BDO Runda gambles LED to win 4.3 billion in three years

In the first three quarters of 2012, only 38 of Germany's 80 MOCVD equipment were in volume production.

On the afternoon of January 10th, The Ritz-Carlton Hotel Shenzhen. BDO Runda several senior executives and partners in turn stood on the new launch. At this time, Wang Donglei saw Wu Changjiang, who was standing at the edge, hurriedly called him to his side and pressed his hand on the energy ball to announce the ceremony.

This means that the two most prestigious "gamblers" of the LED industry have come together. Prior to this, BDO Runda Chairman Wang Donglei and NVC Lighting Founder Wu Changjiang were contenders.

In order to introduce NVC, Wang Donglei initiated the third scheduled increase. Since 2010, BDO Runda has increased by three times, invested billions of funds, and laid out the LED industry chain. But in the eyes of the industry's eyes, the "gamble" has not yet achieved results. To date, the LED project has not brought profits to BDO Runda, relying on the government's subsidy of up to 740 million.

Inquiries about the prospects of the joint NVC

On December 27 last year, BDO Runda announced that it intends to obtain a total of 20.05% of NVC Lighting's total share capital of 1.34 billion from its wholly-owned subsidiary and become the largest shareholder. Reached the second largest shareholder, the two companies cross-share swaps to achieve marriage.

At the same time, BDO Runda issued a fixed-income plan and plans to issue additional 230 million shares, including Wuhu BDO Runda, a controlling shareholder, to subscribe for 100 million shares and Wu Changjiang to subscribe for 130 million shares, raising a total of 1.348 billion yuan in funds.

A number of LED industry analysts told the Money Weekly reporter that BDO Runda's acquisition of NVC lighting is an important reason to value the latter's channels and brand advantages, so as to open up channels for downstream sales.

"In the past three years, numerous people asked me that I was gambling on LED. It was indeed. We acquired chip companies in several cities throughout the country and established a huge LED industry chain." At the new product conference, BDO Runda Chairman Wang Donglei believes that there is a gamble. LED successful.

Since NVC Lighting's “Infighting Incident” surfaced in May last year, the internal management of the company has still not been significantly changed. NVC, the founder of NVC, is still outside the board of directors.

Teddy Runda, director of Deng Fei, said that BDO Runda supported Wu Changjiang to return to NVC Lighting's board of directors and management. Wu Changjiang may also participate in the management of BDO Runda and even enter the company's board of directors.

"Wang Donglei's personality is similar to Wu Changjiang. This is one of the reasons why they appreciate each other. But the first problem that BDO Runda entered into NVC Lighting's board of directors was how to gain the confidence of other shareholders and coordinate them. The contradictions between the two parties are considered to be successful," an LED industry analyst told reporters.

Wu Changjiang stated on Weibo on December 31, 2012, “We met in the morning and we talked with each other very well; we affirmed the strategic cooperation of DHL.”

"The downstream channel dealers need to observe the degree of recognition of BDO Runda lighting products, and BDO Runda is expected to put chips on the market in batches, and NVC's digestion level is not big enough," said the analysts.

Three-time fixed increase of 4.3 billion, operating rate is only 50%

Wu Changjiang joined, can not hide BDO Runda plans to design more than three years of LED industry layout "big and empty" embarrassing situation.

The LED industry has a long investment cycle, and the investment in the early stage is huge, and the upstream technical barriers are high. As a latecomer, BDO Runda has reached at least 7 billion in total fundraising since 2009 through successive launches of targeted issuances, short-term financing bills, and corporate bonds. As some of the plans have not been approved by the China Securities Regulatory Commission and the fund-raising has shrunk, the actual fund-raising is about 3 billion. Although BDO Runda has achieved the entire LED industrial chain layout from epitaxial wafers to chip-package applications, it is not profitable.

In the first three quarters of 2012, BDO Runda posted a net profit of 115 million, a drop of 57.41%. In the middle of last year, the small home appliance business, mainly exported to Europe and the United States, was still the main source of BDO Runda's revenue, accounting for 67.7% of revenue, while the LED business focused on investment accounted for only 32%.

In October 2010, BDO Runda completed its first scheduled increase, raising 1.506 billion yuan and investing in "LED lighting projects," "LED packaging projects," and "LED chip projects." Prior to this, BDO Runda had invested 240 million yuan in self-raised funds.

"Wang Donglei began to use its own funds to invest in LED projects before he raised funds. On the one hand, he predicted that the speed of development in this industry would be prompted by the personality of his character," said an industry analyst.

In August 2011, BDO Runda issued its second fixed increase announcement and plans to raise 3.5 billion yuan. When Wang Donglei told the media, "This is the biggest financing case for LED in China." But this time, the private placement promotion did not go well. It actually only raised 1.522 billion yuan, which is far from the plan.

Together with the 1.348 billion raised this time, BDO Runda will have a total of 4.3 billion in three years.

However, Wang Donglei’s huge amount of gambler investment did not achieve the expected “significant return.”

As of November 30, 2012, Bundau Runda's LED packaging project for the first time in 2010, with a total investment of 93.686 million yuan, has not been invested, and it has been one year since the expected completion date in December 2011. In 2012, the “LED Epi Wafer Project” that will be fundraising will be purchased 150 sets of MOCVD equipment, and currently only 68 procurement plans have been completed.

According to BDO Runda's third quarterly report in 2012, of the 80 MOCVD equipment of BDO Runda, only 38 were in volume production and another 5 were used for R&D. The operating rate was only slightly higher than 50%.

At the new product launch conference on January 10, Wang Donglei said: "The current 80 devices can meet production." This means that 150 items of equipment previously set to increase have shrunk.

7.4 billion government subsidies to cover up the crisis

The doubt is that although LED overcapacity has become a consensus, BDO Runda is still singing all the way forward.

In November of last year, Shenzhen Haobo Optoelectronics shut down due to arrears in payment for large suppliers and employee salaries. It is reported that in the past two years, Shenzhen has shut down the fourth billion-dollar LED company.

According to a report released by the Samsung Economic Research Institute on the status and prospects of China's LED general lighting industry, since 2009, local governments in various parts of China have stepped up efforts to support the LED industry, subsidizing the purchase of MOCVD, and the industry has entered a period of growth. Focus on upstream chip links.

According to statistics, BDO Runda obtained government subsidies for the current profit and loss for the first three quarters of 2010, 2011, and 2012 were 270 million, 310 million, and 164 million, respectively, and accumulated three years of 744 million yuan. The net profit for the same period was 196 million yuan, 392 million yuan, 115 million yuan, government subsidies supported most of BDO Runda's profits.

"In 2009, the country began to subsidize the LED industry and created a stable market environment for the year, followed by large capital inflows. At present, there is a phenomenon of excess capacity in packaging, chips and other projects in China." An analyst in Shanghai Pointed out. Bundesliga Runda's gambling was born, but the risk is self-evident.

“Subsidized projects will develop in an orderly manner. There will be insufficient demand for non-subsidized projects. Research and development will slow down. Products will be concentrated in the low-end market. If domestic civilian markets are not opened up, once the production capacity of many LED companies is released, it will have a huge impact on the market. "The aforementioned analyst said.