Six key words to interpret the trends of the LED industry in the first half of the year

Shopping malls are like battlefields. After a fierce battle for the market, the forces of all parties have waxed and waned, and the entire industry structure and territory has also evolved. The current "free-for-all" state of the LED lighting industry is ultimately a process of accelerating industrial adjustment and resource integration. However, this does not mean that the strong will always be strong and the weak will always be weak. This is just because we are in the "Warring States Era", unpredictable, and everything is full of variables. The strong may have dismal performance and lose power, and the weak may also make a comeback and suddenly emerge. To paraphrase an advertising slogan: Everything is possible.

The development stage of each industry will present different situations at different development periods. Regarding the development characteristics of the LED lighting industry in the past year or so, we believe that we can observe and grasp some of the current hot spots and development trends in the LED lighting industry from the interpretation of key words such as "LED listing boom", "M&A wave", "resignation wave", "foreign companies exiting the business", "price war", "Internet e-commerce and O2O".

LED is hot on the market

Those who make good use of soldiers will no longer be in the army and will not have enough food for three years. It is used for the country, because the food is given to the enemy, so the army can have enough food.

——"The Art of War·Combat Chapter"

Nowadays, more and more companies are vying to be listed. In addition to Mulinsen Lighting, which successfully listed on the Small and Medium-sized Board of the Shenzhen Stock Exchange in February this year, six LED lighting companies, including Zhuonaipu, Omig, and Lite Technology, are listed on the "New Third Board"; while Opple Lighting, Yuanhui Optoelectronics, Regent Optoelectronics, Inventronics, etc. are already waiting to take the step to the listing threshold. According to incomplete statistics, there are currently 26 LED companies listed on the "New Third Board". It can be said that many LED lighting companies are struggling to catch up on the road to listing on the main board, small and medium-sized board, and GEM.

Enterprises going public can obtain financing, which can enhance the company's brand awareness and reputation, and corporate management can also become more standardized. In the current chaotic market competition, taking advantage of the trend to break through and going public is a way or an important channel to strengthen oneself. This means that when there are many enemies and both sides are in a bitter fight, they expect to receive a large number of reinforcements from the rear, or to supply food and grass, or to reorganize military affairs, so as to upgrade the guerrillas into regular troops and enrich their combat strength. Of course, going public is not the only way, nor is it the ultimate goal. However, companies will also face many troubles and traps after going public, such as equity disputes, low returns on large project investments, lawsuits or fines for failure to follow up on qualifications and capabilities, etc. Under the current impetuous, exaggerated, and confusing LED market conditions, as if trapped in the haze of the industry, companies must have a clear understanding, and it is necessary to clear the haze and see the reality clearly. Despite this, in this year and beyond, we believe that the rush for LED lighting companies to go public will still intensify.

The tide of mergers and acquisitions

Seize the opportunity to intervene, strangle the host, and gradually advance. ——"Thirty-Six Strategies ● Focus on Customers"

Affected by the development of the global economy in 2015, M&A investment has become a hot topic in the new era. The trend of restructuring and M&A among Chinese enterprises is in the ascendant, and they are all looking for the most beneficial integration in resource allocation.

"Big fish eat small fish" is often seen as a metaphor for corporate mergers and acquisitions. During the Warring States Period, large vassal states annexed weak small vassal states through war. But today's corporate restructuring and mergers and acquisitions have a broader connotation, and are not just about the strong annexing the weak. For example, the two parties can maximize resource utilization and benefits through resource reorganization through strong alliances and complementary advantages.

There were many M&A cases in the LED industry last year and they were very active. Listed companies such as Tsinghua Tongfang, Huacan Optoelectronics, Foshan Lighting, Jiawei Co., Ltd., Hongli Optoelectronics, Changfang Lighting, Unilumin Technology, Ledman Optoelectronics, Epistar Optoelectronics, Feile Audio, Moso Power Supply, Lianjian Optoelectronics, etc. were all involved. Some analysts have noticed that mergers and acquisitions are characterized by complementary mergers and acquisitions between enterprises, and the proportion of horizontal integration of the main business of enterprises is relatively small. As of June this year, the wave of mergers and acquisitions in the LED industry has been further staged: Ruifeng Optoelectronics acquired 85% of the equity of Lingtao Optoelectronics, Unilumin Technology acquired 40% of the equity of Radioactive, and Nationstar Optoelectronics increased its investment to control the LED upstream company Yaweilang.

The pace of mergers and integration among LED companies is also accelerating. It can be said that the LED industry has entered the era of mergers and acquisitions. However, mergers and acquisitions are a double-edged sword. If asset integration is effective, the competitiveness of LED companies can be enhanced, and the company will develop very rapidly; on the contrary, if the integration is unfavorable, the company will inevitably be in trouble. In 2015, M&A cases of LED lighting companies will also appear frequently, because in the industry adjustment and transformation period, no company does not want to seize the opportunity to develop and grow.

Wave of resignations

The development of the LED lighting industry is accelerating, and information about changes in the industry is ever-changing. Since last year, "personnel shocks" in the LED lighting industry have frequently occurred. Last year, Osram, NVC Lighting, Tianlong Optoelectronics, Everlight Group, Dajin Oriental Lighting, Zhenmingli, Nationstar Optoelectronics, Qinshang Optoelectronics and other brands all experienced high-level resignations. Some of the chairman, vice chairman, directors, etc. collectively resigned, staged a "high-level disaster" In some cases, one or two high-level executives such as general managers, financial directors, and directors resigned. Most of the original names cited for resignation were "personal reasons," "busy business," and "work adjustment." Of course, some were forced to leave, staging a "palace farce."

This year’s “wave of high-level resignations” continues. According to incomplete statistics, from March to May this year, a total of 13 senior executives of listed LED lighting companies resigned, involving Lianchuang Optoelectronics, Sunshine Lighting, Feile Audio, Zhaochi Co., Ltd., Midea Group, Tiantong Holdings, BYD and other large companies. The specific identities of LED companies include vice chairman, vice president, deputy general manager, board secretary, financial director, independent director, director, securities affairs representative, employee representative supervisor, etc., and "personal reasons" and "work adjustment" seem to have become common reasons for executives to resign.

Some analysts pointed out that in addition to normal resignations, poor performance, frequent internal adjustments, encountering bottlenecks, transformation, cash-out, insufficient development space, power alternation, financing failure, trial and error in corporate direction, etc. are the main reasons why executives frequently resign. But after all, the reason is the fierce competition in the industry. Companies hope to inject new "blood" to smooth all aspects of the company and maintain or intermittent performance improvement goals. On the other hand, market channels and sales models change too frequently, and the entire market situation is unpredictable. It is not easy to maintain high growth in corporate performance, so senior management changes are even more frequent. In the current "Warring States Period" of the LED lighting industry, the wave of personnel adjustments or resignations of corporate executives will continue to occur.