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How do investment experts view the opportunities in the LED lighting industry?
He believes that the current difficulties in the LED industry include bidding farewell to the period of high growth. The survey shows that since 2015, double-digit high growth has not returned, and the industry has entered a new normal of slow growth. The second is sales growth, but profits have fallen. The third is the spread of price wars, which eroded the profits of most companies in the industry. Many LED companies began to be forced to withdraw from the market. On the 8th of this month, the 2016 China LED Industry International Competitiveness Development Conference was successfully held in Guangzhou. Among them, Shenzhen Guoxin Hongsheng Equity Chen Xiaohai, executive general manager of Investment Fund Management Co., Ltd., shared his experience with the guests in the era of LED capitalization in the eyes of the experience. He believes that the current difficulties in the LED industry include bidding farewell to the period of high growth. The survey shows that since 2015, double-digit high growth has not returned, and the industry has entered a new normal of slow growth. The second is sales growth, but profits have fallen. The third is the spread of price wars, which eroded the profits of most companies in the industry. Many LED companies began to be forced to withdraw from the market. But at the same time, there are opportunities and challenges. For example, the new three-board mechanism is gradually improved, which reduces the barriers for enterprises to enter the capital market and brings opportunities to many small and medium-sized enterprises. In addition, the pace of upgrading the industrial structure is accelerating. Under the new economic normal, the upgrading of industrial institutions is an inevitable choice for enterprises. Internet + and Industry 4.0 are national policies that are in line with historical trends. Breaking the way, through industry mergers and acquisitions, he pointed out that the industry's low point is a good opportunity for industrial mergers and acquisitions. On the road to mergers and acquisitions, you can choose industry chain integration and cross-industry mergers and acquisitions. The specific content of the speech of the day has been compiled by Zhiku Jun, please see below. Difficulties: sales growth, growth rate decline According to Chen Xiaohai, he himself has a deep understanding of the development of the entire market, because last year, has been engaged in manufacturing investment, was the transformation of the Internet + industry investment last year . Since paying attention to the LED industry in 2007, he has clearly felt that the market capacity of the emerging industries in China is very large. The growth rate of emerging industries is very fast and the gross profit is also high, so there will inevitably be capital swarming in. Between 2007 and 2010, due to the guidance of the government and the characteristics of the capital itself, a large amount of capital entered the LED industry, which also led to a serious surplus of the entire industry. According to the above figure, we can first see that the lighting industry in China continues to grow, but the growth rate has slowed down noticeably. According to the data released by China Industrial Information Network, the sales of domestic lighting industry in 2015 was 560 billion yuan, an increase of 8%. The lighting industry developed rapidly from 2009 to 2011, and the growth rate has started to decline in 2012. In 2015, the performance was the most obvious, and the growth rate dropped to single digits. Since 2015, the double-digit high growth has not been reversed, and the industry has entered a new normal of slow growth. The second status quo is that the profit has fallen sharply. According to the 2015 annual report of 37 listed companies in the lighting industry, 70.3% of the listed companies' revenue in 2015 increased compared with 2014, but the net profit increased only 56.7%. Domestic LED lighting penetration rate reached 30% in 2015, and leading LED companies such as Sunshine Lighting and Foshan Lighting accounted for more than 50% of LED sales in 2015. The sales of LED companies in the industry have risen, but the overcapacity in the industry is serious. Overcapacity will inevitably lead to fierce competition. Then the price war will be fought and the spread of price war will cause a significant decline in profits. Plus, because of the lack of innovation, the gross profit will naturally not go. According to its introduction, the LED lighting industry chain is currently facing fierce price wars. The trend of LED bulb prices is continuing to decline. After the price has plummeted in 2014, the downward trend in 2015 is still obvious. The spread of price wars eroded the profits of most companies in the industry, and many LED companies began to be forced to withdraw from the market. Opportunities and Challenges: Capital Entry, Gross Profit Reduction Chen Xiaohai believes that from the perspective of capital, the LED industry, under this pattern, opportunities come from two aspects, one is the opportunity for the capital market to open up, and the other is the opportunity for industrial integration. The capital market is opening up, and with the gradual improvement of the NEE mechanism, opportunities and challenges are ushered in. The new three-board mechanism has undergone qualitative changes in 2015-2016, and its financing capacity has been significantly enhanced. The NEEQ reduces the entry of enterprises into the capital market and brings opportunities to many SMEs. At present, the entire capital structure will develop in two directions. First, the Nasdaq-based institution is the new three-board, which is wide-ranging and wide-ranging. However, this market is mainly based on institutions, and the requirements for investors are very high. It is a professional market. The second is Shenzhen and Shanghai stock markets. It is a capital market dominated by mature enterprises. There is no restriction on investors and the risk coefficient is low. He said that the focus on these two large capital markets is due to the uneven level of LED enterprises, and the market of LED industry is too large and too scattered. From the upper middle and lower reaches, the whole industry is centralized from the upstream. M&A, integration, and production have extended to the lighting industry. Entrepreneurs should have their own considerations when they choose to enter the capital market or not enter the capital market. In this respect, professional institutions can be introduced to find out the enterprises, and then they can understand which capital markets their enterprises should enter and whether they should enter the capital market. To this end, he made recommendations on the operation of LED industry enterprises, those with a net profit of less than 20 million or no profit, but the technology and products in the future space is very large, you can also choose to take the path of the new three boards. As for companies with an annual net profit of 30 to 50 million and a 10%-30% growth, they can choose to hit the main board market. As in the new economic normal, the upgrading of industrial institutions is an inevitable choice for enterprises. Internet + and Industry 4.0 are national policies that are in line with historical trends. Therefore, he said that another opportunity is Internet + Industry 4.0, which is the environment under the background of the government's innovation and mass innovation, and is aimed at strategic emerging industries. Although the LED industry has developed for many years, it is also an emerging industry, but because of its rapid development, it has gradually become a low-margin sunset industry. Breaking the Bureau: Industry Chain Integration, Cross-border M&A Chen Xiaohai pointed out that the industry's downturn is also a good opportunity for industrial mergers and acquisitions. The industry downturn has made many companies with small business structure and small scale in the industrial chain have strong demand for mergers and acquisitions, and enterprises can complete the integration of upstream and downstream industries at a lower cost. The upstream of the LED industry has basically completed integration in the past few years. This market has been developing for many years and its profits have been very thin. There will definitely be no more new capital to enter. In the existing industry, it is mainly to integrate existing enterprises, the larger ones are big, and the small ones may be merged. The market supply and demand is too large, and the overall demand growth rate exceeds the supply capacity. Therefore, when the upstream price is greatly reduced, the downstream innovation will become faster and faster, and more and more people will enter. For example, in the field of packaging, anyone can now enter the industry with hundreds of thousands of dollars. This situation is particularly high in Zhongshan, and then wage wars. But doing packaging does not mean that there is no technical threshold at all, depending on the positioning of its products. Mergers and acquisitions include industrial chain integration and cross-industry mergers and acquisitions. Last year, the integration of LED companies mainly had two directions, namely the integration of the entire industry chain and cross-border integration. Cross-border integration is generated by the background of this industry. When the GEM was launched in 2009, it was easy for these packaging companies to go public. Two to 30 million profits hit the GEM. For them, this was a catch. Great opportunity. The listed listed company, because its product structure and profitability of the industry has declined, can not maintain its position in the market of listed companies, but has the ability to finance. If you are not a leader in this industry, you can conduct cross-border mergers and acquisitions and do more business, such as culture and sports, internet finance, automobiles, and car networking. According to statistics, in 2015, domestic LED companies experienced 33 large-scale M&A investment cases, involving more than 31.8 billion yuan. The main M&A direction is upstream and downstream of the industrial chain, accounting for 58%; cross-industry M&A involves Internet, media, investment, financial leasing, and style. Among them, the specific cases of M&A in the industry chain in 2015 include Guoxing Optoelectronics, which is rooted in the LED industry, and covers the sales of epitaxial chips, packaging and lamps. Huacan Optoelectronics acquired the upstream sapphire enterprise and mastered the production of core raw materials. Lehman shares entered the football industry and cooperated to establish the Beijing Lehman Kaixing Sports Culture Fund to screen, reserve and incubate the targets of high-quality sports culture, sports technology and internet. Acquisition of Fahrenheit Media's advertising media business, focusing on the realization of the company's sports marketing resources. Hongli Optoelectronics' diversified industry development, participating in Cayman Net profit, entering the Internet finance field, as well as participating in Dina Technology, investing 30 million shares in Guangzhou Zhuhang, entered the field of car networking.