Hu Lane Associate (MV $437M): Asia ex-Japan’s #1 Automotive Connector, the “Nervous System” in Smart Cars
Hu Lane Associate (HL) (GreTai: 6279 TT) is Asia ex-Japan’s largest maker of terminal connectors in automobiles and motorcycles, a mission-critical auto part that is dubbed the “nervous system” of cars whose electronic content is rising due to the Green, Connected, Autonomous automotive trends. While it is considered a Tier-2 auto parts supplier, Hu Lane (HL) directly participates in the design process of Tier-1 suppliers for most of its automotive terminal products to be “designed-in” and as a result, enjoys sole supplier rights during the first 2-3 years following a new model launch. In addition, HL has changed its sales model in China from a distributor model to direct selling, forging Tier-1 relationship with the major Chinese automakers, including accounting for over 50% of automotive terminal connectors used in emerging electric vehicle maker BYD (1211 HK). Established in 1977, HL is listed on the GTSM in 2003. HL’s top customers are Changan Automobile (around 10% of sales), BYD (5%) and major automakers that include Great Wall, Geely, SAIC-GM-Wuling, Dongfeng Motor, Chery, Taiwan’s Yulon Motor Group, Nissan Taiwan, Honda Taiwan, Ford Taiwan, Hyundai Taiwan, FIAT, Peugeot, Toyota, Mazda, Mitsubishi, Isuzu, Suzuki, Yamaha, KIA etc. Its top ten customers account for around 44-50% of sales. HL has pursued the strategy of a diversified customer base to lower operating risk and the rest of sales contributed by hundreds of customers. HL operates factories in Taiwan, China (Nanjing, Dongguan, Shenzhen) and Vietnam.
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About The Author: Koon Boon Kee
Koon Boon is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets.
Starting his career at a boutique hedge fund in Singapore and later, at Korea’s largest mutual fund company, Koon Boon started to make headway into the investment arena. In his early successes, Koon Boon was part of the core investment decision committee which achieved 700% in returns (net of fees), in its flagship Asian fund.
A prolific writer and thought leader, Koon Boon has contributed hundreds of articles to Bamboo Innovator and BeyondProxy, an acclaimed series of subscription-based, research-intensive publications for serious investors; and is Managing Editor of the Moat Report Asia, a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia. He had also presented in top banking and finance conferences in Sydney, Cape Town, HK and Beijing, as well as in the Emerging Value Summit and Wide Moat Investing Summit. His work has been featured in local and international media such as, TEDxWallStreet, Investopia, BeyondProxy, Greatinvestors.tv, Jakarta Post, Straits Times Singapore, TODAY Singapore, Business Times Singapore, as well as a publication in the BoğaziçiJournal.
With the wide occurrences of financial fraud committed by listed firms in China during 2015, Koon Boon went to further his studies, from which he saw a gap in the curriculum for accounting fraud. He went on to pioneer the first-of-its-kind course on Accounting Fraud in Asia, which is now an official course in the SMU curriculum.
Today Koon Boon is the Chief Investment Officer at 8I Holdings Limited, where he is responsible for the sustainable growth and outperformance of listed Asian equities investments in the Hidden Champions Fund.
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