Zhen Mingli entered the transition period, and the net profit in 2010 fell by nearly 40%.

On March 11, 2011, Zhen Mingli (HKEx: 01868) announced the second interim report for 2010. The data shows that the company's annual revenue in 2010 increased by 33.4% from HK$1.11 billion in the same period in 2009 to HK$1,482 million, and net profit decreased to approximately HK$107 million (2009: approximately HK$157 million). In 2010, the gross profit margin of the company's products was 32.5%, a decrease of about 1.9 percentage points from the same period of last year (34.4% last year).

Net profit fell by 30% government subsidy into a transformation savior

For net profit, which was down 31.6% from last year, the report believes that the main reason was that the company decided last year to provide accounts receivable and inventory provision of HK$56 million. However, if the inventory of HK$56 million and the provision for accounts receivable are excluded, the company's net profit in 2010 will show almost no growth.

At the same time, the report shows that in 2010 the company received government subsidy income of 48.53 million Hong Kong dollars, accounting for about 50% of the 2010 full-year net profit.

Global regional market earnings have fallen across the board, and the Chinese market has bucked the trend.

2009-2010 Zhen Mingli Global Market Revenue and Profits (Unit: HK$'000)

Revenue area year 2010 Year 2009 Variety
United States 538,557 409,740 ↑ 31.44%
Europe 346,449 335,543 ↑ 3.25%
China 353,383 148,613 ↑ 137.79%
Russia 44,562 41,647 ↑ 6.99%
Asia Pacific and Middle East (excluding China) 193,690 170,503 ↑ 13.6%
other areas 6,118 5,414 ↑ 13%
total 1,482,759 1,111,460 ↑ 33.4%
Operating profit area year 2010 Year 2009 Variety
United States 45,660 67,831 ↓ 32.69%
Europe 45,080 57,009 ↓ 20.92%
China 36,769 22,265 ↑ 65.14%
Russia - -
Asia Pacific and Middle East (excluding China) 34,784 37,645 7.5 7.59%
other areas 865 962 ↓ 10.08%
total 163,158 185,712 ↓ 12.14%
Source: Zhen Mingli Holdings Limited • Interim Report 2010


Mergers and acquisitions of three North American lighting sales companies in the North American market into LED breakthroughs

In 2010, Zhenmingli Group successfully acquired the leading lighting sales companies in the two industries of ILIO INTERNATIONAL USA, INC. (ILIO INTERNATIONAL) and AMERICAN LIGHTING INC. (AMERICAN LIGHTING) in the North American market.

At present, many of Mingli's LED products have been certified by the US Energy Star (the US government recognizes effective energy-saving solutions) and are the first LED lighting products manufacturer in Asia to receive this certification. According to the company's plan, LED bulbs and LED tube will increase significantly in Japan and Europe in 2011, and cooperate with many LED lighting distributors in the US. It is expected that LED lighting products will grow rapidly in the US this year. space.

On January 25, 2011, Zhen Mingli once again used $17 million to acquire HCI (HCI has been designing, manufacturing and distributing high-quality holiday dynamic decorative products and commercial-grade LED products, and has a rich product line for designers worldwide. , electronic engineers, architects, installers and distributors for professional applications.)

This move is expected to continue to strengthen the sales penetration of LED lighting products in the US and Canada in the future.

LED general lighting and component products sales increased by 226.1%

In 2010, LED decorative lights were still one of the company's main sources of income. Annual sales increased by 24.3% to HK$751 million. Sales of LED decorative lighting products accounted for approximately 50.7% of the company's total turnover, down 3.7% from the same period last year.

Sales of incandescent decorative lighting products continued to decline by 6.2% to approximately HK$253 million, accounting for 17.0% of the company's turnover.

Sales of stage lighting products increased by 5.1% to HK$115 million, accounting for 7.7% of the company's turnover. In view of the fact that the company's stage lamp production line will gradually replace the current HID and halogen bulbs with LED bulbs, as the demand for products continues to grow, it is expected to become a new growth point for the company.

The company's LED general lighting and components products sales increased by 226.1% to 314 million Hong Kong dollars, accounting for 21.2% of the company's total turnover, compared with 8.7% last year, an increase of about 13 percentage points.

Will push high voltage, high current and DC LED chips

In 2010, the company's LED chips (including 10 mil x 23 mil) and packaging technology have reached international standards. The average brightness of the mass-produced LED chip packaged into SMD (3528 specification) has reached 2,500 mcd, which is comparable to the brightness of 2,400 mcd to 2,700 mcd of Taiwan's leading backlight manufacturers, which is higher than the 2,100 mcd to 2,300 mcd brightness level of mainland manufacturers. .

The announcement shows that the company is developing HCD LED chips (High Current Driving), AC-LED chips (Alternate Current) and HV-LED chips (High Voltage).

LED production capacity continues to expand, the proportion of chip sales will reach 50%

In 2010, the company's production plant in Vietnam and LED chip epitaxial and packaging plants in Yangzhou and Jiangmen are under construction. According to the company's previous contracts with the two governments, the two LED factories in Yangzhou and Jiangmen will continue to expand their production capacity in the next five years. It is expected that after the production is completed, the company will reach an average production capacity of about 230,000 epitaxial wafers or 5 billion LED chips per month, which will hope to save production costs by about 25% to 40%.

In the second half of 2010, the company added a total of 14 MOCVD and related packaging production lines, all of which were delivered at the end of December. As of the end of last year, the company's epitaxial wafer and chip production capacity increased from 15,000 pieces per month (450 million chips) to 45,000 pieces per month (1.35 billion).

According to the plan, by the end of April 2011, the 19 MOCVDs that the company has installed in place will release 45,000 pieces (2 吋) of epitaxial wafers per month (equivalent to 1.35 billion chips per month). It is expected that the proportion of the company's external sales of chips to total production will increase to more than 50%.

Low-margin product line to reduce costs

In 2009, in order to reduce labor costs and further develop its business in South Asia, the company reduced the manufacturing cost of high and low-end products to a minimum. It acquired 1,200 mu of land in Taiping, Vietnam, as the support of the Group's Heshan plant, the first phase of 20,000. The square meter factory was completed in September 2009, and the second and third phase of the plant construction totaling 70,000 square meters was completed at the end of 2010.

For the capacity transfer of the Vietnam factory, Ye Guoguang, the general manager of the LED chip and packaging division of Zhenmingli Group, said in an exclusive interview with Gaogong LED reporter: "Zhen Mingli is in the transition period and will further upgrade its product portfolio. The assembly part of the low-end products will be moved out of phase to the Vietnam factory, thus making the profitable LED device terminals and channel ends larger."

Ye Guoguang also said that "China's Pearl River Delta region is not suitable for manpower-intensive manufacturing in the future, it must take the high-end manufacturing and brand routes, so to transform, Zhen Mingli is the first to transform. Zhen Mingli is now two One way is to go to Vietnam, one factory in Vietnam is assembled; the other is to find domestic outsourcing manufacturers."

As of the end of last year, the Vietnamese factory had more than 2,000 employees, while the number of employees in China has dropped from 20,000 in the previous peak period to 10,000.

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