The 2016 semi-annual report disclosed by Foshan Lighting recently showed that its operating income in the first half of this year was approximately 1.756 billion yuan, a year-on-year increase of 15.17%. Among them, the sales revenue of traditional lighting products, which accounted for a large amount of revenue in the past years, was about 684 million yuan, down 10.84% ​​year-on-year. The sales revenue of another main product LED lighting products was about 1.059 billion yuan, which was benefited from the sales revenue growth of LED lighting products. Foshan Electrical and Lighting Co., Ltd. (hereinafter referred to as Foshan Lighting), its revenues continued to grow in the first half of this year when the sales revenue of traditional lighting products dropped significantly. The 2016 semi-annual report disclosed by Foshan Lighting recently showed that its operating income in the first half of this year was approximately 1.756 billion yuan, a year-on-year increase of 15.17%. Among them, the sales revenue of traditional lighting products, which accounted for a large amount of revenue, was about 684 million yuan, down 10.84% ​​year-on-year. The sales revenue of another main product LED lighting products was about 1.059 billion yuan, up 42.27% year-on-year. This is the first time that the company's LED lighting products revenue has surpassed traditional lighting since the company began to transform from traditional lighting to LED lighting in 2012. However, while the main business transformation has achieved initial results, due to the continued shrinkage of the traditional lighting market, Foshan Lighting has been in high inventory since 2013 and faces a situation of overcapacity in the LED market. The bankruptcy of its holding subsidiary Suzhou Mengtai Libao Optoelectronics Co., Ltd. (hereinafter referred to as Mengtai Optoelectronics Co., Ltd.) and the claim for violation of the information by the shareholders have nearly 200 million yuan, which also makes the profit outlook for the second half of the year full of uncertainty. On September 12, the reporter wrote a letter to Foshan Lighting on the relevant issues, but did not receive a reply before the manuscript. The gross profit margin of LED products is lower than that of traditional lighting products. As a leading enterprise in the domestic lighting industry, Foshan Lighting has been established since 1958 and its total assets have exceeded 6.5 billion yuan. It was once known as the Chinese lamp king. In recent years, with the shrinking of the traditional lighting market, Foshan Lighting has to start from 2012, from traditional lighting to LED lighting, vigorously develop LED lighting products, and constantly optimize product structure. The reporter combed Foshan Lighting's annual report in recent years and found that in its 2012 annual report, which decided to transform, LED products have not been included in the main business composition table. In the main business composition table of the year, there were only two main products, namely lighting equipment and lamps and hotel revenue, of which the former was about 100 times of the latter. In 2013, the main business composition table, there is no hotel income, only lighting equipment and lamps. Until 2014, Foshan Lighting was listed in the main business composition table, and listed traditional lighting products and LED lighting products as two main products. This year, the company's operating income was about 3.041 billion yuan, an increase of 21.58%. Among them, traditional lighting products revenue was about 2.14 billion yuan, down 4.91% year-on-year, revenue accounted for 69.82%; and LED lighting products revenue was about 926 million yuan, a surge of 233.99% year-on-year, revenue accounted for 30.18%. In 2015, the company's LED products began to work, revenue increased by 52.92% year-on-year to 1.416 billion yuan, compared with the proportion of traditional lighting products revenue difference of less than 2 percentage points, and said that the successful transition from traditional lighting to LED lighting. In the first half of this year, the revenue of traditional products was about 684 million yuan, down 10.84% ​​year-on-year. The revenue of LED products was about 1.059 billion yuan, up 42.27% year-on-year. The latter accounted for about 20 percentage points more than the former. Its 2016 semi-annual report stated that during the reporting period, the company completed 116 series of independent research and development of new products, totaling 365 specifications. These new products bring new growth points to the company's sales revenue and profit. The semi-annual report also showed that domestic sales revenue was about 1.161 billion yuan, up 10.61% year-on-year. Foreign sales revenue was about 582 million yuan, up 25.96% year-on-year; FSL self-owned brand export sales revenue increased by 172% year-on-year. Its official website said that it strives to build FSL Foshan Lighting into an international electric lighting brand. However, by comparing the gross profit margins of the above two main products for two years, it can be found that the gross profit margin of traditional lighting products is still higher than that of LEDs, and the gross profit margin of LED products in the first half of this year is 22.60%, which is lower than 24.15% in 2014. For this situation, Foshan Lighting did not explain in the annual report. Earlier media reports said that Foshan Lighting was questioned in order to seize the low-cost competition strategy in the LED market. The relevant responsible person responded that the low price was due to the large scale of production, so the cost was lower. Dou Lin, secretary-general of the China Lighting Society, told this reporter that the overall trend of the lighting products industry is upward, but the micro-ecology is very poor. The homogenization competition and low-price competition have become the norm. In fact, Foshan Lighting also said that after rapid development and replacement in recent years, the development speed of the LED lighting industry has slowed down, and the homogenization competition and price competition of industrial products have further intensified. Earlier, brokerage analysts expressed concern about low-price competition, which may lead to reduced product quality and disorderly competition. According to public information, some products of Foshan Lighting in the past two years have been exposed due to unqualified quality. In May 2015, the Guangzhou Municipal Administration for Industry and Commerce issued a lighting inspection report showing that the nominal trademark is FSL, the nominal manufacturer is Foshan Electrical and Lighting Co., Ltd., and the model MW1-Y30 220V 50Hz 30W T8 integrated electronic bracket was In November 2015, the State Administration for Industry and Commerce issued a report on the sampling of LED energy-saving lamps in the third quarter of 2015 in Liaoning and other four provinces (districts). The nominal trademark is FSL, and the nominal production enterprise is Foshan Electrical and Lighting Co., Ltd. LED energy-saving lamps were unqualified; on February 22, 2016, the Guangdong Provincial Quality Supervision Bureau announced the announcement of the quality supervision of 13 product quality special inspections in 2015. The nominal production enterprise is Foshan Electrical and Lighting Co., Ltd., model WT5 -12-30/111, the LED bracket light structure project with the production date of 2015-I was unqualified. As the disclosure of violations has been claimed nearly 200 million in the traditional lighting market continues to shrink, as Foshan Lighting said in the 2015 annual report, the development speed of the LED lighting industry has slowed in recent years, especially the LEDs with low threshold In the downstream application field, there are obvious structural overcapacity problems. Although the market demand for LED lighting products is growing, it is not easy for Foshan Lighting to maintain its LED product revenue growth. According to the annual report of Foshan Lighting, its inventory increased from approximately 435 million yuan at the beginning of 2013 to approximately 626 million yuan at the end of 2014, and was reduced to approximately 560 million yuan at the end of 2015. At the end of the first half of this year, there were still about 468 million inventories, and the net profit was only about 207 million yuan. The company's 2015 annual report mentioned in this year's business plan that it is necessary to strengthen inventory management, ensure product sales demand and reduce the impact of inventory backlog on profits caused by product upgrades. At present, its inventory includes raw materials, semi-finished products, finished products, and low-value consumables. Among them, the inventory goods and self-made semi-finished products add up to about 353 million yuan, the price reduction preparation is more than 32 million yuan, and all inventory depreciation reserves are more than 36 million yuan. In January and July of this year, the company made two provision for asset reductions of about 27 million, and explained that due to the continued shrinkage of the traditional lighting market and the rapid replacement of LED lighting products and short product cycles, some of them The backlog of inventory was long and there was a certain degree of impairment. Therefore, the company made provision for impairment of related stocks. Foshan Lighting said in its semi-annual report this year that due to the variety of products and specifications, the inventory amount is relatively high. In the future, if the price or demand changes in the raw material market and product sales market may cause the company to fall into inventory risk. In January this year, in addition to the inventory backlog, it was necessary to make provision for asset impairment. Foshan Lighting also made provision for bad debts of 2.77 million yuan for the accounts receivable of Sanshui Street Light Project and 2436 for the long-term equity investment of Mengtai Optoelectronics. Ten thousand yuan. Mengtai Optoelectronics Foshan Lighting said that because of its R&D advantage in LED, it became the controlling shareholder in April 2014 with a purchase of 50.5% of its equity of 24.36 million yuan. Foshan Lighting has previously said that it will seek partners with technological leadership and expand the production scale of the company's LED lighting products in a timely manner. Since the acquisition, Suzhou Mengtai Company has continued to lose money due to reasons such as scale and market. At present, Suzhou Mengtai Company has neither production business nor sales business, and it has no conditions for continued production. In addition, due to information disclosure violations, Foshan Lighting was sued by stockholders for claims, and it has not yet been fully settled. The company’s semi-annual report disclosed this year that from September 2013 to May 2016, a total of 2,767 plaintiffs filed a lawsuit with the Guangzhou Intermediate People’s Court on the grounds of securities misrepresentation disputes, requiring them to bear civil affairs for information disclosure violations. Responsibility and claim compensation of 368.845 million yuan and 1.328 million Hong Kong dollars. From November 2014 to December 2015, the Guangzhou Intermediate People's Court sentenced 2,755 cases to the 2755 plaintiff for a total of RMB 18,273,500 and HK$7,358,200, and legal expenses of RMB 3,323,200. At present, in addition to 12 cases (involving the amount of complaints of 2,733,600 yuan) have not yet been decided, and 31 plaintiffs outside the appeal (involving the amount of the complaint amounting to 1,368,200 yuan), the judgment has all taken effect. As of August 22 this year, Foshan Lighting has paid compensation of 1,019.78 million yuan (including legal fees) to 2,715 plaintiffs. According to its introduction, the series of cases of securities misrepresentation liability disputes affected the total profit of 2014 by 61.438 million yuan, affecting the total profit of 2015 of 133,889,900 yuan. Foshan Lighting said it is expected that the litigation will not have a major impact on the financial situation this year. However, He Zaihua, a senior researcher at China Investment Consulting, said publicly that investors' continued claims have dragged down net profits, which is a major challenge for Foshan Lighting's LED transformation.
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