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Recently, the domestic LED packaging giant Mulinsen (002745.SZ) accepted the research of Founder Securities (601901.SH), Cinda Aussie and other institutions, the company's declining business performance in 2015, has become the focus of attention of institutions and investors.
Recently, Mulinsen disclosed the 2015 annual report, indicating that Mulinsen's net profit has declined for the first time since its listing in 2015, which is far from the rapid growth of previous years.
A few days ago, Lin Jili, executive general manager of Mulinsen, in an exclusive interview with Time Weekly reporter, blamed the sharp decline in profits last year's "price war", R&D investment and expansion of new capacity.
Mulinsen, who specializes in LED packaging and application products, was founded in the 1990s. Chairman Sun Qingyi and the entrepreneurial team, after more than 20 years of painstaking efforts, finally pushed Mulinsen to the capital market in February 2015.
Sun Qingyi is also the chairman and general manager of the company. In the eyes of the company's insiders, he is quite low-key, pragmatic, and has little contact with the outside world, giving people a sense of mystery. The management of the Mulinsen packaging industry, which he founded, was mostly given to Lin Jiliang.
Recently, Lin Mialiang and the Times Weekly reporters met face-to-face before the Mulinsen headquarters of Mulinsen Avenue in Xiaolan Town, Zhongshan City, Guangdong Province. He revealed that Mulinsen will increase investment in equipment and R&D in the LED field to further reduce production costs.
Net profit decline
Mulinsen's 2015 annual report shows that in 2015, Mulinsen achieved operating income of 3.88 billion yuan and net profit of 256 million yuan, down 3% and 41.09% respectively. This is also the first profit decline since Mulinsen was listed in February last year. In 2014, Mulinsen achieved revenue of 4.01 billion yuan, a year-on-year increase of 39.25%; net profit reached 435 million yuan, a year-on-year increase of 0.25%. Earlier, Mulinsen's business momentum was also more rapid. From 2011 to 2013, the compound annual growth rate of revenue was 50.21%, and the compound annual growth rate of net profit was 98.22%.
For a while, he was a moment. The reason for Mulinsen’s decline in net profit in 2015 has recently become the focus of attention.
According to public information, in 2015, due to factors such as fierce global economic and market competition, LED industry chain prices generally fell by 30% to 50%, and international corporate product prices also fell by more than 20%.
GGII expects to have more than 20% in 2015, and a total of about 5,000 related LED companies will withdraw from the market. And some of the exiting LED companies have sold off at low prices in order to eliminate inventory, which has caused a shock to the market and formed a vicious circle.
In this wave, Mulinsen obviously can't be alone. In order to maintain market share and maintain a stable relationship between major customers and distributors, Mulinsen had to follow the market to fight the price war.
"The price war has to be played. Who didn't fight the price war last year?" Lin Jiliang talked about the price storm of the LED industry that was once set off last year. It seems quite helpless. He acknowledged the impact of the price war on net profit. "But last year you didn't hit the price." In the war, you will be out of the game, and even the market share will be gone."
Three major factors dragged down
In Lin Jiliang's view, last year's profit decline was not entirely due to price wars.
In 2015, Mulinsen increased its R&D investment. The company's R&D investment was 151 million yuan, an increase of 21.95% over the previous year. During the reporting period, Mulinsen has obtained 234 authorized patents, including 12 invention patents, 152 utility model patents, and 70 appearance patents.
"Last year we observed the development of the latter, we believe that we must strengthen the technical research and development of some products, so in the research and development of technological transformation, technology upgrades, the investment is relatively large." Lin Jiliang told Time Weekly reporter.
In addition, Mulinsen also carried out capacity expansion last year. According to its annual report, in 2015, the company decided to relocate Xiaolan's lighting production line to Xinyu's production base. During the relocation process, the project capacity could not be completely released, and the impact of the relocation will lower the profit of the products, especially the lighting products.
In September 2014, Mulinsen and Jiangxi Xinyu High-tech Zone Management Committee signed the “LED Product Production Project Investment Contract†with a total investment of 2 billion yuan and a initial investment of 600 million yuan. "Building a factory, from the investment to the first order, the investment is relatively large." Lin Jiliang told the Times Weekly reporter.
Speaking of the above three major measures, Lin Jiliang said frankly that the price war is to consolidate the market, to increase R&D investment for technical reserves, and to expand production capacity in order to have a strong production base.
Regarding how to maintain the company's future performance growth, Mu Linsen said that it will further increase investment, increase the company's production scale and automation, reduce product costs, strengthen the company's scale and automation competitive advantages, in order to increase the product's gross profit margin; R&D investment to enhance the company's comprehensive gross profit margin.
Accelerate industrial transformation
In the eyes of the industry, as early as 2014, when signing an agreement with the local government of Jiangxi Province, Mulinsen accelerated the transformation and upgrading.
In June and September 2014, Mu Linsen signed project investment contracts with Jinggangshan Economic Development Zone Management Committee and Xinyu High-tech Zone.
In order to raise funds, Mu Linsen carried out capital operation. The non-public issuance of shares does not exceed 83.5 million shares. After deducting the issuance expenses, the net proceeds raised will not exceed 2.316 billion yuan, and the proceeds will be used for project construction.
"By implementing the fundraising project, the company will further consolidate its leading position in the LED packaging business, and accelerate the company's extension in the downstream LED application lighting field, and improve the layout of the company's LED industry chain." Mulinsen said.
The Times Weekly reporter learned that the construction of the first phase of the plant in the Xinyu Phase of Jiangxi has been completed and some of it has been put into use. The first phase of the plant in Jiangxi Ji'an is under construction.
Speaking of the main work in 2016, Mulinsen said that it will speed up the construction of two production bases in Xinyu and Ji'an, Jiangxi, and increase the market share of products.
From the outside world's point of view, Mu Linsen chose to invest in Jiangxi, it is really "choose the timing." At the 2016 National Two Conferences, which just ended, the Jiangxi delegation made a heated discussion on the development of the LED industry.
Guoan, deputy of the National People's Congress and Mayor of Nanchang, said in an interview with the media that during the "Thirteenth Five-Year Plan" period, Jiangxi Province planned to build "Nanchang Optical Valley" and strive to build a 100 billion LED industry.
According to the latest statistics, the current annual production capacity of Mulinsen is about 203.5 billion LAMP/SMD per year. At the same time as the production base was consolidated, Mulinsen also increased the pace of market expansion.
At present, Mulinsen has more than 20 subsidiaries in major cities in the country, responsible for sales expansion and customer maintenance in the local and surrounding markets.
In the process of promoting the “Belt and Road†initiative, Mu Linsen also responded positively. According to Sun Qinghuan, chairman of Mulinsen, in response to the call of the National Belt and Road, Mulinsen opened a subsidiary in India, and the company's products have now entered Southeast Asia, the Middle East, Africa, Latin America, the United States, Europe and other places.
In the process of Mulinsen's internationalization, Lin Jiliang was hailed as an important "ambassador". Since 2014, Lin Jiliang has moved to overseas markets, accumulating 240,000 miles in a year, almost one month around the earth, and has traveled all over the world.
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