Qinshang Optoelectronics: Channel layout is "big test"

Qinshang Optoelectronics: Channels on the Optoelectronics: Channel Layout Pro

[Source: "High- tech LED - Research and Review" December issue reporter / Zhao Hui ]

As a listed company with high-power LED lighting as its main business, Qinshang Optoelectronics (002638.SZ) surrendered a relatively bright financial report in the third quarter after experiencing a slightly flat first half. According to financial report data, the company's operating income in the first three quarters reached 593 million yuan, an increase of 8.96% year-on-year. The net profit attributable to owners of the parent company was 92.22 million yuan, a year-on-year increase of 20.84%. In the third quarter, the inventory turnover rate increased by 52.5% compared with the first half of the year.

For the growth of performance and the acceleration of inventory turnover, Weishang Optoelectronics Secretary Wei Li was in the interview with “High-tech LED”, which benefited from the booming demand in the LED lighting market in the second half of the year, especially in the centralized procurement of government street lighting projects. effect. “In the second half of the year, the company made timely adjustments to its sales strategy.”

Accounts receivable climb

The reporter noted that since entering October, Qinshang Optoelectronics has successively announced a number of LED lighting project winning projects, including 160 million yuan of Guangbai Group LED lighting demonstration project, 46,000 yuan Qingyuan urban LED street lamp energy-saving renovation service procurement The project and the LED lighting contract energy management project of the Shanghai-Ningbo Expressway lighting test section project. Among them, the latter three projects all adopt the contract energy management (EMC) model.

Qinshang Optoelectronics, which was born as an LED street light, has applied the EMC model to outdoor lighting engineering since 2009. As of the IPO of the company, the EMC contract amount of LED lighting projects has exceeded 100 million yuan.

Wei Li said that the company's success in a number of LED lighting projects lies in the company's technological leadership and brand influence in the field of LED lighting. Secondly, the company has rich experience in EMC project operation and management. On this basis, Qinshang Optoelectronics also integrated the advantages of business models such as EMC and BT, and launched a new EMBT business model, which was successfully implemented in the promotion and application through the auxiliary EMC model in cooperation with insurance companies.

However, while seizing a large number of engineering projects, Qinshang Optoelectronics' accounts receivable continued to climb. According to financial report data, Qinshang Optoelectronics received accounts receivable of 334 million yuan at the end of the third quarter, while operating income in the first three quarters was only 593 million yuan, and accounts receivable accounted for 56% of revenue, compared with 34% at the end of 2011. The proportion has increased a lot. .

According to a CPA, the cash flow generated by operating activities and fundraising activities (including share issuance, bonds, bank loans, etc.) is the two main sources of funds for listed companies. If there are more accounts receivable, the net cash flow from operating activities will be reduced accordingly, and the listed company with excessive proportion of accounts receivable to the main business income may have hidden concerns about the receivables, which will be directly Affect the profit of the company.

In order to ensure the development of the enterprise and the normal development of the business, the listed company can only raise funds by issuing additional bonds or issuing bonds if the accounts receivable cannot be recovered in time. In 2004, Changhong Electric, a listed company, made a provision of $310 million in bad debts due to the uncollectible receivables of its main customer, APEX, which was up to US$460 million. It directly affected the company's profitability in the year and caused a major loss. .

800 million yuan invested in EMC

In addition to the above-mentioned hidden concerns in the book, Qinshang Optoelectronics bet on EMC on the project, which is a bit of a sinister suspicion.

Qinshang Optoelectronics reported that as of the end of the third quarter, the company's working capital reached 1.55 billion, and the balance of cash and cash equivalents was 1.243 billion yuan. From this point of view, Qinshang Optoelectronics does not seem to be bad.

The reporter reviewed the announcement of the listed company and found that Qinshang Optoelectronics had used the super-raised funds to supplement the company's working capital twice in February 2012 and August 2012. In February, the actual use of over-raised funds of 70 million yuan to supplement the working capital was in August. Returned on the 6th. On August 10, the board of directors of the company again decided to use the over-raised funds of 100 million yuan to make up the working capital to supplement the funds needed for business development and operation, while reducing financial expenses.

On June 20th, the board of directors of Qinshang Optoelectronics passed the “Proposal on Issuing Corporate Bond Schemes” and decided to issue corporate bonds of no more than RMB 800 million. On November 29th, it has been approved by the China Securities Regulatory Commission.

The driving force behind this series of actions is obviously the “Implementation Plan for Promoting the Use of LED Lighting Products in Guangdong Province” issued in May. According to the plan, Guangdong will popularize LED public lighting within three years. The program encourages all regions to adopt LED lighting products when they are replaced. The EMC operation mode and the products used in the promotion project must be the recommended catalogues for entering the Guangdong LED benchmark system.

The reporter checked the recommended catalogue and found that Qinshang Optoelectronics has a large number of products entering the catalogue in the indoor and outdoor lighting field. Through fundraising, Qinshang Optoelectronics responded to the huge potential local market, and the reserve of funds was used to expand EMC project operations and supplement the increased liquidity requirements. According to the company's disclosed plan, by 2014, its EMC business revenue will account for about 30% of the company's main business income.

According to the reporter's understanding, the initial investment of the EMC project is as low as several million yuan, and hundreds of millions, and the project duration is generally 5 to 10 years. The capital recovery is slow. If several large projects are carried out at the same time, it will occupy 100 million yuan. funds. “The LED lighting project adopts the EMC model, which has extremely high requirements on the technology, capital and product quality of the enterprise. The enterprises whose product quality or financial strength cannot meet the requirements will be dragged down by the EMC project,” said Dr. Zhang Xiaofei, CEO of Gaogong LED.

In addition to the requirements for the product quality and financial strength of the enterprise, the EMC project also has the risk that the later payment cannot be recovered. Even the government project has the same problem.

"If the enterprise is positioned as the leading LED lighting company in the future, the establishment of a specialty store is a road that cannot be crossed. The difference is only the choice of time nodes." Zhang Hongbiao, research director of the High-tech LED Industry Research Institute, believes that for most LED companies, it is established. The specialty stores are more based on propaganda and exploration, and the time for a real large-scale establishment of a specialty store is not mature. The “diligence model” is not suitable for most companies, because most companies are not financially strong enough to maintain multiple stores. Bureau of the "big test"

As a listed company with high-power LED lighting as its main business, Qinshang Optoelectronics (002638.SZ) surrendered a relatively bright financial report in the third quarter after experiencing a slightly flat first half. According to financial report data, the company's operating income in the first three quarters reached 593 million yuan, an increase of 8.96% year-on-year. The net profit attributable to owners of the parent company was 92.22 million yuan, a year-on-year increase of 20.84%. In the third quarter, the inventory turnover rate increased by 52.5% compared with the first half of the year.

For the growth of performance and the acceleration of inventory turnover, Weishang Optoelectronics Secretary Wei Li was in the interview with “High-tech LED”, which benefited from the booming demand in the LED lighting market in the second half of the year, especially in the centralized procurement of government street lighting projects. effect. “In the second half of the year, the company made timely adjustments to its sales strategy.”

Accounts receivable climbed the reporter noted that since October, Qinshang Optoelectronics has successively announced a number of LED lighting project winning projects, including 160 million yuan of Guangbai Group LED lighting demonstration project, 46,000 yuan Guangdong Qingyuan City LED The street lamp energy-saving renovation service procurement project and the LED lighting contract energy management project of the Shanghai-Ningbo Expressway lighting test section project. Among them, the latter three projects all adopt the contract energy management (EMC) model.

Qinshang Optoelectronics, which was born as an LED street light, has applied the EMC model to outdoor lighting engineering since 2009. As of the IPO of the company, the EMC contract amount of LED lighting projects has exceeded 100 million yuan.

Wei Li said that the company's success in a number of LED lighting projects lies in the company's technological leadership and brand influence in the field of LED lighting. Secondly, the company has rich experience in EMC project operation and management. On this basis, Qinshang Optoelectronics also integrated the advantages of business models such as EMC and BT, and launched a new EMBT business model, which was successfully implemented in the promotion and application through the auxiliary EMC model in cooperation with insurance companies.

However, while seizing a large number of engineering projects, Qinshang Optoelectronics' accounts receivable continued to climb. According to financial report data, Qinshang Optoelectronics received accounts receivable of 334 million yuan at the end of the third quarter, while operating income in the first three quarters was only 593 million yuan, and accounts receivable accounted for 56% of revenue, compared with 34% at the end of 2011. The proportion has increased a lot. .

According to a CPA, the cash flow generated by operating activities and fundraising activities (including share issuance, bonds, bank loans, etc.) is the two main sources of funds for listed companies. If there are more accounts receivable, the net cash flow from operating activities will be reduced accordingly, and the listed company with excessive proportion of accounts receivable to the main business income may have hidden concerns about the receivables, which will be directly Affect the profit of the company.

In order to ensure the development of the enterprise and the normal development of the business, the listed company can only raise funds by issuing additional bonds or issuing bonds if the accounts receivable cannot be recovered in time. In 2004, Changhong Electric, a listed company, made a provision of $310 million in bad debts due to the uncollectible receivables of its main customer, APEX, which was up to US$460 million. It directly affected the company's profitability in the year and caused a major loss. .

800 million yuan invested in EMC in addition to the above-mentioned hidden concerns in the book, Qin Shang Optoelectronics bet on EMC in the project, it is a bit sceptical.

Qinshang Optoelectronics reported that as of the end of the third quarter, the company's working capital reached 1.55 billion, and the balance of cash and cash equivalents was 1.243 billion yuan. From this point of view, Qinshang Optoelectronics does not seem to be bad.

The reporter reviewed the announcement of the listed company and found that Qinshang Optoelectronics had used the super-raised funds to supplement the company's working capital twice in February 2012 and August 2012. In February, the actual use of over-raised funds of 70 million yuan to supplement the working capital was in August. Returned on the 6th. On August 10, the board of directors of the company again decided to use the over-raised funds of 100 million yuan to make up the working capital to supplement the funds needed for business development and operation, while reducing financial expenses.

On June 20th, the board of directors of Qinshang Optoelectronics passed the “Proposal on Issuing Corporate Bond Schemes” and decided to issue corporate bonds of no more than RMB 800 million. On November 29th, it has been approved by the China Securities Regulatory Commission.

The driving force behind this series of actions is obviously the “Implementation Plan for Promoting the Use of LED Lighting Products in Guangdong Province” issued in May. According to the plan, Guangdong will popularize LED public lighting within three years. The program encourages all regions to adopt LED lighting products when they are replaced. The EMC operation mode and the products used in the promotion project must be the recommended catalogues for entering the Guangdong LED benchmark system.

The reporter checked the recommended catalogue and found that Qinshang Optoelectronics has a large number of products entering the catalogue in the indoor and outdoor lighting field. Through fundraising, Qinshang Optoelectronics responded to the huge potential local market, and the reserve of funds was used to expand EMC project operations and supplement the increased liquidity requirements. According to the company's disclosed plan, by 2014, its EMC business revenue will account for about 30% of the company's main business income.

According to the reporter's understanding, the initial investment of the EMC project is as low as several million yuan, and hundreds of millions, and the project duration is generally 5 to 10 years. The capital recovery is slow. If several large projects are carried out at the same time, it will occupy 100 million yuan. funds. “The LED lighting project adopts the EMC model, which has extremely high requirements on the technology, capital and product quality of the enterprise. The enterprises whose product quality or financial strength cannot meet the requirements will be dragged down by the EMC project,” said Dr. Zhang Xiaofei, CEO of Gaogong LED.

In addition to the requirements for the product quality and financial strength of the enterprise, the EMC project also has the risk that the later payment cannot be recovered. Even the government project has the same problem.

The distribution channel is slow. “At present, Qinshang Optoelectronics mainly adopts the EMC model in the Guangdong region, and more directly sells products in other regions.” Wei Li revealed that Qinshang’s indoor lighting products and some street lighting products are sold through distribution channels.

According to the survey data of the High-tech LED Industry Research Institute (GLII), the annual output value of China's LED lighting application industry in 2011 was nearly 77 billion yuan. The overall scale of the indoor lighting market in the first half of this year increased by nearly 36%. It is expected that the indoor lighting market will exceed 25 billion yuan in 2012, and the overall market demand for LED indoor and outdoor lighting is gradually increasing.

The domestic business of LED lighting companies mainly sells products through engineering channels and distribution channels. At present, the engineering channel share is relatively large, but the engineering project market is limited.

With the decline in the price of LED lighting products and the increasing number of LED lighting companies, the competition in the LED lighting market will become increasingly fierce. The huge commercial and home market will become a must for enterprises to increase sales and brand influence, while the terminal market Competition will greatly test the construction of distribution channels for LED lighting companies.

Traditional lighting companies such as Philips, Sunshine, NVC, Op, etc., its huge terminal sales and brand influence are derived from having a distribution network throughout the country. For example, Sunshine Lighting has formed a sales and service network with more than 20 logistics operation centers in the country as the core, provincial-level dealers as the backbone network, and covering the whole country. NVC Lighting has 36 operating centers and more than 3,000 specialty stores nationwide.

A vigorous "NVC farce" made everyone see the lethality of the channel.

A few days ago, Qinshang Optoelectronics announced a notice about the extension of the fundraising project, which caused people to worry about the progress of their distribution channels. According to the announcement, the “Company Operation Management Center Project” with a planned investment of RMB 42.31 million, as of July 31, 2012, the actual use of the project raised funds of RMB 46,500, and the investment progress was only 0.1%. It is proposed to extend the project construction completion date by one year to November 30, 2013.

In the prospectus, Qinshang Optoelectronics stated that the company's operation management center fund-raising project plans to establish an operation management center headquarters in the company headquarters and set up marketing management centers in eight cities including Shenyang and Tianjin. The center integrates sales management, customer service, engineering design, product display, logistics and other functions. The company will rely on the regional operation management center to develop agents and achieve better and more efficient services to dealers, cooperative enterprises and users. Enhance the company's brand image in the national market.

The person in charge of Qinshang Optoelectronics once said that the company's existing singular marketing network channel system is not enough to support the company's response to the rapid development of the future, complex market forms and the development speed of regional differentiation. The Operations Management Center project is to better expand the marketing channel. The extension of the operation management center project is based on the fact that Qinshang Optoelectronics believes that the current LED lighting application market, especially the indoor commercial and household market, is growing slowly, lower than expected. However, from another aspect, the attention of Qinshang Optoelectronics is more focused on engineering projects, especially the LED lighting promotion project in Guangdong Province. The municipal engineering projects occupy a large amount of resources.

According to the financial report data, Qinshang Optoelectronics completed sales revenue of 34.83 million yuan in the first half of the year, accounting for only 9.68% of total revenue.

The recommended list of LED benchmarking systems in Guangdong Province shows that the number of outdoor lighting products is 50% of the total, and the tunnel lights account for 57%. For the indoor lighting products, all types and specifications of Qinshang Optoelectronics accounted for 29% of all the finalists. Among them, there are no products in the LED downlights, and only two models of LED bulbs enter the catalog.

When talking about the distribution channels, Sun Yong, general manager of Sunshine Lighting, said that compared with the support of the huge national distribution network in the home and commercial markets of the traditional lighting business, LED lighting is still more concentrated in engineering channels. However, with the rapid development of the LED indoor lighting market, enterprises with complete channel layout will undoubtedly seize the opportunities.

According to industry insiders, the main reason for the implementation of the EMC model is that LED lighting products are expensive, and initial investment requires a lot of money. As the price of LED lighting products declines, the EMC model will surely suffer. Especially in the field of commercial lighting, if the price drops to a certain extent, the owner is more willing to buy directly, thus obtaining huge energy-saving benefits.

Zhongshan Securities analysts believe that the extension of the operation center project has little impact on Qinshang Optoelectronics' annual revenue. However, with the increasingly fierce competition in the LED lighting market, indoor commercial and home lighting will become the main market, and the distribution channel will become the company. The key to opening up the indoor lighting market.

The “100-City Store” profit is not as expected. The “100-City Store” project, which was highly anticipated by Qinshang Optoelectronics, started in August 2011. More than 50 companies have been built in the same year, and more than 100 stores have been put into operation so far. The “Light Experience Center” has been established in Shanghai, Nanjing, Xiamen and Xi'an. The “Hundred City Thousand Stores” program mainly adopts the way of dealers to join. The main task of diligence is to promote the brand and supply the products. The rental and decoration of the store are all completed by the partners. Qinshang Optoelectronics attracts dealers by providing service and decoration subsidies (500 yuan / square meter), as well as sample support, free shipping, discount rebates and other means.

Take Qinshang Optoelectronics as a special store in a provincial capital city. The 120-square-meter store is mainly composed of indoor lighting products, ceiling lamps, bulb lamps, lamps, and lamp cups. The annual rent of the store is about 200,000 yuan. Coupled with staff salaries, store promotion, etc., the fixed cost per year is about 400,000.

According to the store staff, the current store sales are not very good, mainly relying on the boss to pick up the project outside to maintain the daily revenue of the store.

According to industry insiders, the current domestic LED indoor lighting is still in the market cultivation period, no matter whether it is fluorescent lamps, downlights or bulbs, there is not much sales. The main customers of the store are some engineering and decoration companies. Li Xuliang, chairman of Qinshang Optoelectronics, once said that there are more than one hundred specialty stores in operation, but one or two are truly profitable.

"If the enterprise is positioned as the leading LED lighting company in the future, the establishment of a specialty store is a road that cannot be crossed. The difference is only the choice of time nodes." Zhang Hongbiao, research director of the High-tech LED Industry Research Institute, believes that for most LED companies, it is established. The specialty stores are more based on propaganda and exploration, and the time for a real large-scale establishment of a specialty store is not mature. The “diligence model” is not suitable for most companies, because most companies are not financially strong enough to maintain multiple stores.