On April 28, Mulinsen (002745) released the first quarter report for 2017. During the reporting period, the company achieved operating income of 1.536 billion yuan, an increase of 87.36% over the same period of the previous year; the net profit attributable to shareholders of listed companies was 133 million yuan. This is an increase of 162.70% over the same period of the previous year.
In 2016, with the continuous advancement of LED technology and the gradual expansion of downstream application areas, especially the rapid development of the LED lighting market, the entire LED industry has accelerated its growth momentum. Technology upgrades, cost reductions, power consumption reductions, and industrial policies have accelerated the popularization of LEDs, driving the overall development of the LED industry chain.
Undoubtedly, the huge LED application market provides a broad space for the development of epitaxial wafers, chip production and downstream packaging devices in the middle and upper reaches. In 2016, Mulinsen achieved operating income of RMB 5,552,500,000, a year-on-year increase of 42.22%; net profit attributable to shareholders of listed companies was RMB 473.46 million, an increase of 85.27% over the same period last year.
Through continuous integration of the upstream and downstream of the LED industry chain, Mulinsen has continuously expanded its sales channels through the integration of industrial chains and cooperation with well-known foreign companies.
In addition, Mulinsen's acquisition of the general lighting business (Lund Vance, LEDVANCE) accounted for about 30% of Osram's annual revenue. LEDVANCE's channels in more than 40 countries (both developed countries) and close major customer relationships will drive the company's rapid entry into Europe, the Americas and other Asian countries, further diversifying and globalizing its business.
Improve performance and profitability
According to the plan, LEDVANCE will enhance its performance and profitability by continuing to expand the scale of LED lighting business, actively develop OTC lamps, and smart home electronics business.
With the maturity of technology, the production cost of LED lighting products is gradually decreasing, further occupying the traditional lighting market share. At the same time, there is a market demand for product upgrades in the traditional OTC lighting market.
OTC luminaires mainly refer to lighting products with specific application scenarios. Typical applications include chandeliers, wall lamps, recessed lights, spotlights, etc. On the basis of traditional light sources or LED light sources, luminaire suppliers form OTC luminaire products by adding components such as controllers and fixtures, and sell them through trade channels or retail channels.
In addition, the advancement of urbanization in developing countries or regions has also formed a corresponding incremental market, and the number of OTC LED lamps installed in new buildings will continue to increase. According to the predictions of Frost & Sullivan and Markets & Markets, the global market size of OTC lamps in 2016 is 26 billion euros. It is estimated that the market size of OTC lamps will reach 32 billion euros in 2020, with a compound annual growth rate of 4.24%.
In the future, with the decline in the price of smart home solutions, more and more real estate developers will begin to accept smart home solutions, and the corresponding smart home electronics market will grow rapidly. At the same time, consumers' demands for safety, convenience, and energy conservation and environmental protection have further promoted the rapid development of the smart home electronics market.
According to the predictions of Frost & Sullivan and Markets & Markets, the global smart home electronics market will be 6 billion euros in 2016 and 10 billion euros in 2020, with an average annual compound growth rate of 10.76%.
In the future, the company relies on the growth of LED business to offset the decline in traditional light source business revenue, while relying on OTC lamps and smart home electronics business to drive overall revenue growth.
Other 1, including LEDVANCE OTC lighting business, smart home electronics business and revenue generated by OSRAM's transitional business.
Restructuring and efficiency improvement, product gross margin target of more than 30%
The LEDVANCE management team has prepared a more specific plant closure plan for each production line of the plant being operated. It is expected that the plant closure plan will continue until 2025.
At present, LEDVANCE has 15 factories in operation around the world, including 7 in Europe, 2 in Asia Pacific and 6 in the Americas. According to current forecasts, there will be a total of 6 factories in Europe, 1 Asia Pacific, and 2 in the Americas.
According to the International Accounting Standards, the restructuring and conversion expenses will be included in the operating costs, sales expenses, management fees and other subjects according to the nature of the expenditure. Therefore, the gross profit margin of LEDVANCE is lower than that of domestic listed companies.
At the same time, as an international company, most of the LEDVANC factories are currently set up in developed countries in Europe and America, and the labor cost is higher than that of domestic manufacturers.
The company currently plans to accumulate part of the severance expenses as the estimated cost, which will effectively improve the future profitability of LEDVANCE.
According to the company's current operating conditions, the traditional light source market shrinks faster than expected, and due to the successive withdrawal of competitors, the gross profit margin of some products of the company is higher than expected.
The company is currently discussing with Mulinsen the post-restructuring integration plan, which may further improve the efficiency of the current plant and effectively improve profitability.
The management of LEDVANCE has adjusted the normalization of the pre-tax profit (loss) during the reporting period to eliminate the impact of the above special projects related to restructuring and conversion, as shown in the following table:
After adjustment, the gross profit margin of the company during the reporting period was about 30%. In the future, the company will face the adjustment of its income structure. It will be transformed from LED light products to LED products, lighting products and smart home electronic products. At present, LED products, lighting products and smart home electronic products are facing large market opportunities. The company's future income is expected to grow further.
According to LEDVANCE's future business plan, it will quickly occupy the LED and lighting market mainly through the existing brand advantages and global sales channels. Some of the lighting products and smart home electronic gross margins currently being tested are all above 30%-40%.
Play the role of upstream and downstream synergy and OSRAM brand authorization
According to the management of LEDVANCE, the LEDVANCE LED business level is ranked first in Germany and second in the world. The market share in the European region accounts for 10%, and the market share in the Americas accounts for 9%. However, the overall proportion is still low, and the company will continue to vigorously promote the LED business in the future.
There are currently eight major warehouses in the world, including three in the United States, one in Germany, one in France, one in Mexico, one in Spain, one in Russia, and nearly 60 external storage centers. Sales channels cover 120 countries or regions around the world. In the future, we will make full use of existing warehousing logistics and sales channels.
The main starting point of Mulinsen’s acquisition is synergy. At present, LEDVANCE is a revenue of 2 billion euros per year. The upstream purchase volume is huge. After Mulinsen is selected as a supplier, a large order quantity can be obtained, so that the overall performance is better.
As the largest LED packaging company in China, Mulinsen will expand its production capacity target to 100 billion to 150 billion in 2017, and its focus will be on small-pitch display applications, accounting for 60-70% of new capacity, and another 40%. Capacity is used in LED lighting needs.
At the same time, Mulinsen previously announced the adjustment of the strategic plan. In the future, the business of Mulinsen's parent company and existing subsidiaries will focus on the LED packaging and LED application lighting components, while the LED application lighting business will focus on LEDVANCE or through subcontract production.
According to the previous acquisition agreement, according to the management of LEDVANCE, the annual brand license fee is about 10 million euros in the future. OSRAM grants LEDVANCE a license for the general lighting & general lighting starter until September 30, 2021, and LEDVANCE has the right to extend the period from five years to September 30, 2026.
The company revealed that all products in North America will continue to use the Xiwannian brand indefinitely in the future; in other parts of the world, the light source products (light bulbs) will continue to use the OSRAM brand by 2026, and will be renewed with OSRAM after the expiration. OSRAM has completely withdrawn from the general lighting sector.
2C products such as smart home electronics and consumer lamps will continue to use OSRAM products until 2019. After expiration, they may choose to use their own brands or continue to use the OSRAM brand; professional lamps (2B) will use LEDVANCE and 2019 years ago. Osram co-branded and later transitioned to LEDVANCE's own brand.
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