Re-emergence of the wave of mergers and acquisitions LED industry continues high growth

Continuing the integration heat in 2014, the merger and acquisition of LED lighting industry continued to fertilize in 2015, setting off a new round of “mergers and acquisitions”. Up to now, there have been more than 25 cases of mergers and acquisitions in the LED industry, with a scale of nearly 30 billion yuan. According to industry insiders, with the withdrawal of a number of small and medium-sized enterprises, the concentration of LED industry will be further improved in 2015, and leading enterprises with technological advantages and economies of scale will stand out in the industry competition. At the same time, for small and medium-sized enterprises, differentiated development may be able to obtain more living space.

Then "the wave of mergers and acquisitions"

"In the first half of this year, the LED industry has seen a boom in mergers and acquisitions, not only horizontal integration, vertical extension, but also 'cross-border' acquisitions, surges in mergers and acquisitions. The LED industry is shuffling, a large number of SMEs have withdrawn from the market, and some have technological advantages and economies of scale. The big companies stand out in the industry competition, and the industry concentration is further improved.” He Zaihua, a senior researcher at China Investment Consulting, told this reporter.

As of the middle of the year, there have been more than a dozen mergers and acquisitions in the LED industry. The industry resources are increasingly concentrated, and the LED industry is accelerating the pace of survival of the fittest. For example, in June, Chau Ming Technology (300232) acquired a 40% stake in Redio, achieving 100% holding of Redio; Lianchuang Optoelectronics (600363) 100 million acquisition and capital increase Zhejiang Fangda Zhikong Technology Co., Ltd., will hold Fang Dazhi Controlling 72.37% stake; Alto Electronics (002587) plans to acquire RMB 100 million to acquire 100% equity of Qianbaihui to increase the scale of LED lighting business. In July, Liard (300296 acquired a 81% stake in Mingji Electronic Technology Beijing Co., Ltd. after 162 million yuan, and increased its capital by 57 million yuan to hold a 55% stake in Huaneng Optoelectronic Technology Shanghai Co., Ltd. It is worth mentioning that In early January, Liard announced that it plans to acquire 100% of Lifeng Culture and 100% of Jinlixiang for 890 million yuan. Through this acquisition, it will contribute to the field of LED culture media.

It is worth noting that from the second half of 2014 to the first half of 2015, horizontal mergers and acquisitions are very dense, which means that the industry has changed from incremental competition to stock competition. In the case of horizontal mergers and acquisitions, listed companies have made some acquisitions of enterprises with advantages in the segmentation field, especially in the field of LED display, such as Liard’s acquisition of Jin Lixiang, Zhouming Technology’s acquisition of Lanpu Technology, and Lianjian Optoelectronics (300269). In addition to the acquisition of Easystar, the acquired companies have a large share in the market segment.

In this regard, the industry believes that LED listed companies to acquire the same type of enterprise is to reduce competitors, expand the original market share or target the market segment, and explore a larger market space.

Zhou Mingjun, general manager of Jingyuan Optoelectronics, once said that now, the integration and reshuffle of enterprises in the LED industry chain has accelerated, and domestic LED downstream manufacturers have begun to fully integrate mergers and acquisitions. The LED industry can only continue to go on with continuous mergers and acquisitions.

Future LED industry continues high growth

In the LED market where industrial capital is continuously injected, mergers and acquisitions and industrial upgrading will further increase the concentration of the industry. The technological advantages and scale effects of leading enterprises will also gradually become prominent in the integration. The LED lighting pattern is undergoing tremendous changes.

Recently, Ai Bisen (300389) clearly stated in the agency research that the LED display industry has been accelerating in recent years, especially in the past two years. All listed companies have a certain degree of mergers and acquisitions, and future industry associations. More tend to focus on the competition between several large companies, small business survival difficulties, differentiated development or may be able to gain more living space for market segments.

He Zaihua told reporters: "In the future, the LED industry will continue to mature, the industry will face deep adjustment, enterprise integration and reshuffle will accelerate, and domestic LED downstream manufacturers will begin to fully integrate mergers and acquisitions."

However, in He Zaihua's view, the biggest problem in China's LED industry is: the number of LED companies is large, the market competition is lack of order; the product homogenization is serious and lacks innovation.

In this regard, Liard Chairman and General Manager Li Jun said at the Liard 20th Anniversary Celebration and New Product Strategy Conference held on September 10th that the company should adhere to the innovation-driven development strategy in the future and turn its attention to business model innovation. And Liard's philosophy of innovation in two major aspects. “Liyad not only wants to be the leader of the LED industry market, but more importantly, it is to drive the healthy and sustainable development of the entire LED industry with technological innovation. I hope to adopt the three strategies of “Main Business + Investment M&A + PPP Mode” to Innovation growth drives the rapid development of Liard."

He Zaihua suggested that in the face of this trend, enterprises should strengthen their ability to innovate and cultivate their core competitiveness; second, they must focus on market segmentation and improve product quality; third, they must improve product production efficiency and reduce production costs.

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