LED industry inventory pressure increased by raising the prospects of the Wright IPO fund-raising worrying

Complex nests, eggs for what? LED lighting industry is already suffering from the low barriers to entry, product homogeneity, price war, gross margin continued low adverse situation, and the European debt crisis caused by the spread of the global economic downturn is bound to China LED exports have an extremely negative impact.

However, export revenues accounted for total revenues of more than 80% Guangdong jinlaite electric Limited by Share Ltd (hereinafter referred to as: Wright) but I want to continue to expand its production capacity and product structure of LED lamp, a single company, destined to the weak anti risk ability, future profitability is worrying.

Investors can not help but ask, such companies can be listed? After the listing has money scene it?

LED lighting industry is facing inventory pressure

According to Kim Levin special prospectus (draft report) shows that the company intends to apply to the public offering of 23 million 350 thousand shares RMB ordinary shares, raising the issue after deducting the cost of 3 investment projects: 1, spare rechargeable LED lamps expansion project; 2, rechargeable AC and DC fan expansion project; 3, R & D center project.

3 projects a total investment of 272 million yuan (below), the "spare rechargeable LED expansion lighting project investment amounted to 175 million yuan, mainly the production of spare rechargeable LED lamp products, after the annual production capacity of 9 million 480 thousand units, the output value of more than RMB 368 million yuan.

Recently, LED lighting companies set off a wave of listing. From the 2011 Annual Report of listed companies to disclose the data show that the overall LED lighting industry overcapacity. Due to the lack of upstream core technologies, currently China LED enterprises get together in a package, the application areas of low-end products, the homogenization problem is serious, and the European and American markets decline in purchasing power, in addition to high-end products, the overall order tends to decline.

In addition the LED lighting industry listed companies Yankon, Lehman photoelectric, Sanan optoelectronics, KingSun, dry according to optical 2011 inventories were 783 million yuan, 100 million yuan, 918 million yuan, 164 million yuan and 127 million yuan, an increase of 70.55%, 73.31%, 195.88%, 61.58% and 219.16%.

Ping An Securities Research Report in May 28th showed that the main downstream LED industry display, backlight, automotive lighting and general lighting, etc.. Due to the LED industry chain from upstream to downstream into the threshold gradually reduced, resulting in a large number of LED downstream SMEs, the pattern of confusion. The homogenization of enterprises is serious, the lack of core technology, relying on price war for low-level competition.

As a result, the pressure on the industry to store goods more and more serious, Wright Wright launched at this time LED lighting projects, the future prospects for concern.

A single product against weak risk

According to the prospectus (draft report) show that Wright was set up in November 29, 2007, March 2008 all subscribed registered capital, engaged in lighting products and spare rechargeable rechargeable AC and DC fan of R & D, production and sales.

From the product structure, Wright only two products: spare rechargeable lighting products and rechargeable AC and DC fan, 2009-2011 annual operating income of spare rechargeable lighting products, the proportion of total revenue was 84.23%, 79.33%, 66.87%; rechargeable AC and DC fan, the proportion of total revenue was 14.65%, 20.13%, 32.61%.

In other words, the Wright product structure is too simple, if China or outside the rechargeable standby lighting products industry policy or industry standards change, will affect the performance of wright.

From the Wright products, spare rechargeable lighting products is divided into three types: rechargeable flashlight, rechargeable emergency lighting, indoor and outdoor fire emergency lights; rechargeable AC and DC fan is divided into two types: rechargeable AC and DC fan, AC / DC rechargeable dual-purpose fan.

In other words, the main product of the division of only 5 categories, product price from more than $20 to more than 140 yuan, the product added value is small, low barriers to entry, must be a large number of production and sales profit.

As everyone knows, China production flashlight, lighting lamps and fans of large medium and small enterprises of similar alternative products meet the eye everywhere, very common, there is no competitive advantage of main products of Wright, the producer of many products, if the company suffered quality problems, its market share will be replaced by other companies, thus affecting the gold Wright performance. Due to the large base of product sales, product quality, safety and other issues can not be ignored.

From the Wright raised investment projects, the company continues to expand the production of two major categories of products, the product of a single anti risk ability of the situation has not eased.