Promote The Return Of NVC To A Shares To Create A Lighting Industry Chain

Promote the return of NVC to A shares to create a lighting industry chain

Dehao Runda recently announced that the company is planning a merger and acquisition of NVC's manufacturing operations and related companies in China, which constitutes a major asset restructuring. According to the data, the target of this asset restructuring is NVC, the core asset of NVC Lighting Holdings. The transaction is expected to cost 4 billion.

According to the announcement, NVC is currently at the domestic first-class level in terms of brand influence, sales channels and production capacity. It has 34 operation centers (provincial exclusive distributors) in China, and is shared by regional distributors and their subordinate distributors. More than 4,000 stores, the provincial capital coverage rate is over 90%, the prefecture-level city coverage rate is over 85%, and the county-level city or county-level city coverage rate is over 60%.

"In addition to sleeping for 7 hours, basically working every day, sometimes there is an hour of exercise time, the only love golf because of wasting time was abandoned." Wang Donglei told reporters about his daily schedule.

At present, NVC Lighting has passed the recovery period, and the integration with Dehao Runda is advancing forward. Wang Donglei hopes that the LED chips, packaging technology and products of Dehao Runda will be connected with the downstream channels of NVC to improve the efficiency of resource operation. , become a whole industry chain lighting company.

Plus flip chip

In recent years, the international lighting giants have successively withdrawn from the market. Philips divested its lighting assets separately, and OSRAM and GE repeated the same move, and also divested the sale of lighting assets.

Wang Donglei believes that the lighting core technology in China, Dehao Runda holds the technical initiative. Recalling the opportunity to cross the border from small appliances to LEDs, Wang Donglei said: "At that time, the country promoted seven strategic emerging industries. Dehao Runda had contacted new energy industries such as plasma batteries and solar energy and LED semiconductors, and found that LED chips have significant energy-saving effects. And it is the new material industry, which coincides with the fourth revolution in the global lighting industry. Choosing this industry means that we have the opportunity to start at the same time as global companies."

However, the large-scale domestic technology introduction and policy support quickly caused the industry's Red Sea. The domestic LED industry was overcapacity and the terminal price was lower. In order to lead the industry again, Dehao Runda invested in the development of LED flip chip in time. In June 2014, Dehao Runda released the "Sirius" new generation LED blue flip chip and the "North Star" CSPLED white flip chip product.

The LED flip chip concept was introduced as early as 2012, but was put on hold because of the lack of market and technology. Today, flip chip has been considered the latest development direction of LED.

"When watts of lumens is not the most essential factor, because of the pursuit of cost, high-power drive is the core element, which is why today we just see that flip-chip is likely to become a mainstream chip. Southeast Asia market, China's In rural markets, sub-county markets, the use of flip-chips on a large scale, as the most cost-effective chip, led to the use of the entire flip chip in general lighting."

Wang Donglei explained that the hottest LEDs are Mini LEDs and Micro LEDs. As display backlights and next-generation display technologies, Mini LEDs and Micro LEDs are flip-chips instead of pre-loaded chips, so flip-chip is the future direction.

At present, the industry's stability has improved slightly, but there is still no uniform industry standard in the industry. The chip parameter update cycle has been extended to six months. "Flip-chips are slightly better, and Dehao's chips are leading domestic industry standards," said Wang Donglei.

The industry is hard and the profits are meager. In contrast, the price of Tangjiawan in Zhuhai, where the headquarters of Dehao Runda is located, has risen all the way. In the years when Dehao Runda independently developed chips, the average price of Tangjiawan houses entered the 3rd era from less than 10,000 yuan. It is almost the industry consensus that the industry does not win real estate, but Wang Donglei never thought about getting involved in the real estate industry and has been focusing on manufacturing.

"As long as someone has a night, they need lights. This industry is naturally resistant to cycles." Wang Donglei speaks fast. "The core brand like NVC is now a better strategic opportunity, and the market is focusing on core brands."

Wang Donglei told reporters that at present, Dehao Runda's LED flip chip technology ranks second in the world, and its production capacity reaches the third place. With the accelerated implementation of the company's additional investment projects, it is expected to eliminate the capacity bottleneck of the company's LED flip chip, improve the structure of the chip products, and enhance the company's various operating indicators.

In the past few years, Wang Donglei has gradually left the front line of scientific research. "I can't choose today. My vice president once said that I can't go to the lab every day. I should be with the banker and the fund manager. In what position, I still pay attention to the technical direction and maintain technical sensitivity. There is no need to care about the technical details, but to look at the details of the entire industry to maximize shareholder value."

Pushing NVC back to A

Wang Donglei believes that the value of NVC lighting listed on the Hong Kong Stock Exchange for 8 years has been underestimated for a long time. At present, the market value of NVC is only in the early 2 billion Hong Kong dollars, the price-earnings ratio is 6-8 times, and the same echelon of the A-share listed company Opto Lighting P/E ratio is close to 40 times.

“NVC Lighting is a subsidiary of Dehao Runda. The current valuation is low. It is also a pity and waste for investors of A-shares. We want to integrate this asset and also retain mine. The status of the company listed in Hong Kong," said Deng Fei, vice president and director of the Dehao Runda.

Dehao Runda announced that in 2016 and 2017, the net profit of the underlying asset, NVC is 228 million yuan and 340 million yuan respectively. According to estimates, NVC expects to deduct non-recurring gains and losses from 2018 to 2021. The net profit was 370 million yuan, 450 million yuan, 550 million yuan, and 600 million yuan. After the completion of this transaction, Dehao Runda will become the leading lighting company in China, and its asset scale, scale of operation and profitability will be greatly enhanced.

Dehao Runda is doing upstream and midstream, and NVC Lighting is doing downstream. This is the existing plan for DHL Runda to participate in NVC in 2012. According to Wang Donglei's plan, in the context of LED transformation, the two companies can better complement each other's advantages and bring about industrial synergies.

Facts have also proved that Dehao Runda's cost control and efficiency is very strong. After Dehao's gene was grafted to NVC, the gross profit margin of NVC Lighting products rose from 23.4% and 26.8% to 28.9% from 2015 to 2017. However, NVC's innovation is still far from the modern management enterprise. Waiting for Wang Donglei is not only the business life of NVC, but also the reconstruction of cultural consensus.

Talking about the progress of this integration, Wang Donglei appears to be more serious: "The speed of integration is slow, it has not reached our own expectations, and it is lower than market expectations. There are reasons for NVC itself, and there are also unstable Chinese stock markets in recent years. Reasons, etc., we can only improve the integration effect." He believes that the industrial foundation of the two companies is more solid in time.

NVC brand and channel are also steadily improving. At present, NVC has 4,200 terminal stores. In 2016, this figure is 3,800. Under the downward pressure of the industry, NVC's recovery period can be said to be short-lived.

In addition, NVC launched the upgraded home lighting brands such as Beckley and Leeds Castle. "We want to use the latest products and technologies to bring consumers the artistic sense, the perfect combination of technology and art to form the core of NVC products. This is actually a bit like Apple, opening up a new era of IT products." Wang Donglei said.

In cooperation with the Tmall Elf, NVC plans to become the entrance to the smart home. Currently, the research of this section is exclusively undertaken by NVC Shenzhen Research Institute. The next step for the board of directors to NVC is to build a new building materials retail company. The fast-growing online business has brought the flow foundation to the NVC brand platform.

Wang Donglei hopes to establish an influential company in the world. "From the beginning of our business, we have set a number of strategies, and we still insist on it today. Our goal is very firm, that is the top three in the world."