Recently, mergers and acquisitions in the LED industry have occurred frequently: Guangdong Province's electronic information industry group of 2.62 billion took over Osram's 13.47% stake in Foshan Lighting; Huacan Optoelectronics received 1.08 billion yuan to acquire Blue Crystal Technology; Feile Audio plans to acquire German Osram lighting project; Photonics plans to spend $100 million to take over 6.15% of the shares held by Philips in Lumileds...
Although the dawn of the popularity of LED lighting was first seen, the price dropped sharply and the profit level dropped rapidly, which made the integration and reorganization of the LED industry culminate. Incomplete statistics, nearly 30 mergers and acquisitions so far this year, the overall M&A funds exceeded 28 billion yuan; and the cases of mergers and acquisitions have occurred more frequently, one after another.
What is different from the past is that the profits of the industry are “slowing outâ€, which has caused some multinational companies to be prosperous. The multinational giants such as Osram and Philips are “shrinking the front line†in the field of LED lighting, which is a great opportunity for the rise of Chinese enterprises. Industry experts predict that there will be more and more cross-border mergers and acquisitions of Chinese LED companies in the future.
LED enters the era of low profit
The LED industry has entered the era of low profit, providing sufficient power for industry integration. China, the United States and other countries are accelerating the process of eliminating incandescent lamps. LED lighting prices continue to drop sharply. Like 40W LEDs have dropped to 4.9 dollars, and the LED lighting era has arrived. LED industry integration is gradually increasing. It is estimated that the domestic LED output value will reach 430 billion yuan in 2015, with a growth rate of 27%, but at the same time the industry is highly competitive, especially in LED packaging and application fields, and the industry concentration is low, which provides a necessary integration. conditions of.
Foshan Lighting was once known as the "Chinese Light King." However, in the first half of 2015, Foshan Lighting's operating income was 1.52 billion yuan, a slight decrease of 1.21% year-on-year, and net profit was about 100 million yuan, down 46.94% year-on-year. The decline in performance should be one of the reasons why OSRAM transferred the equity of Foshan Lighting.
On September 9, Foshan Lighting announced that Osram Holdings Co., Ltd. transferred about 170 million A shares of Foshan Lighting to Guangdong Electronic Information Industry Group for about 2.62 billion yuan. After the transaction is completed, Guangdong Electronic Information Industry Group will hold 13.47% equity of Foshan Lighting and become the largest shareholder of Foshan Lighting.
As one of the leading enterprises in the domestic lighting industry, Foshan Lighting, together with companies such as Mulinsen (002745) and Opp, will not hesitate to significantly reduce the price of LED products, accelerate the popularity of LED lamps, and continue to expand its market share in the LED lighting market. The price of its LED tube has dropped below 10 yuan, so income and profits are also affected.
However, the Guangdong Electronic Information Industry Group, which is affiliated to the Guangsheng Company of the Guangdong Provincial State-owned Assets Supervision and Administration Commission, is the actual controller of another domestic LED listed company Guoxing Optoelectronics (002449). After Guangdong Electronic Information Industry Group became the major shareholder of Foshan Lighting, Guangyu will be expected to open up the LED industry chain from packaging, lighting to channels.
Another proof of the "micro-profit era" is that the data of the high-tech LED industry research institute shows that domestic LED sales increased by 100% year-on-year from January to June this year, but sales only increased by 10%, because the price of the main LED products It fell by 50%; in August this year, China's LED export value fell by 10% compared with July, and the export volume did not drop, because the price fell, resulting in a decline in LED exports.
Zhang Hongbiao, director of the senior financial services project, believes that “the current merger is different from the previous one. In the past, both the acquisition and the acquired party lived relatively moist; the current acquisition is “integrationâ€, and some of the acquirers are unable to survive, and some are original. If you want to go public, you can't get on the market, even if you don't get money on the new board."
Four acquisition directions
According to the data of the High-tech LED Industry Research Institute, from the beginning of this year, there have been nearly 30 mergers and acquisitions in the LED industry, and the total amount of mergers and acquisitions has exceeded 28 billion yuan. It is mainly divided into four categories: horizontal mergers and acquisitions to improve core competitiveness, complementary mergers and acquisitions to optimize the industrial chain, cross-border mergers and acquisitions to find new profit growth points, and cross-border mergers and acquisitions to better go abroad. The ratio is 6:13:4:5.
Horizontal mergers and acquisitions, such as this year Ruifeng Optoelectronics (300241) acquired an 85% stake in Lingtao Optoelectronics for 200 million yuan, expanding the small and medium LED packaging business, and consolidating its position in the field of LED packaging; complementary mergers, such as Huacan Optoelectronics acquired upstream sapphire Enterprise Blue Crystal Technology; cross-border mergers and acquisitions, such as Lehman Optoelectronics actual controller Li Manzhao intends to participate in the establishment of a holding company in Hong Kong not more than 25 million euros with Wanda Group, IDG, Chinese Culture Fund, Oriental Pearl (600637) Swiss Infront Group's equity investment, Lehman Optoelectronics revenue fell 16.38% in the first half of the year, is currently expanding from the stadium LED screen to the sports industry, seeking new growth space.
In addition, the intention of cross-border mergers and acquisitions has increased significantly. As the profit level of the LED lighting industry continues to decline, it has changed from “Xiangxiang†to “chicken ribs†in the eyes of multinational companies. For example, Osram not only sells its stake in Foshan Lighting, but also fades out some of its LED fields.
Feile Audio announced on September 10 that it intends to acquire its lighting business from Osram, Germany. On July 22, the company officially submitted to OSRAM a non-binding letter to acquire its lighting business. Feile Audio has formed an experienced international team to support this potential acquisition opportunity, but the final agreement to acquire OSRAM lighting business has yet to be further discussed in the future.
There is also a giant that shrinks the front line is Philips. Qinshang Optoelectronics announced on September 18 that it plans to spend US$100 million (about 655 million yuan) to acquire 6.15% of its Lumileds (Chinese name “Gui Rui Tradingâ€) company from Philips.
Both Osram and Philips are one of the “Four King Kongs†in the global lighting industry. Why is it necessary to withdraw some of the LED business in the context of the accelerated popularization of LED lighting? Zhang Hongbiao believes that “because it can’t make money. The price competition is too strong, transnational The company has no power to fight back. The entire lighting industry in China is more influential than before.†Therefore, Osram is ready to sell LED lighting sources and distribution channels, leaving only engineering lighting and LED packaging.
“The performance of the four major lighting companies in the world since 2014 and 2015 is declining. Their traditional lighting business is rapidly declining, but the revenue of LED lighting has not fully recovered.†Zhang Hongbiao predicts that there will be a possibility of selling the lighting business of GE in the future.
Opportunities for the rise of Chinese companies
In 2014, the world's top ten LED companies were basically covered by European, American, Japanese, Korean and Chinese Taiwanese companies. The largest LED company in China, Sanan Optoelectronics (600703), was only ranked 11th. Technology patents, brand accumulations, and customer channels are all in front of LED companies in China, and they need to cross the “railingâ€.
Nowadays, multinational companies are eager for the thinning of LEDs, which is a good opportunity for Chinese companies to “upperâ€. This year, after being split by Philips' head office, Philips Lumileds has changed its name to Lumileds, which is controlled by the Jinshajiang-Philips Venture Capital Fund by 80.1%, and Philips only holds 19.9% ​​of the shares. Qinshang Optoelectronics wanted to invest US$100 million to acquire a 6.15% stake in Lumileds from Philips and open up the upstream chip and packaging industry chain.
In the research report, Qinshang Optoelectronics believes that compared with developed countries such as Europe, America and Japan, the potential of emerging market markets is even greater for Chinese LED companies. In addition to overseas emerging markets, LED emerging applications are also growing rapidly, including smart lighting, automotive LEDs, and small-pitch displays. Lumileds has technology and customer resources, and it is a good time to invest in it.
A bigger advantage for China's LED industry is that the upstream LED chip industry is maturing. Sanan Optoelectronics, Dehao Runda (002005), and Huacan Optoelectronics have become among the top nine LED chip companies in the world, and their overall share is getting higher and higher. The LED chip is more land-based and the price is falling. It is the middle and lower reaches of China's LED industry. Equipped with more "bullets".
On September 11, Huacan Optoelectronics announced that it plans to spend 1.08 billion yuan to acquire the entire equity of Yunnan "Blue Crystal Technology" company, and to raise funds for 600 million yuan to extend the upstream sapphire business and improve the supporting industrial chain.
Sapphire substrate is the raw material of LED epitaxial wafer. Blue crystal technology is a high-tech enterprise integrating R&D, production and sales of sapphire substrate. According to Zhang Hongbiao, Lanjing Technology has planned to list IPOs for a long time, and the process has gone halfway. However, it has no problem to encounter a bear market and has to sell it to the downstream listed company Huacan Optoelectronics to realize indirect listing. Huacan Optoelectronics will enhance its position in the field of LED epitaxial wafers and chips through this acquisition.
This year, many LEDs listed in the first half of the year, net profit fell, Zhang Hongbiao believes that now is not a question of how much money to earn, is to survive. "I expected the domestic LED company's elimination rate to be 10% this year. It is estimated that the annual elimination rate will reach 20%. If the elimination rate is 20% next year, it will mean that more than 10,000 LED companies in China will have 40%-50% exit the market, that is, about a few thousand LED companies will be eliminated."
Zhang Hongbiao also expects that LED manufacturers will continue to expand production in the future, further squeezing the living space of small enterprises. Now that LED technology is mature, many companies will produce LED products in large quantities, and small enterprises will be more difficult. It is expected that the price war of LED will continue in the fourth quarter of this year, and small enterprises can only find a way out in market segments, such as stage lights and table lamps.
In this wave of mergers and acquisitions and survival of the fittest, China's leading LED companies will be strong and strong, and have the opportunity to become the global industry leader. In the first half of this year, listed companies such as Sanan Optoelectronics, Guoxing Optoelectronics, and Sunlight Lighting (600261) continued to maintain double growth in revenue and net profit. Zhang Hongbiao said that in the future, Chinese LED companies will have more and more cross-border mergers and acquisitions, and the target of cross-border mergers and acquisitions will extend from manufacturing companies to service companies.
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