TUS International Acquires Suzhou Zhihua to Develop Smart Mobility System Business with Tsinghua University’s Technological Achievements
(9th Aug 2017, Hong Kong) TUS International Limited (“TUS International” or the “Company”; stock code: 872.HK; together with its subsidiaries, the “Group”) announced on 9th Aug 2017 (after trading hours) that its indirect wholly owned subsidiary Suzhou Qiyizhi Management Enterprise Limited (“Suzhou Qiyizhi”) has entered into the Equity Transfer Agreement with Shanghai Dachen Hengsheng Venture Capital Centre (Limited Partnership) (“Dachen Hengsheng”), pursuant to which Suzhou Qiyizhi conditionally agreed to acquire the equity interests in Suzhou Zhihua Automobile Electronics Company Limited (“Suzhou Zhihua”, together with its subsidiaries, the “Suzhou Zhihua Group”) from Dachen Hengsheng in order to place its strategy in the smart mobility business.
After completion of the acquisition, the Group shall hold an aggregate of 16.5039% equity interests in Suzhou Zhihua. In addition, pursuant to the cooperation agreement dated 3 March 2017, TUS International has obtained the subscription right on the additional shareholding interests in Suzhou Zhihua, and in the circumstance that the Company exercise such subscription rights, it is expected that the Group will hold 26.7578% equity interests in Suzhou Zhihua, in which case Suzhou Zhihua will be accounted as an associate of the Company, TUS International will become the largest shareholder of Suzhou Zhihua, and the second largest shareholder will be the industrial investment fund in relation to the Automotive Research Institute (Suzhou) of Tsinghua University. TUS International also intends to further acquire equity interests in Suzhou Zhihua. Once a formal agreement is reached, TUS International will disclose relevant transactions in the form of an announcement in accordance with the Listing Rules.
Suzhou Zhihua was incorporated in the PRC on 10 January 2012. It is an incubated enterprise of the Automotive Research Institute (Suzhou) of Tsinghua University. Through cooperating with the Automotive Research Institute and with the talent and academic advantages of Tsinghua University, Suzhou Zhihua has abundant reserves in artificial intelligence algorithm. Suzhou Zhihua strives to develop a number of competitive ADAS products and is engaged in the production and sales of related products. The Suzhou Zhihua Group has achieved satisfactory development in the Around View Monitor (AVM, which generates real-time top-view images by processing of multiple-area images by the Electronic Control Unit (ECU), and provide more intuitive auxiliary driving information and reliable blind area display tools), Lane Departure Warning (LDW, which has straight road and curved road measurement ability and high level distance measurement ability), Forward Collision Warning (FCW, by the high degree of mastery in core technologies of hardware design, image recognition, alarm algorithm and other aspects, to conduct differentiated and customized development according to different customer needs), Pedestrian Detection, Night Vision, Blind Spot Detection, Driver Fatigue Monitoring and other ADAS-related technologies. Also, Suzhou Zhihua has developed a series of products in areas including vehicle intelligent monitoring and intelligence-aided safe driving. The high-quality and diverse customer base established and owned by the Suzhou Zhihua Group in the sales channels to the high-quality customers including car factories with domestic original brand and the large Chinese Original Equipment Manufacturer (OEM) brands, such as Guangzhou Automobile, SAIC GM Wuling Automobile, Geely Automobile, Zotye Automobile, Dongfeng Nissan, BAIC Motor and Changan Automobile, and covering their key models. Most crucially, the Suzhou Zhihua Group has built a solid track record for its ADAS products based on product quality and affordable prices, and therefore the product penetration has grown significantly since inception, and they have sold approximately 380,000 and approximately 560,000 pieces of Camera-based ADAS System units in 2016 and in the first half of 2017, respectively. TUS International believes that the market potential of ADAS-related products in China is considerable, and they have brought strong income for the Suzhou Zhihua Group. The sales of the Suzhou Zhihua Group in the first half of 2017 exceeded RMB100 million, and it began to make a profit.
Suzhou Zhihua is a leading and emerging enterprise which has entered the pre-installed ADAS market with promising development strategies as the shipment volume and penetration rate of ADAS systems in China are increasing due to increasing demand for vehicle safety. The acquisition will be an important step for TUS International to establish the business. The company believes that the development of information technology is reshaping the automobile industry in a way that transportation and travelling is moving towards smart and connected vehicles. Backed by Tsinghua University, TUS International is driving the core smart and connected vehicle technologies in China’s national strategy of “Made in China 2025”, strive to become an intelligent driving and solution provider which connects automobiles and the cloud seamlessly, and lead the ecological construction of smart and connected automobile. On one hand, TUS International shall cooperate with Suzhou Zhihua and hopes to lead the development of China’s smart and connected automobile system, transfer the existing auxiliary solutions into multi-sensor comprehensive solutions, develop the millimeter radar product via R&D, and through the international M&A team of the Company to explore the overseas (especially the United States and Europe) investment opportunities in the automobile industry. On the other hand, TUS International will incorporate the “5G+ High Precision Map” national technological innovation strategy. Backed by the reputation of Tsinghua University and through the accumulation of technology to become a core technology provider, TUS International will strive to establish the national smart and connected vehicles cloud platform (which is expected to become a core “information infrastructure” in the smart and connected vehicle era) and drive the development of the smart mobility ecological chain including the concepts of V2X.
About TUS International Limited
TUS International Limited (“TUS International”, and its subsidiaries (collectively, the “Group”) is principally engaged in automobile related businesses and strives to establish the smart mobility business. Tus-Holdings Co. Ltd. (“Tus-Holdings”), a subsidiary of Tsinghua University, became the single largest shareholder of TUS International since June 2015. The name of the company has also been changed since early 2016. TUS International is the international investment arm of Tus-Holdings and its significant listed platform in Hong Kong. Tus-Holdings is the university-owned enterprise of Tsinghua University. As a holding corporation managing assets with the value over 30 billion US dollars and a controlling shareholder/shareholder of over 800 enterprises, Tus-Holdings has established the world largest and unique global innovative ecological system with over 200 innovative business bases and has provided incubation services to over 5000 enterprises. Adhering to the “Triple Helix”, a cluster based innovative theory, Tus-Holdings created an incubation model which consists of “incubation services + financial investment + entrepreneurship training + open platform” and a whole-industry-chain financial service system, and invests in and operates leading corporations in environmental protection, new energy, healthcare, new materials and other strategic emerging industries in China. Tus-Holdings has strengths and brilliant results in technology transfer, start-up project incubation and nurturing innovation talents.
TUS International has completed a comprehensive business review. In the restructuring process, TUS International has disposed of the traditional automobile part manufacturing and sales businesses, and has developed towards ADAS and smart and connected vehicles solutions. The two major competitive advantages owned by the Group includes: (1) The Group receives the full support from Tsinghua University and its rich resources, including the university’s technological accumulation, the long-term cooperation foundation with the core enterprises in the automotive ecology, as well as Tsinghua University’s technological and ecological services, business incubation and establishment capability. “TUS” in the name of the company is the abbreviation of “Tsinghua University Science Park”; and (2) The management team is experienced, and forging ahead with the smart-connected vehicles business. The Group has established an international M&A team, which is actively seeking M&A opportunities in the domestic automobile industry, at the same time evaluates overseas (especially the United States and Europe) automobile acquisition opportunities and strives to expand the related businesses in the China market. The Group strives to be an internationally leading smart mobility system provider and join automobiles and the cloud seamlessly with the support of Tsinghua University, and lead the ecology building strategy of the industry. Since March 2017, the Group has acquired the equity interests in Suzhou Zhihua Automobile Electronics Company Limited, an advanced driver-assistance systems (ADAS) provider, by phases through a series of agreements.