Last week, the stock prices of companies in the LED industry bucked the trend and soared. 80% of LED companies reported positive semi-annual results, and institutions added 2.3 billion to 16 LED stocks in the second quarter, which may be its catalyst.
Since this year, investment, production expansion, and mergers and acquisitions in the LED industry have been extremely active.
Wanrun Technology acquired Rishang Optoelectronics, Feile Audio acquired Beijing Shen'an, Foshan Lighting acquired Lipao Optoelectronics, Yuanfang Optoelectronics acquired Advanced Optoelectronics, Zhongjing Electronics acquired Founder... Mergers and acquisitions involving the LED industry came one after another. In the first half of this year, a total of 11 mergers and acquisitions were completed, with a total amount of 3.5 billion yuan.
At the same time, Sanan Optoelectronics plans to invest tens of billions to become the world's number one, Huacan Optoelectronics invests 1.18 billion to expand its epitaxial wafer production capacity, Nationstar Optoelectronics expects to increase packaging production capacity by 40% in the middle of this year, Qinshang Optoelectronics plans to invest 500 million to expand its main business... There is also endless news about the expansion of LED companies.
This reminds people of the LED industry from 2010 to 2011, when companies expanded wildly, which ultimately led to overcapacity and industry downturn in the following years. Will the same mistakes be repeated this time?
"Judging from our recent acquisitions of Rishang Optoelectronics and others, the company is very rational in terms of mergers and acquisitions. First, in recent years, the company has been based on its old business, that is, packaging, and has used this advantage to gradually extend downstream; secondly, the expansion of the downstream field can further promote the digestion of the company's packaging production capacity. Therefore, current and subsequent mergers and acquisitions are mainly concentrated in the downstream, and the downstream will also be the company's profit growth point in the future." Qing Beijun, financial director of Wanrun Technology, used actual cases and detailed strategies to refute market doubts.
There are many rational acquirers. "First, the company's main business will not be given up, but we insist that company mergers and acquisitions will increase our highlights." said Fang Jibin, secretary-general of the board of directors of Maoshuo Power.
“Many of our companies are now looking for target mergers and acquisitions. If you buy it, can you digest it? This is very worthy of our consideration.” Liu Jiao, director of Unilumin Technology, clearly pointed out that Unilumin Technology will not easily conduct mergers and acquisitions, and if it does, it will think repeatedly before the merger. Why should the company acquire the other party? What value can it bring to the other party? "It is recommended that companies first strengthen themselves before mergers and acquisitions, and then consider growing bigger."
Liu Jiao gave an example. Unilumin Technology acquired a company, Radio, mainly because this company has been doing a lot of work in creative display and can strengthen the company's display business.
Takeoff in integration
Looking back at the development history of the LED industry, from the official launch of production in the 1990s to the present, for more than ten years, the industry's homogeneous competition, fierce competition, and lack of innovation capabilities have been hampering the industry's take-off.
"It is precisely because of homogeneous competition and cruel competition that if we want to survive, we will not be large in scale and can only rely on integration. Industry integration may further accelerate." Before the new round of integration, Yang Sihua, secretary of the board of directors of Alto Electronics, believes that the root causes of the industry have not been eliminated, and this round of integration will last 3-5 years. However, there is still a lot of space to be explored in terms of market demand and technology space in the LED industry. "The future development prospects of the industry are very good."
"LED has a very broad prospect. Both midstream packaging companies and downstream application companies can have a path forward." Liu Jiao also agreed.
However, if the proposition that the industry is improving is established, when is the best time to make a layout? The answer is now! Participants agreed that this is the best time for the development of the LED industry, and it is also an opportunity for LED companies to become bigger and stronger. First of all, the policy level is in the stage of strong support from the state. In addition, the demand in the upstream and downstream markets is gradually growing after the concept was popularized in the past few years, and it is time for the industry to take off.
The semi-annual reports of several LED companies show that after the LED lighting market resumed growth in 2013, affected by factors such as the incandescent lamp phase-out plans in major countries and regions such as the United States, the European Union, and China that came into effect in batches, and the cost reduction driving the decline in terminal prices, the LED lighting market capacity will be significantly expanded and will be fully launched and achieve sustained growth. The next 3-4 years will be the golden development period in which the penetration rate of the LED lighting market will increase the fastest. At the same time, the rapid growth of lighting applications will also lead to an improvement in the supply and demand relationship of packaging components for lighting applications. Authoritative organizations predict that the output value of my country's LED lighting industry will increase by 58% in 2014, reaching 180 billion yuan.
However, during the period of industry consolidation and great development, the gaps between companies have become increasingly obvious. At this time, how can investors choose outstanding targets among the more than 50 LED companies in the A-share market?
In this regard, Liu Jiao revealed that when she joined Unilumin Technology two years ago, she entered with the idea of an investor. Two years later, reflecting on her investment ideas, she still believes that the following points should be followed when choosing an LED company: first, look at the technology, whether the company has technical reserves, and if so, whether it is preparing for the current bloody battle in the Red Sea or for the next peak; second, look at who its industry benchmark is, such as If it is a small company in China, forget it; third, look at whether the company has long-term plans and ambitions to take root in this industry, and whether it has a ten-year or even century-long plan; fourth, look at whether the team is full of vitality; fifth, look at whether the corporate governance structure and its internal control system can support its development for three to five years.
In Yang Sihua's view, corporate value is to create value. It is important to see whether the company's market positioning is accurate, its gross profit margin and cash flow situation. "As long as you choose a company that creates value and focus on where the real value lies, you will eventually be recognized by the market."
ANNA