Recently, Foshan Electric Lighting Co., Ltd. (hereinafter referred to as "Foshan Lighting") released a performance report showing that in the first quarter of 2016, revenue and profit increased year-on-year, of which revenue increased by 17.85%, total profit increased by 6.64%.
Compared with the overall performance in 2015, it has been downgraded to rise, but it is still affected by the “aftershocks†of the litigation claim that caused the loss of shareholders’ rights and interests due to false statements. Whether the compensation continues to drag down the performance remains to be decided by the court. It is understood that at the end of February, 30 people appealed to the court to claim Foshan Lighting compensation of 123,144.28 yuan.
2015 may be an eventful event for the old company Foshan Lighting. At the end of March 2016, the company announced that its operating income fell by 6.26% in 2015, and the net profit attributable to shareholders of listed companies and basic earnings per share fell sharply by nearly 80%. In addition to the sharp decline in performance, quality issues frequently “blacklistedâ€, and the company’s chairman, directors, supervisors, and financial directors, as many as a dozen senior executives have resigned, are undoubtedly worse.
In an interview with the reporter of China Business News, Foshan Lighting’s Dong Mi said that the lawsuit “actively responded†and the quality has been rectified. The personnel changes are normal adjustments. The company is currently not affected by normal operations.
2015 net profit double drop
Analysts who have long been concerned about the lighting industry said that the data in the first quarter showed that the current performance of Foshan Lighting was relatively stable, but the overall income still fell due to the dispute.
On February 27th, Foshan Lighting announced that 30 appellants had appealed to the Guangdong Higher People's Court against the previous relevant judgment and proposed to let Foshan Lighting compensate for 123,144.28 yuan.
In this regard, Foshan Lighting Secretary Lin Yuhui accepted the "China Business News" reporter interview said that the entire dispute has come to an end, the total payment of more than 2,700 people, only five or six people nearly 100,000 yuan of compensation has not been paid, is currently Contact the other party to ask for the information needed to pay the indemnity. The above 30 people, because of the appeal of the first-instance defeat and dissatisfaction, are still in the process of "we are actively responding."
It is reported that since 2013, Foshan Lighting has been trapped in the claim for damages caused by false statements, and the amount of claims has been increasing, becoming the largest investor rights protection case in recent years. According to Lin, as of now, the dispute has totaled 180 million yuan. The industry believes that if the appeal of the above 30 people is successful, it may increase the indemnity.
It is worth noting that due to the continuous indemnity of the dispute, the company's overall profit fell sharply by nearly 80% in 2015.
The annual report released at the end of March 2016 showed that in 2015, Foshan Lighting achieved operating income of 2,876,659,100 yuan, down 6.26% year-on-year; realized total profit of 459.93 million yuan, down 85.59% year-on-year; realized net profit attributable to shareholders of listed companies was 53.405 million yuan, It was down 79.93% year-on-year.
Foshan Lighting said in the annual report that the main reasons are: According to the Guangzhou Intermediate People's Court's judgment on the series of securities misrepresentation disputes, the company compensated investors for RMB 13,188,900 in 2015. (including legal fees of 2,205,700 yuan); provision for impairment of assets was 89,749,900 yuan; affected by the market, the sales price of the company's products decreased, resulting in a decline in gross profit margin and a decrease in profits.
The annual report also showed that the net cash flow from operating activities in 2015 decreased by 38.38% compared with the previous year, mainly due to the payment of misrepresentation awards for the current year. The net cash flow from financing activities decreased by 33.97% year-on-year, which was mainly due to the increase in dividends distributed during the year compared to the previous year. The net increase in cash and cash equivalents decreased by 161.02% year-on-year, which was mainly due to the increase in the amount of compensation for the false statements and the increase in the distribution bonus during the year.
The reporter roughly calculated that the 2015 compensation has reached more than twice the net profit attributable to shareholders of the listed company, which is the most important reason for the decline in profits.
Many senior executives leave their jobs, and the products are repeatedly "blacklisted"
In 2015, it was an eventful event for Foshan Lighting. The lawsuit was entangled and the claim money continued to drag down the company's performance. It was even worse that 12 executives resigned in less than a month, causing constant suspicion.
The announcement on December 9, 2015 stated that the company also received the resignation from Chairman Pan Jie, Vice Chairman Liu Xingming, Director Wu Shengbo, Vienne Hoffmann, Ye Zaiyou, Yang Jianhu and independent directors Liu Zhenping, Dou Linping and Xue Yizhong. The report, please resign the reasons are "personal reasons." However, since their collective resignation will result in the company's board of directors being lower than the statutory minimum number and the number of independent directors of the company is less than one-third of the total number of directors, the resignation report of the nine directors and independent directors has not yet taken effect.
On the same day, the company announced that the company's supervisors, Zhuang Rujia and Zhang Yingqi, had applied for resignation from the company's supervisors for personal reasons. After resigning, Zhuang Rujia and Zhang Yingqi no longer held any positions in the company.
In less than a month, Foshan Lighting once again announced the personnel change announcement. Yin Jianchun, the company's financial controller, applied for resignation as the company's chief financial officer for personal reasons, and applied for the resignation of the directorship of the company's controlling subsidiary, Suzhou Mengtai Libao Optoelectronics Co., Ltd. After Yin Jianchun resigned, he will no longer hold any position in the company and its subsidiaries and subsidiaries.
For the case of personnel exchange, Lin Yuhui told reporters that the personnel change was due to the withdrawal of the original major shareholder of the company, the entry of new shareholders, and the expiration of the term of the directors, which was changed early at the end of last year, which was a normal personnel adjustment. At the end of last year, the new board of directors and the board of supervisors have all been formed. Now the company is operating normally and its performance is not affected by this.
In addition, the company is still a "frequent customer" on the "blacklist."
According to industry insiders, the “blacklist†is frequently exposed, which will inevitably have an adverse impact on the company's brand image, performance and market value.
In response to quality problems, Lin Yuhui explained that “as an old company, product quality has always been excellent. The quality problems are a few small types of products, not leading products, not affecting the company’s performance, and it has been rectified. The relevant departments have passed the quality inspection."
Speed, quality to be synchronized?
Foshan Lighting Analysis, the traditional lighting products market continued to shrink in 2015, but the LED lighting products market is still growing at a certain rate. After rapid development and replacement in recent years, the development speed of LED lighting has slowed down, and the homogenization competition and price competition of industrial products have further intensified. Especially in the field of LED downstream applications where the threshold is not high, there are obvious structural overcapacity problems. Large enterprises will expand through mergers and acquisitions, and some small and medium-sized enterprises that lack market competitiveness will gradually withdraw from the market, and the entire industry will enter the integration stage.
In the company's main business, the sales revenue of traditional lighting products was 146,029,100 yuan, a year-on-year decrease of 31.84%, and the revenue accounted for 50.76%; the sales revenue of LED products was 1,146,635,500 yuan, an increase of 52.92%, and the revenue accounted for 49.24%. According to the data of the annual report in the past two years, the company's LED lighting products revenue ratio is increasing year by year, indicating that the company is strengthening its transformation and achieving certain results.
However, industry observers said that under the weak traditional lighting situation, LED lighting products have developed rapidly in recent years, but the products on the market are uneven and the quality problems are frequent. It is worth thinking about how the speed and product quality of the transition can effectively balance development.
In front of the "blacklist", Lin Shuhui said that in the process of transformation, we must first grasp the quality and ensure the speed of development on the basis of quality. If the quality of the product is not good, the speed is not useful. In particular, Foshan Lighting, which is planned to be a century-old store, should be considered in terms of development, brand and strategy for many years. In the process of transformation, it has been emphasized to ensure quality, and as a premise to ensure the speed of development.
At the same time, the contrast between rising costs and falling prices is worrying. According to the annual report, the operating cost of Foshan Lighting LED lighting products reached more than 1.1 billion yuan in 2015, accounting for 51.27% of the total cost, up 59.52% year-on-year. At the same time, due to the decline in the sales price of the company's products, the gross profit margin decreased and the profit decreased.
According to the National Bureau of Statistics, in the first half of 2015, there were 579 loss-making enterprises in the national LED lighting industry, with a loss of 22.18%, which was 8.6 percentage points higher than the national light industry industry. According to the statistics of market research institutions, the average unit price of LEDs fell by 30% to 40% in 2015, and the output value of the industry only grew by 2% to reach US$14.52 billion.
According to industry respondents, there is a significant structural overcapacity problem in the LED industry. The market competition will continue to be fierce in the future, which may lead to the continuous decline in the prices of industrial products.
Zibo, deputy secretary general of the National Semiconductor Lighting R&D and Industry Alliance, said that in the big environment, demand is shrinking. The LED downstream application market is in an excessive competition caused by product homogenization. The demand of enterprises and markets is fragmented, and the market needs to be standardized, which is in the stage of industry shuffling. When the traditional lighting products are replaced with LEDs, which are long-lived lighting products, the fixed market share is replaced, and where the future market space is, it is the industry's concern.
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