silicon Valley is widely rumored that Apple is developing electric vehicles to compete with Tesla and traditional car companies. According to the US financial investment website Fool, Apple's move into the electric vehicle market has also brought an excellent investment opportunity, and some potential suppliers have now experienced a low valuation.
Tesla’s head, Musk, said that Apple’s research and development of cars is an open secret in Silicon Valley. In the city of Sunilville, Apple has set up an electric vehicle research and development base, recruiting a large number of employees, and Apple has recruited executives from outside. Responsible for the automotive project, the leader of the project also includes the chief design officer Ivey.
Foreign media pointed out that considering the personnel changes in recent car projects, Apple's authenticity is much larger than ever.
If Apple is ready to enter the automotive industry and launch a subversive, then this will bring a valuable investment opportunity, not only Apple's own stock, but also the supplier group of Apple's automotive projects.
So far, which vendors have become suppliers of Apple's automotive projects are still unknown. However, according to previous reports, a company named Magna InternaTIonal is very likely to become a partner and supplier of Apple.
In the automotive industry, OEM manufacturing is still relatively rare. Most auto companies have their own production lines and factories. For Apple, Magna will become a car foundry, similar to Apple's partner in the consumer electronics field. group.
For the traditional automotive industry, having its own manufacturing plant can bring some competitive advantages, but it also requires huge capital investment. At present, the total amount of cash held by Apple exceeds 200 billion US dollars. If you invest in building a car assembly plant, this is a breeze for Apple. However, this will also damage Apple's overall profit margin and return on capital.
According to reports, in the global automotive market, Magna is almost the only company that provides automotive foundry services. According to some sources, Magna's Streyr business is likely to become Apple's partner.
Earlier, Morgan Stanley analysts also said in the research report that Streyr is very likely to become a "Foxconn Group in the automotive industry."
If the Apple Auto Project starts manufacturing and chooses Magna as a foundry, then Magna will expand its vehicle production capacity on a large scale. Of course, Apple may also provide funds to the foundry in the past in the consumer electronics field. stand by.
If Magna and Apple really build a partnership, then Magna's undervalued stocks today will be extremely valuable.
Whether in absolute or relative terms, Magna's current share price is seriously undervalued. The price-earnings ratio is about ten times.
In contrast, the constituents of the US S&P 500 index currently have a price-to-earnings ratio of more than 25 times.
Of course, talking about the value of a company needs to consider its business prospects. At present, Magna's low share price reflects some of the business dilemmas, but in the long run, the company's prospects are optimistic.
Magna is currently the world's largest manufacturer of modular auto parts. According to relevant regulatory documents, the company's core competitiveness lies in the production of car frames, bodywork, roof, electronics, vision and other components. In addition, it includes complete automotive engineering services and foundry manufacturing operations.
Currently, half of the company's revenue comes from supplying auto parts to Ford, General Motors and Fiat Chrysler. In addition, the proportion of vehicle manufacturing business in the company's total revenue is currently less than 10%.
It is worth noting that Magna has expressed in the past that it hopes to get deeper into the automobile manufacturing business. Of course, this desire has also been hampered by car manufacturers as parts customers.
For Magna's plans to enter the car manufacturing industry, a large technology company like Apple will be an ideal partner.
Most of the 17 analysts who focused on Magna's stock maintained varying degrees of optimism. For the current fiscal year, analysts expect their sales revenue to grow by 12.3% to reach $36.1 billion, with the lowest growth rate estimated to exceed 10%. For profit, analysts are estimated to grow by 4% on average, and no one analyst believes that profits will fall.
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