{"text":[[{"start":8.18,"text":"This article only represents the author's own views."}],[{"start":12.28,"text":"Being a member of a big family has both its upsides and downsides. On the upside, you have access to all the resources of your different family members, many of which may not be available to ordinary people, and often on good terms. On the downside, if and when you succeed, people don’t tend to take you too seriously, saying you have an unfair advantage from your family connections."}],[{"start":40.41,"text":"In the corporate realm, Ecarx Holdings Inc. (ECX.US) is one such company. Despite its relatively successful business making digital cockpits for smart cars, the company trades at far lower valuation multiples than many of its peers, which appears to be a “family discount” tied to its ownership by Geely (0175.HK), one of China’s most successful private carmakers."}],[{"start":68.31,"text":"That investor skepticism was on display once more on Thursday, as investors greeted news of a potential relatively large new acquisition by Ecarx with a yawn. The stock initially opened slightly higher after the announcement, and rose as much as 4.2% during the trading day. But it ultimately closed down 1.8% as investors took a closer look at the investment that, if it happened, would be just another shuffling of assets within the extended Geely family."}],[{"start":100.99000000000001,"text":"Ecarx said its board approved a “a preliminary plan to pursue the potential acquisition of a minority interest” in a Singaporean company called DreamSmart Technology. It noted that DreamSmart is an affiliated company, and that its main interest in any potential investment would be DreamSmart’s FlyMe operating system (OS). A potential deal could see Ecarx offer both cash and its stock, though no value was given."}],[{"start":127.92000000000002,"text":"One of DreamSmart’s main assets is Meizu, a well-known name to China tech old-timers that started out operating a popular MP3 audio player, before getting into smartphones that were fairly well regarded. Meizu made headlines in 2015 when Alibaba paid $590 million for an unspecified minority stake in the company back when the e-commerce giant was just starting on a major acquisition binge. That would have valued Meizu at more than $1 billion at the time."}],[{"start":160.65,"text":"But much has changed since then, most notably Meizu’s fading as a major smartphone brand. Geely bought about 80% of Meizu in 2022 and folded it into DreamSmart. In 2024, DreamSmart hired investment banks to explore a potential IPO that would have valued the company at around $2 billion, according to a Bloomberg report. While that listing has yet to happen, the valuation implies that Ecarx would probably need to pay at least $200 million or $300 million for a meaningful minority stake in DreamSmart."}],[{"start":197.3,"text":"That may explain Ecarx’s disclosure in February that it was close to securing $200 million in new funds. Not surprisingly, Geely was one of the contributors to that funding, along with ATW Partners, a New York-based investment firm. Ecarx could use the money, since it only had about $125 million in cash and short-term investments at the end of last year."}],[{"start":222.98000000000002,"text":"Lack of respect"}],[{"start":225.67000000000002,"text":"While a DreamSmart technology stake purchase could bring an important new partnership for Ecarx, the fact that it’s just another move on the Geely family chessboard takes away some of any potential excitement. The FlyMe OS that appears to be Ecarx’s main reason for pursuing the deal helps to connect Meizu smartphones, smart glasses and smart vehicles."}],[{"start":249.26000000000002,"text":"That means that Ecarx could potentially use the system to help the car makers that are its main customers to incorporate smartphone and smart glasses interoperability into their products. That certainly looks like an important selling point, as Ecarx and its peers try to differentiate themselves in a highly competitive field for smartcar technology. From an investor standpoint, Ecarx also has the selling point of becoming profitable for the first time in the third quarter of last year, and remaining profitable in the fourth quarter as well."}],[{"start":281.81,"text":"Yet the company’s stock has lost more than a third of its value this year, most of that since it reported its most recent quarterly results in February. At its current level, the stock trades at a price-to-sales (P/S) ratio of just 0.5. That trails just about all of its peers, including much higher levels of 4.3 for Minieye (2431.HK) and 3.2 for Mobileye (MBLY.US), which is what you would expect from companies with big growth potential."}],[{"start":315.56,"text":"Ecarx currently derives the majority of its revenue from other members of the Geely family, which include names like Volvo, Polestar and Lotus overseas, as well as the Geely, Zeekr and Lynk & Co. names in China. Those brands helped Ecarx to generate nearly $850 million in revenue last year, up 10% year-on-year, led by 27% growth for its core smart cockpits, which accounted for more than 80% of sales."}],[{"start":346.25,"text":"The company’s revenue growth showed signs of accelerating towards the end of the year as Ecarx gains traction. What’s more, analysts also hold out big hopes for the company this year, forecasting its revenue will cross the $1 billion mark to reach $1.15 billion, which would represent 33% year-on-year growth."}],[{"start":369.55,"text":"The big catalyst for that growth is German carmaker Volkswagen, which is the only major global brand not connected to Geely so far to try out Ecarx’s products. Ecarx previously disclosed that partnership will eventually see its products used in a “significant number of cars” under both the Skoda and Volkswagen brands initially in India and Brazil. More recently Ecarx has only been talking about Latin America, suggesting the earlier India plans may be on hold for now."}],[{"start":403.69,"text":"UBS previously said the VW partnership could start delivering meaningful revenue as early as last year, though other reports mention 2027 as a more likely timeline for such gains. Meantime, Ecarx has also said the $200 million in new fundraising will be used partly to build out an R&D and engineering hub in Germany and infrastructure across key growth markets in South America and Southeast Asia, which looks mostly related to the Volkswagen tie-up."}],[{"start":435.64,"text":"All of that looks relatively positive, including the potential new investment in DreamSmart that could help Ecarx differentiate its products from its rivals. That could imply some potential upside for the stock if Ecarx can continue to lessen its reliance on the Geely family and show it’s a company capable of standing on its own."}],[{"start":465.96999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1776251945_5152.mp3"}