Secret rectangular group performance behind trapped

It is understood that, LED packaging private enterprises, one of the Shenzhen rectangular group Limited by Share Ltd (hereinafter referred to as "rectangular group") is not yet out of the shadow of decline in performance.

Many familiar with the rectangular group analysts told reporters that, behind the performance of rectangular group decline, with the company's product positioning, business ideas, etc., have some relevance. Company LED product positioning in the low-end market, the company has been hovering around the "price war", resulting in frequent fluctuations in performance.

In order to solve the current business difficulties, the group is preparing to cross border into the education industry. For the company's cross-border action, the outside world also take a wait-and-see attitude.

Products perennial hit "price war.""

It wasn't the first time the group was in trouble. Listed companies in the first two years, namely in 2012 and 2013, attributable to shareholders of listed companies net profit has declined by 27.76% and 42.21%, respectively.

2016 full year, in the realization of operating income of 1 billion 603 million yuan, operating income grew by 12.98%, the square group attributable to shareholders of listed companies net profit loss of 62 million 744 thousand and 700 yuan. 2016 has also become the company's first loss since listing.

For performance, rectangular group explained mainly in two aspects, one is the company product competition, affected by the overall economic situation and the impact of multiple industry competition, the company product sales prices, a greater impact on the company's gross margin; on the other hand, due to the relocation of factories, resulting in part of the company's production capacity can not effectively release.

According to the group's 2016 annual report shows that most of the company's gross margin declined. Among them, the patch type LED (including high-power) for the company's second largest revenue scale products, the product revenue reached 497 million yuan, gross margin was only 6.74%, gross margin fell 74.58%. In addition, packaging products margin also fell 42.82% to 14.31% year on year.

In May 5th, the chairman of the group's annual performance network 2016, chairman Deng Zichang mentioned the challenges facing the industry. Affected by the depression of the economic environment and the rapid promotion of LED lighting instead of traditional lighting, the development of lighting industry in our country has also been affected to some extent, and the lighting market is not satisfactory." Deng Zichang expresses.

Many analysts in the industry told reporters that the performance of the rectangular group trapped behind, with the company's deep product prices are bound to swamp. The LED product positioning of the group is in the low-end market. In the low-end market competition is relatively intense, companies have such a large package and Linsen giants face competition. Due to the homogenization of low-end market competition is more serious, customers are very sensitive to prices, so it is very difficult to maintain high gross margin level. Unlike some LED companies positioned in the market segment, the competition is not so intense, and it can maintain a high level of gross profit margin." Wang Fei, director of analysis at LED Research Center (LEDinside), said.

Reporters further combed the square group over the years reports, found that in the year of decline in performance, the company mentioned the initiative to take the price reduction strategy. The group aims to consolidate and expand its market share, the group said.

Liu Jun, deputy secretary-general of Guangdong lighting electrical appliances association, said that the group had long been confined to the "price war" mentality. In addition, CCID lighting consultant analyst Han Yun pointed out: "unlike in previous years, the entire LED industry as long as the product of life, you can earn money.". Today, the whole industry is gradually developing toward high-end, and the competition in the industry is becoming more and more fierce. If the Group continues to take the low-end route, the product will inevitably continue to be affected by price fluctuations."

Prospective education industry transformation

With the packaging industry competition, industry enterprises have to downstream lighting applications industry development in depth, expand the way, one is directly engaged in the production of lighting business; two is the indirect lighting enterprises downstream mergers and acquisitions. These two methods involve the rectangular group. However, the former method is not up to expectations. "The company spent a lot of money laying the channels, but the results are not satisfactory.". This has a lot to do with product positioning thinking. Company's lamps and lanterns products also adhere to the low-end market, but the product lacks a certain market reputation." Liu Jun expresses.

In the main business emergency, the rectangular group by the LED industry cross-border education industry, in the industry is not the first. Downstream of LED lighting companies KingSun shares have conducted a lot of exploration. Compared with the rectangular group, KingSun shares involved in the education industry is more "radical action".

The future management thinking of the group will not rule out the possibility of gradually withdrawing from the LED business." Liu Jun said, LED enterprise restructuring, it is best to choose companies associated with the industry cut in. To do so, to some extent, can avoid related risks. At present, the LED industry has more successful transformation examples, most of them choose the path is to the company related industry extension."

Similarly, Han Yi believes that cross-border transformation, unless it has a greater accumulation of resources can be involved, otherwise it is difficult to reflect the advantages.

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