Value Analysis of Nine Concept Stocks in LED Industry

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Hongli Optoelectronics: Entering Internet Finance and Building an Industrial Chain Ecosystem

Events:

The company plans to establish a wholly-owned subsidiary, Hong Kong Hongli, in Hong Kong with a capital of US$10 million. At that time, Hong Kong Hongli established BVI Hongli in the British Virgin Islands with US$10 million. BVI Hongli invested US$10 million in Cayman Wangli and obtained 15,625,879 Class B preference shares. After the capital increase was completed, BVI Hongli's equity ratio in Cayman Wangli was 10%.

Cayman Wangli established a wholly-owned subsidiary, Beijing Wangli Information Technology Co., Ltd. (hereinafter referred to as "Wangli Information") in Beijing, China, through Wangli Financial Co., Ltd. established in Hong Kong. Wangli Information controls Beijing Wangli Technology Co., Ltd. through an agreement. Wangli Technology's main business is Internet finance and online lending. It cooperates with industry core enterprises, guarantee companies and other cooperative institutions to conduct asset securitization, develop credit and financial products, and conduct online sales to public investors through the Wanglibao platform. As an information intermediary platform, the Wanglibao platform only provides information and consulting services and does not intervene in capital transactions. The company's income mainly comes from the intermediary service fees collected from borrowers.

Main point:

1. Investment risks are controllable and investment returns are expected

This external investment is the first large-scale investment in the Internet finance field in the company's history. Therefore, in its first involvement in the non-LED industry, the company has well controlled the risks that may be brought about by the investment. First, the Class B preferred shares obtained by the company enjoy priority liquidation rights compared with other shareholders holding Class A preferred shares and ordinary shares, so the company's rights and interests can be protected first in the event of an unexpected event. Second, if Cayman Wangli’s arrangement to control Wangli Technology through an agreement is deemed invalid or unenforceable, BVI Hongli has the right to require Cayman Wangli to repurchase the 15,625,879 Class B preference shares it issued to BVI Hongli at the price of this investment plus an annual interest rate of 10%. Since the effectiveness of agreement control is not as strong as that of equity control, once agreement control fails, the company can choose to withdraw its investment to ensure the safety of funds. Third, BVI Hongli and its designated parties have the right to purchase 10% of the equity of Wangli Technology from existing shareholders of Wangli Technology for RMB 1. Under this clause, the company can directly participate in Wangli Technology through its wholly-owned subsidiary, further strengthen the investment relationship with Wangli Technology, and form a double insurance with the agreement control of Cayman Wangli Technology. Fourth, BVI Hongli has the option to purchase Class B preference shares accounting for 10% of the total share capital of Cayman Netli for US$30 million within 6 months after the implementation of this investment. The existence of this option provides the possibility for the company to amplify potential investment income. If Wangli Technology's business model can be recognized by the market, then additional investment will undoubtedly be a way for the company to obtain high returns.The only choice.

2. Internet finance helps the company build an industry ecosystem

The company’s entry into the Internet finance field this time hopes to use the financial service platform to provide financing support for high-quality small and medium-sized enterprises in the LED industry. In my country, there are a large number of companies in the field of LED packaging and application, and the market competition is fierce. Some of these companies with excellent quality will experience financial constraints during the industry reshuffle. If these companies are forced to withdraw from the market, it will have an adverse impact on their partners. Therefore, the company uses Internet finance to help high-quality suppliers and customers in the industry chain relieve financial pressure, while also creating a good industry ecology for itself and achieving a win-win situation in the fierce market competition. As Internet finance continues to mature and relevant experience accumulates, the company can also use this platform to extend outside the industry, and is expected to cooperate with the company's planned layout of the Internet of Vehicles field to realize the company's business vision of building an ecological platform of LED main business + Internet finance + Internet of Vehicles.

Conclusion:

The company’s deployment in the Internet financial field not only minimizes risks and maximizes returns in investment, but also plays a positive role in promoting the healthy development of the LED industry and helping industry chain companies achieve a win-win situation. At the same time, the company's concept of combining Internet finance and the Internet of Vehicles has enhanced the company's imagination, and the company's future development is worth looking forward to.