The rectangular group results encountered difficulties behind

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

Many analysts familiar with the rectangular group, told reporters that the group behind the rectangular decline in performance, have a certain relationship with product positioning, the company's business ideas. Company LED product positioning in the low-end market, the company perennial wandering in the "price war", often lead to greater volatility in performance.

In order to solve the current financial difficulties, a group is preparing to cross into the education sector. For the company's cross-border move, outside also have to wait-and-see attitude.

Perennial products "price war"

A group is not the first time the results fall into dilemma. The company listed on the first two years of 2012 and 2013, net profit attributable to shareholders of listed companies were down 27.76% and 42.21%.

In the year 2016, achieved operating income of 1 billion 603 million yuan, operating income grew 12.98%, net profit attributable to shareholders of listed companies. The group was a loss of 62 million 744 thousand and 700 yuan. In 2016, the company has become the 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 a group report shows that in 2016, the majority of the company's product gross margin declined. The patch type LED (including high power) is the second largest revenue size products, the product revenue reached 497 million yuan, only 6.74% gross profit margin, gross margin fell 74.58%. In addition, the package supporting product gross margin also fell 42.82% to 14.31%.

In May 5th a group 2016 annual results will be on the network, the company chairman Deng Zichang mentioned the challenges facing the industry. "The economic downturn, and the rapid advancement of LED lighting to replace the traditional lighting, the development of China's lighting industry has been affected to a certain extent, the lighting market unsatisfactory." Deng Zichang said.

Industry analysts told reporters that the rectangular group results encountered difficulties behind, have a certain relationship with mud deep price products. The LED group is the product positioning 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 low-end product market competition is more serious, the customer is very sensitive to price, so you want to maintain a high level of gross margin is very difficult. Unlike some position in the market of the LED companies, relatively less competitive, but also can maintain a high level of gross margin." Dramexchange consulting LED Research Center (LEDinside) analysis of director Wang Fei said.

Reporters combed found further statements in the rectangular group over the years, a decline in the performance of the year, the company has taken the initiative to mention the price strategy. A group said the price objective is to consolidate and expand the market share.

Deputy Secretary of Guangdong Province Association of lighting Liu Jun said rectangular group long confined to the "price war" thinking. In addition, CCID lighting consultant analyst Han Yun said: "unlike previous years, the entire LED industry as long as the output of the product life, you can earn money. Now the whole industry gradually to high-end development, the increasingly fierce competition in the industry. If a group continues to low-end route, the product will inevitably continue to be affected by the impact of price fluctuations."

The transition to the education industry

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 ways are involved, the rectangular group. However, the former approach has not reached the expected. The company spent a lot of money to lay the channel, but the performance is not satisfactory. It is of great relevance with the positioning of the products. Lighting products company also stick to the low-end market, but the lack of a certain product market reputation." Liu Jun said.

In the main emergency under the rectangular group by the LED industry cross into the education sector, is not the first in the industry. 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".

"A group of future business ideas, do not rule out the possible business will gradually withdraw from the LED." Liu Jun said, LED business transformation, it is best to choose the company with relevant industry breakthrough. This can avoid the risks associated with a certain degree. At present, the LED industry has a successful example of the transformation, most of them choose the path is extended to the company and related industries."

Similarly, Han Yun also believes that cross-border restructuring, unless itself has a larger accumulation of resources can be involved, otherwise it is difficult to reflect the advantage.

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