The era of major mergers in the LED display industry is coming, and giants are expected to take the lead

The LED display industry has entered the era of major mergers, and companies with revenue of 3-4 billion will appear in the next three years.

The LED display industry CR6≈14%, the industry concentration is obviously low. Since 2013, the industry's prosperity has bottomed out and mergers and acquisitions in the industry have gradually increased. Based on our understanding of the industry chain and the opinions of industry entrepreneurs, we judge that the LED display industry has entered the era of large-scale mergers. Listed leading companies will use the capital market to kick off large-scale mergers and acquisitions and reorganizations in order to create a model effect.

The explosive development of small-pitch display technology is expected to overturn the ceiling of the industry. Compared with DLP and LCD splicing display technology, small-pitch displays have a comprehensive trend in terms of display effects, energy consumption, and maintenance costs. The continued decline in the price of small-pitch lamp beads is expected to promote the industry's continued explosive growth. The scene application of small-pitch displays will be divided into three stages: 1. High-end display fields replace DLP and LCD wall-mounting; 2. Enter high-end indoor display venues such as shopping malls and airports; 3. Enter the high-end civilian market; each stage is expected to release market space worth tens of billions. Since this year, small-pitch manufacturers have had full orders and tight production capacity. The industry is expected to continue to maintain a growth rate of more than 80%, with the market size exceeding 5 billion yuan.

The three major downstream industries (sports, stage performing arts, outdoor advertising) are highly prosperous, the extension of the industrial chain is natural, and the extension expectations are clear. The rapid development of the downstream industry has not only boosted the prosperity of the LED display industry, but also raised the expectations of LED display companies to integrate upstream and downstream of the industry chain. Currently, mainstream companies in the industry are carrying out strategic layouts in fields such as sports, stage performances, and outdoor advertising. Related targets are expected to deeply benefit from this industry trend, bringing greater valuation flexibility.

From asset-heavy manufacturing to asset-light scenario operation, the LED display operating model continues to upgrade. As the application scenarios of LED displays continue to expand, the traditional model of simply selling hardware can no longer adapt to the industry situation. Mainstream companies in the industry have begun to try LED display scene operations (hotels, communities, etc.). The new operating model is expected to significantly improve the performance flexibility of related companies.

Unilumin Technology: There is broad space for endogenous transformation, and external development performance has exploded.

The market competition is fierce, and the company's performance continues to grow at a high speed. The LED display industry market is fragmented, and as technical barriers increase, the industry has naturally entered a stage of mergers between companies. In 2015, the company relied on product upgrading, small spacing entered a period of business growth, and the acquisition of Radioo to expand the overseas display market, achieving a profit growth of 86.61%, and making the profit growth rate significantly ahead of the revenue growth rate, indicating that the company has developed a new high-profit business direction. The company's early overseas brand promotion and layout have begun to show results. Overseas revenue increased by 53.88% year-on-year, and the extension development has achieved outstanding results.

The performance of small-pitch products has grown rapidly, helping the company’s development. The LED small-pitch products developed by the company are at the forefront of the display technology substitution trend. Product cost-effectiveness, technology, and first-mover advantages have ensured its revenue compound growth rate of 70% in the past three years. With the expansion of the domestic small-pitch market and the gradual expansion of display screen applications into the civilian field, the company's products for high-end exhibitions will become more popular. Its product revenue in 2015 increased by 122.61% year-on-year. The company focuses on segmented areas, seeks differentiated leading advantages and launches products with high added value. Among them, 2mm small pitch products are the strongest driving force for its performance growth. The company's active overseas layout will be conducive to exploring overseas small-pitch markets.

Acquired Radioo to create a leading stage display rental company. After the consolidated performance of Radiodio in 2015, its profit proportion reached 45.90%. Rdio is deeply involved in the field of high-end LED display rentals in Europe and the United States, providing LED display rental screen services to large venues such as stages and exhibitions. Its customized creative screen-to-body ratio is high, ensuring high profit margins. Radiodio's competitive advantage will continue to be maintained in the next few years, and the company's overseas creative screen performance will also continue to grow. In addition, the company will try to develop the domestic creative screen rental market and promote unified layout and common growth at home and abroad.

Lay out smart cities and start the O2O model. The Unilumin public intelligent lighting control system (Unilumin1.1) developed by the company provides smart people's livelihood services such as security monitoring, intelligent positioning, public information video playback, and Wi-Fi micro base stations for the secondary platform of smart cities on the basis of road lighting services. At present, the system has mass production capabilities, providing a solid foundation for the company to transform into an urban lighting system solution service provider, and may become the company's future performance growth point. In the field of indoor lighting, the company has extended its sales channels online by investing in Internet companies such as Hanyuan Lighting, Nandian Yunshang, and Esser Networks. The first B2B platform in the lighting industry that the company has cultivated for many years has also been completed. The company's implementation of the "Internet +" strategy and the development of "Lighting O2O" will help improve the company's warehousing capabilities and promote the diversification of sales channels.