LED lighting accelerates the pace of integration

A number of LED companies queuing for listing or intensifying industry consolidation
After BDO Runda merged with NVC and Sanan Optoelectronics to acquire Taiwan Haoyuan, recently Tongfang’s shares have acquired Hong Kong-listed Zhen Mingli... In the industry’s view, the intensity of LED industry consolidation this year will be greater than last year. The reporter learned from the organizing committee of the Guangzhou International Lighting Fair, the world's largest lighting exhibition and LED exhibition to be held in June, that the scale of this year's exhibition will reach a record high, reaching 225,000 square meters, covering 22 exhibition halls, ending in 2014. By the end of April of the year, 2,237 exhibitors had participated in the exhibition, and the number of companies in the brand exhibition area had increased by 10%. Domestic enterprises have become the main force of the brand hall.

LED lighting continues to lead the lighting trend, and the pace of industry consolidation is accelerating. Guangzhou International Lighting Exhibition covers LED industry chain products and technologies, presenting the latest status and future trends of lighting and LED industry. The organizer Mr. Hu Zhongshun, general manager of Guangzhou Guangya Messe Frankfurt Co., Ltd., said that more than 100 high-end seminars in Guangzhou International Lighting Exhibition in 2014 have been comprehensively innovated, focusing on four themes: lighting + design, lighting + technology, lighting + market , lighting + communication, another industry in the lighting concept and business practices, get better interaction and development. The Guangzhou International Lighting Fair is a vane of the development of the lighting industry. In the theme design and event arrangement of the exhibition, it will fully consider the market development trend and market demand to actively guide the development of the industry.

Dr. Pan Wenbo, the founder of Guangzhou International Lighting Exhibition and the president of Guangya Lighting Research Institute, believes that the increase in listed companies and the demand for energy-saving transformation in the market are all catalysts for the accelerated integration of the industry.

Industry integration comes first year

The reporter's investigation found that the cost-effectiveness of LED lighting has been accepted by the market, resulting in actual demand, not relying on the government to promote, and the elimination of incandescent lamps has played a catalytic role.

According to the statistics of Guangya Lighting Research Institute, last year the domestic LED application market scale exceeded 200 billion yuan, of which indoor lighting accounted for nearly 30%; by 2015, the proportion of indoor lighting will further increase to 40%. According to the “China Roadmap for Phase-out of Incandescent Lamps”, from October 1, 2014, the import and sale of incandescent lamps for general lighting of 60 watts or more will be banned. Indoor lighting has become one of the biggest thrusts for the growth of China's LED application market.

At the same time, if the market becomes hotter, companies that have not had time to increase their supply will go for acquisitions; some of the projects that they negotiated last year will also land this year, so this year's industry consolidation will accelerate.

The reporters found that before the Spring Festival, Tongfang shares announced that it plans to acquire 51% of the equity of Zhenmingli for 700 million yuan. This is similar to that of BDO Runda, which is a merger of NVC Lighting. Dreida Runda sees the channel of NVC in China. However, Tongfang’s stock is convinced that the company is overseas. Almost at the same time, Sanan Optoelectronics successfully completed a new round of additional investment around the Spring Festival this year, financing 3.3 billion yuan, intends to expand the current LED chip production capacity about doubled.

“2013 is just a prelude to industry consolidation. 2014 is the real integration year.” According to Pan Wenbo, although the overall market size will continue to expand in the future, competition will be fierce and many companies will be eliminated. From the perspective of the decentralized nature of the industry, many companies in the niche area will be the target of priority mergers and acquisitions, and these companies may find it difficult to become bigger and stronger on their own. Therefore, the intensity of integration is unprecedented, and it will have a decisive role in promoting the industry from scattered to concentrated processes.

Two forces to promote integration: policy and capital

For accelerating industry consolidation, Dr. Pan Wenbo believes that it is related to both policy and capital.

“In the government procurement LED lighting project in 2013, there are a number of large-scale projects for energy-saving LED lighting selected the (EMC) contract energy management model. But this model requires companies to have a lot of money, companies without funds or choose to follow the energy Management companies collaborate, either by listing financing."

It is worth noting that the recent opening of the IPO has also facilitated the listing of LED companies. In the recent announcement of the IPO declaration of corporate information by the Securities and Futures Commission, Absen, M. Linsen and other names are on the list. Pan Wenbo said that after the opening of the IPO, there will be a large number of LED companies listed, the industry's capital strength will become stronger and stronger, so that the industry integration will continue for a long time. "From the perspective of the industry's decentralized characteristics, many companies in niche areas will become the targets of priority mergers and acquisitions, and these enterprises may find it difficult to become bigger and stronger on their own. Therefore, the intensity of integration is unprecedented, and the industry is scattered and concentrated. The process will have a decisive boost."