TUS International Acquires Additional Shares in Suzhou Zhihua to Support the Strategic Layout of its Smart Mobility System Business
(25th Aug 2017, Hong Kong) TUS International Limited (“TUS International” or the “Company”; stock code: 872.HK; together with its subsidiaries, the “Group”) announced on 25th Aug 2017 (after trading hours) that its indirect wholly owned subsidiary has entered into the Equity Transfer Agreement with a party of the transaction (the “Vendor”), pursuant to which the Group agreed to acquire the 7.1% equity interests in Suzhou Zhihua Automobile Electronics Company Limited (“Suzhou Zhihua”, together with its subsidiaries, the “Suzhou Zhihua Group”) held by the Vendor and the right of first refusal in respect of the remaining equity interests held by the Vendor and its related entities in Suzhou Zhihua, in order to support the strategic layout of the Company’s smart mobility business.
After completion of this acquisition, as well as the Equity Transfer Agreement with Shanghai Dachen Hengsheng Venture Capital Centre (Limited Partnership) dated 9 August 2017, the Group shall hold an aggregate of approximately 23.6% equity interests in Suzhou Zhihua, in which case TUS International will become the largest shareholder of Suzhou Zhihua (meanwhile the second largest shareholder will be the industrial investment fund in relation to the Automotive Research Institute (Suzhou) of Tsinghua University, it shall hold approximately 23.3% equity interests in Suzhou Zhihua.) Pursuant to the cooperation agreement dated 3 March 2017 that the company has obtained the subscription right on the additional shareholding interests in Suzhou Zhihua, after such subscription rights and the Right of First Refusal as aforesaid is fully exercised, the Group will hold approximately 38.5% equity interests in Suzhou Zhihua. TUS International also intends to further acquire equity interests in Suzhou Zhihua so as to enhance its position as being the largest shareholder of 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 is an incubated enterprise of the Automotive Research Institute (Suzhou) of Tsinghua University, and a leading Advanced Driver Assistance Systems (ADAS) provider. Currently its customer base includes major Mainland and joint venture automotive brands, includes of its flagship and best-selling models. Suzhou Zhihua owns abundant reserves in artificial intelligence algorithm, it has already achieved satisfactory development in the Around View Monitor (AVM), Lane Departure Warning (LDW), Forward Collision Warning (FCW), 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. 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.
In addition, Suzhou Zhihua has 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 as the intention of automobile companies to highlight their products increases, the proportion of installing intelligent systems will increase. As the market potential of ADAS-related products in China is considerable, they will bring strong income for the Group. To cater to the demand for smart vehicles, the new system contains more sensors, including millimeter-wave radars and other components. The existing early warning system will be transformed into an auxiliary driving system to make driving safer, more energy-efficient and have better user experience.
Since mid-2016, TUS International Limited has begun to reorganize the business structure, and has disposed the original traditional auto parts manufacturing business. The Group believes that when comparing with the international suppliers, Suzhou Zhihua are currently and basically on the same starting line in terms of ADAS, and now, it is the right time for the Group to strengthen its strategic layout of the ADAS business. The Group also believes that after the “lessons” for its products in the domestic market, the Group will gain international competitiveness. The Group will strengthen the R&D and promotion in multi-sensor integration, comprehensive perception and other aspects, build a sound quality management system, and develop products to fulfill the demand for higher levels of smart vehicles. The Group will also develop to connect vehicles, infrastructure, and pedestrians and form a big data cloud platform to integrate vehicle data, environmental data and public data, so as to provide more integrated intelligent driving and smart mobility solutions.
The Group believes that the ADAS industry is technology-driven. The support from Tsinghua University allows the Group to form closer connection with scientific research teams of domestic and overseas institutions of higher learning. At the same time, the Group will integrate domestic and overseas resources and strive to become an internationally leading supplier of smart mobility systems and ecosystem service provider.
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; actively seeking M&A opportunities in the domestic automobile industry, at the same time evaluates overseas (especially the United States and Europe) smart-driving acquisition opportunities. 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.