Already in 2012, for Dehao Runda (002005.SZ) - half-way in the upstream of the LED investment, it is urgent to seek downstream estuary to digest the chip capacity to be released; for NVC Lighting (02222.HK) - the tradition Commercial lighting hegemony has been slow to transition on LEDs, and it is urgent to make up for its short-board in the upstream of the LED industry chain, even if it is a guarantee for its own dealers.
On the evening of December 19, 2012, Dehao Runda suddenly announced that the company acquired 633 million shares of NVC Lighting through its wholly-owned subsidiary Dehao Runda International (Hong Kong) Co., Ltd. ("Hong Kong Dehao Runda"). It accounted for 20.05% of the total number of issued ordinary shares and became the largest shareholder of NVC Lighting. At the same time, Wu Changjiang also became the second largest shareholder of Dehao Runda.
Subsequently, Wu Changjiang and Wang Donglei issued a nearly unanimous rhetoric: "The cooperation and integration between large enterprises is the only way for the LED industry to be scattered to the norm. Dehao Runda and NVC Lighting complement each other's advantages. Cooperation is the beginning of industry integration."
Everything looks so good. However, the performance of the two companies in the secondary market has been unexpected. Among them, Dehao Runda temporarily suspended trading on the 20th, the stock price fell 3.99% on the 27th. On the 20th, NVC's share price fell 0.43%, and on the 27th, it fell 9.322%, closing at 2.14 Hong Kong dollars. According to this calculation, the part of the shares transferred by the Dehao Runda Agreement has already had a floating loss of approximately 153 million Hong Kong dollars (about 124 million yuan).
In fact, just a few months ago, both companies had just experienced a â€œrobberyâ€.
NVC lighting experienced Wu Changjiang's "flash" turmoil for nearly five months, which can be described as heavy casualties. Among them, the company's net profit fell 80% in the first half of the year, and this year's sales target is almost impossible to exceed last year. In the near future, Dehao Runda was exposed by the media to a series of violations of the letter, including the poor performance of major contracts in daily operations, the failure of MOCVD equipment parameters to meet government subsidy standards, and the doubts about the qualification of â€œhigh-tech enterprisesâ€.
The ancients have clouds: if they are not dead, they will have a blessing. Then, for Dehao Runda and NVC Lighting, which have been firmly tied together, can the two parties reach an agreement as soon as possible on the interests of shareholders, resource integration, business strategy and corporate culture, and the result is that blessings or disasters may soon Revealed.
Dehao Runda itself is difficult to protect
â€œFor NVC Lighting, Dehao Runda may not be able to help weather the internal crisis, but Dehao Runda only digests its own LEDs through traditional lighting companies like NVC Lighting, which have thousands of channels in China. Chip capacity." Dr. Zhang Xiaofei, CEO of Gaogong LED, said.
What made Wu Changjiang, the founder of NVC Lighting, make this sacrifice?
In NVC's 2012 semi-annual report, LED lighting revenue was not pointed out. However, the reporter can see from its gross profit statement that the gross profit of LED products in the first half of the year was 2.34 million US dollars, accounting for only 4.06% of the total gross profit. Compared with its own competitors, NVC Lighting's performance on LEDs this year is not satisfactory.
For Wu Changjiang, if you want to continue to grow your own lighting industry, you must make a breakthrough in the LED business as soon as possible. Taking "shortcuts" may be an unavoidable choice for NVC lighting, even if it is to make some sacrifices.
In fact, in the past two years, Dehao Rundaâ€™s strengths have been at the level of capital operation and government relations, and the companyâ€™s performance in the LED business is not outstanding.
Previously, Dehao Runda plans to have 100 MOCVDs this year. At present, there are 80 MOCVDs that have been reached. The LED chips were not officially mass-produced until the second quarter of this year. Only 38 MOCVDs have actual capacity.
According to the current number of domestic chip manufacturers, Dehao Runda is temporarily ranked second. However, the overcapacity of LED chips in the domestic market is also an indisputable fact. Defei Rundaâ€™s secretary-general Deng Fei said that some of the companyâ€™s chips are currently used by themselves, and some are exported to emerging markets such as India and Russia.
In fact, it is not difficult to see from the financial report of Dehao Runda that in recent years, the so-called "high performance of LED" is just a play. In addition to the huge government subsidies, the sales of LEDs of Dehao Runda in the first half of this year was only 388 million yuan. Among them, the subsidiary Ruituo showed that it relied on the display business to contribute 250 million yuan in revenue in the first half of the year. According to this calculation, in addition to part of the chip and device revenue, in the first half of the year, Dehao Runda's revenue in the LED lighting application part is only about 50-60 million yuan.
In fact, NVC Lighting hopes that Dehaorun will reach its â€œprocessing factoryâ€ for LED lighting. However, Dehao Runda's unsatisfactory performance in the field of LED lighting will inevitably lead to doubts: whether Dehao Runda's weakness can make up for the lack of NVC lighting in the LED field. "This combination of weak and weak reinforcement may make these two companies more difficult to extricate themselves." An industry source said that unless Wang Donglei and Dehao Runda can be "amazing" in the next industry consolidation tide. .
Because Wu Changjiang and NVC Lighting ultimately want nothing more than a cost-effective LED lighting product.
NVC Lighting Cost Theory
For NVC Lighting, in cooperation with Dehao Runda, on the one hand, it expresses confidence to its own channels through industrial chain integration, on the other hand, it hopes to reduce the production cost of LED lighting products through its self-produced chips from Dehao Runda. .
However, this is not the case. NVC has accumulated more than ten years of experience in manufacturing and sales in the field of traditional lighting. For Dehao Runda, which also has a strong style of work, it is difficult for both parties to reach an agreement.
The contradiction between traditional lighting and LED has always been a difficult problem to solve. This year, there are many cases of failures such as the termination of cooperation between Feilo Audio and Taiwanâ€™s Dayou Optoelectronics, and the disintegration of new light source companies by Foshan Lighting. "The biggest contradiction between the two is cost. The key to the success of the cooperation is whether Dehao Runda has the ability to produce the low-cost products that NVC Lighting wants." Zhang Xiaofei said.
Wang Donglei once hoped to rely on more than 100 MOCVD scale advantages to quickly reduce the cost of chips, and to achieve the lowest cost of LED lighting products through vertical integration of the industry chain. But as the saying goes: "The plan will never catch up with the change." This year, the LED lighting market has been somewhat messed up by several companies including Mulinsen and Changfang Lighting, and the price war has been fierce. This made Wang Donglei a little overwhelmed, and it was difficult to parry.
In fact, as early as November 2011, NVC Lighting will extend its reach to Taiwan's LED chip maker Jingyuan Optoelectronics, hoping to minimize the cost of LED lighting through strategic cooperation in the industrial chain.
Since then, NVC Lighting has been continuously involved in the upstream and midstream of the industry chain through mergers and acquisitions and joint ventures. However, Wu Changjiangâ€™s business strategy of staying in the traditional lighting era has encountered a closed door in the LED field.
Previously, NVC Lighting's acquisition of Mingxin Semiconductor is a typical case. A former senior executive of the core semiconductor revealed that the two sides had experienced a period of six months of management. Wu Changjiang's way of thinking is to minimize costs. The original team of Mingxin Semiconductor did not understand this approach. Because LED lighting has high requirements on production process and technology, the cost control requirements of traditional lighting cannot be achieved at that time.
"It is difficult for us to do LEDs in the way of traditional lighting control costs," said the top executive.
The reason why NVC lighting is so sloppy in cost control is that the original distribution channel mainly sells products with low added value, and has an advantage in price war, but it is not good at selling high value-added products.
Due to the cost control, NVC Lighting's requirements for OEMs have forced many LED lighting companies to focus on technology and quality. Earlier, it was reported that NVC Lighting chose to enter into small-scale OEMs for the rapid entry into the field of LED lighting, including Zhongshan's small businesses.
However, the industry is questioning that there is still a certain distance between LED and traditional lighting in production management. The LED lighting products that NVC Lighting wants may not be produced by Dehao Runda. For NVC Lighting, the concern is how to minimize the cost. In the future retail market, it is necessary to have cheap and high-quality LED lighting products. In addition to the light source itself, there are requirements for the technology and innovation of the enterprise. . At present, at least Dehao Runda's LED chips are not fully qualified.
DeHao Runda's vertical integration model, if successfully implemented according to the original idea, can indeed bring huge cost advantages to LED lighting products. But for NVC lighting, which currently relies on LED products to stabilize the channel, perhaps waiting is the most unacceptable fact.
Whether it is Dehao Runda entering NVC lighting, or Wu Changjiang borrowing Dehao Runda to return to NVC lighting, the two sides are out of consideration, and indeed only the players in the game know. But in the end, who can help who in the end, but the market has the final say.
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