International LED makers set off mergers and acquisitions to accelerate industrial integration

The high-growth LED industry entered a downturn this year. In addition to the continuous decline in the prices of industrial chain products caused by fierce market competition and the increase in cost, the continued weakness in downstream demand has also directly impacted various manufacturers in the industry chain. Many companies begin to think about the future of the industry and the company.

For the current low point of the industry, more people in the industry have attributed it to the return to rationality after the explosive investment boom in the past two years.

But in the face of a market downturn, different companies have different options.

Recently, Samsung Electronics said that it is currently considering the acquisition of LED joint ventures formed by the remaining Samsung Motors, but has not made a final decision, did not disclose more details of the acquisition time, acquisition methods. Samsung LED was established in 2009. Samsung Electronics and Samsung Electric have invested 290 billion won (approximately 200 million U.S. dollars). The two companies hold shares, but the company’s corporate management rights are owned by Samsung Electric.

The Samsung chose to integrate the overall LED business into the sub-industry when the industry is in the doldrums, and integrate the downstream bulbs vertically from the upstream dies and packages, and use its own brand to demonstrate its determination to challenge OSRAM and Philips' first-line brands in the lighting field.

Where does the domestic traditional lighting go? The National Development and Reform Commission has officially released a roadmap for the elimination of incandescent lamps. It plans to basically stop its domestic use in five years. At the same time, it also announced the first batch of incandescent lighting production transformation pilot companies, including Guangdong Benbang Electric Co., Ltd., Shandong Huatai Light Source Co., Ltd. and South Piaya Light Bulb Manufacturing Co., Ltd. 3 companies.

However, for these traditional professional incandescent lamp manufacturers, they have to face the strategic transformation of the company. “We are also considering the transition to energy-saving lamps or other products, but they are all ideas that have not yet been finalized,” a person in charge of related companies told reporters.

For incandescent lamp production enterprises that need to transform, if they switch to production of energy-saving lamps, on the one hand, fierce market competition and falling sales prices, on the other hand, the increase in rare earth prices in the past two years has boosted the rise in costs. It can be said that The cost of transition will increase a lot. However, if LED lighting is directly transformed, a large amount of domestic investment in the past two years has caused the overcapacity in this industry.

For those traditional lighting companies that have already made achievements in the field of energy-saving lamps, the current LED lighting market situation seems to have caused some dilemmas.

Chairman of Foshan Lighting Chairman Zhong Xincai has some opinions on the current Chinese traditional lighting industry. In an interview with reporters, he said: “At present, the market is still “chaotic,” and there are more than 1,000 lighting companies in the country, many of which have not reached the national standard. Products are also circulated in the market, but I think China's lighting industry is in mergers and acquisitions, and through the series of restructuring, only a dozen lighting companies will be enough in the future."

In the past year, the continued impact of the international financial crisis, the frequent sovereignty debt crisis in European countries, and the international economic recovery are still full of uncertainties. At the same time, due to the continuous appreciation of the renminbi exchange rate, the increasing domestic inflationary pressure, and the multiple factors of rising raw materials and labor costs, the competition in the domestic traditional lighting industry has become increasingly fierce. The company's operating expenses have risen sharply, and the industry's average profit margin has gradually become thinner. At the same time, it is also facing the huge capital cost for transforming LED lighting.

However, from the 2011 third quarterly report released by the lighting industry related to listed companies, it can be seen that the business performance of the company is showing signs of improving. Among them, the sunshine lighting (SH.600261) from January to September 2011 operating income of 1.694 billion yuan, an increase of 9.85% over the same period last year. However, the net profit in the third quarter was 104 million, a significant increase of 116.9% from the same period of last year.

Foshan Lighting (SZ.000541) achieved operating income of 1.72 billion yuan from January to September 2011, an increase of 30.36% over the same period of last year, and achieved a net profit of 219 million yuan, an increase of 34.18%.

Snow Wright (SZ.002076) realized operating income of 320 million yuan from January to September 2011, an increase of 43.31% over the same period of the previous year, of which the third quarter net profit of 0.08 billion yuan, an increase of 90.86%.

From the above financial statements, it can be seen that the operating income and profits of the traditional lighting companies in the country have increased substantially, and the average profit rate is relatively high.

When talking about the transformation of LED lighting, Zhong Xincai said frankly: “At present, we still use traditional lighting as the main industry, but the development behind it is hard to talk about. Foshan Lighting was founded in 1958, we have developed by relying on the production of light bulbs today, the traditional lighting is Foshan At the heart of lighting, we emphasize the development of “diversification”, but we cannot overdo it, because the business is more than one person's heart is dispersed.LED is an “alternative” topic for Foshan Lighting, a product that replaces traditional light sources, we certainly do not Will forgo this part of the development."

For a long time to come, traditional lighting will still not exit the market. However, for the traditional enterprises, more integration of LED and traditional lighting, and in this convergence to seize the opportunity to develop themselves.

Acceleration of mergers and acquisitions accelerates industrial integration On November 23, 2011, the European Commission announced that it has reviewed and approved the acquisition of Industrias Derivadasdel Aluminio SA ("INDAL"), a Spanish outdoor lighting group, by the Philips company (Philips) in accordance with EU merger regulations. According to report, INALD Group was one of the top five lighting manufacturers in the world.

On December 15, Philips invested 25 million euros in building an LED lighting center in Chengdu, increasing its investment in China. In the past few years, Philips has been in the depth of the global LED lighting industry chain layout. In the subdivided lighting market, the company acquired ColorKinetics (the first company to produce complete LED integrated lighting systems) in 2007, acquired New Zealand professional entertainment lighting company Selecon in 2009, and Italian LED lighting design company IltiLuceSpA, when it acquired Jialishi in 2010. (Group) Co., Ltd. (designer, manufacturer and distributor of LED, traditional entertainment lighting and lighting control solutions).

In the field of lighting drive control, Philips successfully acquired the American company Telerotol Systems and Australia’s Dynalite in 2009. In 2010, it again acquired the street lighting control business of Amplex, Denmark, as part of its lighting electronics business, and for Philips’ existing Outdoor lighting business provides support.

Another multinational lighting giant OSRAM is also stepping up its efforts to integrate resources. OSRAM officially announced that it has acquired Traxon Technologies, Ltd. from a joint venture partner since November 9, 2011. (Traxon)'s remaining shares. OSRAM related responsible person said that through this acquisition, the company will further strengthen its strength in the rapidly growing professional LED lighting solutions market.

Just a few months ago, OSRAM had completed its acquisition of German Siteco and US technology company Encelium. Encelium CEO Anthony Marano said: "OSRAM has become the leader in LED lighting solutions, whether it is in the module, lighting, control, installation and maintenance services are leading, plus Encelium's software technology The capability will open up a positive new growth strategy and achieve further penetration of existing and new markets.

For the German company Siteco’s acquisition, it is widely believed that taking into account the company’s market advantages in commercial and public lighting, combined with Traxon’s solutions in store lighting, architectural lighting, entertainment and hotel lighting, OSRAM’s future The dominant position in the lighting market.

From an international point of view, international manufacturers have been accelerating the LED lighting layout through acquisitions, consolidations, expansions, and internal integration. They have communicated to the market their confidence in the future market of LED lighting, and they also indicated that the outbreak of the lighting market is not expected. far.

A person familiar with the operation of the multinational industrial chain disclosed to reporters: “Their current series of acquisition integration is still focused on the long-term. The selected projects are all enterprises that are technologically forward-looking and have a certain market share at the same time; The industries are in a phase of adjustment. These foreign-funded enterprises should not be affected greatly, especially for some multinational lighting giants. Not only will they not be cautiously conservative at the moment, but they may be a great opportunity to save money."

In China, in 2011, the domestic LED industry began to show signs of a mid-stream investment boom. In particular, the focus of the capital market has shifted from the upstream of last year to the middle and lower reaches. According to the latest industrial investment monitoring data from the GLII Institute, the investment in the domestic LED industry in the first half of 2011 was 14.4 billion yuan, accounting for 12.1% of the total, and the total investment in the third quarter was 8.8 billion yuan. Than 31.1%. From the perspective of the proportion of investment in the industry chain, the share of investment in the application side increased by 1.5 times.

As the most important industrial chain of LED, the market of the application end affects the consumption of upstream and midstream production capacity. Therefore, whether it is in production, technology, or sales channels, investment in the application end can alleviate the future to some extent. Worry about overcapacity in the middle reaches.

At the same time, some of the listed companies with their own businesses and LED companies, this year's prospects for the development of LED lighting business, one after another in the LED industry by way of mergers and acquisitions, including the main electrolytic capacitor Depp Technology (HK.03823). When the company’s chairman Li Yongsheng was interviewed by this newspaper, he said that the company had spent close to 1 billion yuan to acquire 4 companies in different positions in the LED industry chain. According to the profits provided by these companies, the total amount could reach 100 million yuan. It has far exceeded the company’s past profit performance. The profit performance is believed to be reflected next year.

Li Yongsheng said that the company’s original electrolytic capacitor business had a weak growth and the company had planned to enter the LED industry two years ago. At the end of January this year, it officially started the acquisition of LED lighting products. So far, it has acquired a total of 4 companies in different positions in the industry chain. He said that the contribution of these companies will not be reflected until next year.

For the LED industry bubble already exists, Li Yongsheng believes that the mainland LED market is immature, the current development of the LED industry is only relatively mature in Europe and Japan, but the penetration rate has not yet reached 10%, while the permeability of the mainland is less than 0.01% . As industry standards and subsidy policies have not yet been introduced, the development of LED has not yet extended to the retail level and can only be used in some large-scale infrastructure and national projects, and the products are mainly concentrated in light bulbs, light tubes, etc., while other products have not yet seen mass production. He estimated that the industry standards will be introduced as early as next year.

At the same time, he expressed optimism about the outlook for the industry and disclosed that the profit growth of the acquired companies ranged from 20% to 30%, and will continue to identify new acquisition targets in the future.

In addition to the accelerated expansion of industrial capital penetration in the market, PE and venture capital are also increasing investment in the domestic LED industry chain.

The new wave of M&A integration in the LED industry will undoubtedly provide new investment opportunities for various investment institutions. “It is only the beginning of a new round of consolidation. Opportunities are there, because in the previous period, funds were raised because of the domestic LED industry investment boom in 2010. Now there is a lot of room for investment projects.” Industry insiders disclosed to reporters the "hidden rules."