Sun Qinghuan, chairman and general manager of Mulinsen (002745), told China Securities News in an interview recently that with the further improvement of domestic industrial concentration and the opening of overseas LED replacement market, the global LED lighting penetration still has room to double. Mulinsen has accelerated the construction of national production bases, including LED components, LED light source modules and terminal lighting products. In the future, we hope to build the largest lighting group in the world by borrowing the layout of middle and lower reaches, covering the global sales channels.
From 2011 to 2018, it is the golden seven years for the development of LED industry. The compound growth rate of Mulinsen's business income is 45.69%. The company focuses on the development, production and sales of LED packaging and application products. At the same time, continue to extend the industrial chain, improve market share, merger and acquisition of downstream global lighting giant LED VANCE, become the largest listed company in the field of green lighting in China.
Beneficiary LED Capacity Transfer
Data show that Mulinsen has maintained an annual growth rate of more than 40% since its listing in February 2015. From 2015 to 2017, business income reached 3.882 billion yuan, 5.521 billion yuan and 8.169 billion yuan respectively. According to the performance report, the revenue of Mulinsen reached 17.749 billion yuan in 2018, and it entered 10 billion clubs. It is worth noting that the total direct and indirect financing of the company since its listing is less than 4 billion yuan.
At the end of November 2018, the company announced that it planned to publicly issue convertible bonds with a total amount not exceeding 2.66 billion yuan for Xiaolan high-performance LED packaging product production project, Xiaolan LED power supply production project, Yiwu LED lighting application product automation production project and interest-bearing debt repayment.
Sun Qinghuan told reporters that after Mulinsen went public, it invested in Xinyu, Ji'an, Yiwu and Shaoxing in Jiangxi Province. Zhongshan Xiaolan as the company's headquarters and R&D headquarters, Ji'an to build packaging base, Xinyu to provide one-stop service supporting products, Zhejiang base to produce filament lamp products. After all these projects are put into operation, Mulinsen will become the largest LED manufacturer in the world.
The manufacturing advantages of the whole industry chain enable it to undertake more orders from lighting giants at home and abroad. An LED industry analyst said that in recent years, the global LED industry has shown a trend of capacity transfer to the mainland of China due to the incentives for green lighting industry and the decline of industry profits. GE, Osram, Samsung and other international LED giants have withdrawn from the lighting market; Philips and others have abandoned all manufacturing links to be manufactured by Chinese mainland enterprises. China has become the main platform for LED industry transfer. With the increase of domestic productivity concentration and technical barriers, excellent companies in the industry will enjoy the dividends brought by the growth of market scale and technological upgrading, which is expected to enhance overseas and high-end market share.
Sun Qinghuan said that Mulinsen's unique technological and technological innovation is the base of its expansion. Since its establishment, the company has insisted on R&D investment and improved the level of automation production. In terms of supporting components, the company is leading peers in brackets, moulds, electroplating, plastics, etc. The company has formed its own standardized production system, thereby forming a unique cost control advantage and high bargaining power. Through the layout of the whole industry chain, the scale effect of the company is constantly emerging. The price of upstream chips has been lowered, which further reduces the unit cost of products. The company's market competitiveness is increasing, and its market share is increasing year by year.
"Industry concentration is relatively decentralized, and the potential for future development is still great." Sun Qinghuan pointed out that from Mulinsen's current market share, although the private brand has occupied a pivotal position, but only 20% of the domestic market share. Overseas OEM orders, Mulinsen only takes about 10% of the share of LED VANCE. "There is a large market demand. We have been expanding investment in manufacturing industry, and we have a large demand for capital."
Forming synergistic effect
In the third quarter of 2018, the company completed a major asset restructuring and acquisition of OSRAM General Lighting Splitting Business - LED VANCE Company, with business revenue of 12.35 billion yuan, and successfully achieved the first "10 billion" target. As the first domestic LED manufacturer to annex international lighting brands, Mulinsen will face the problem of how to maximize the synergy between domestic and international channels.
Throughout the existing domestic well-known LED brand, its main sales business is in the domestic market, overseas market development is quite difficult, and it needs a long time to accumulate. "The difficulty is how to convert traditional light sources from overseas channels into LED light sources." Sun Qinghuan introduced that compared with the domestic LED replacement rate of 50%, overseas LED light source substitution is less than 20%, and the consumption level is higher, so the overseas lighting market has more space.
According to the data at the end of 2017, Philips, the world's largest seller, has annual revenue of 7 billion euros, while the second largest seller, LED VANCE, sells less than 2 billion euros. According to reports, LED VANCE has a strong network of agents and distributors, with sales agencies in more than 50 markets worldwide, covering more than 120 countries and regions. "With the support of global brands, Mulinsen's manufacturing advantages will be further expanded." According to Mulinsen's calculation, less than 10% of LED VANCE lamps are manufactured by Mulinsen. If the proportion is raised to 30%, it will bring about a 20-30% growth in the manufacturing sector of the company.
Sun Qinghuan said that the company's overseas integration is gradually unfolding, and the new CEO of LED VANCE is Lin Jiliang, executive general manager of Log Linsen. The new purchasing center has been set up in Shenzhen, and the overall operation situation is steadily improving.
According to Mulinsen's business income in the third quarter of 2018, the lighting business has surpassed the traditional packaging business. Mulinsen has become a trendsetter in the global lighting market from a packaging company. In the future, brand will be used as a breakthrough to further open the downstream application market.
LED lighting products gradually replace traditional lighting products and become the main source of home, commercial, industrial and outdoor lighting. Due to the rapid improvement of the performance-price ratio of LED lighting products, the penetration rate increases year by year. In 2017, the global penetration rate of LED lighting reached about 40%. With the maturity of LED lighting technology, there is still room for doubling the global LED lighting penetration.