The smartcar technology company is considering buying a stake in DreamSmart, owner of an operating system linking smartcars, smart glasses and smartphones
image credit: Bamboo Works
Key Takeaways:
- Ecarx’s board has authorized the company to pursue a potential purchase of a minority stake in DreamSmart, whose main asset is the Meizu brand of smartphones
- Both Ecarx and DreamSmart are controlled by Geely, one of China’s most successful private carmakers
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.
In the corporate realm, Ecarx Holdings Inc. (NASDAQ:ECX) 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.
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.
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.
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 …
This post was originally published here
