As the “king of export” of LED lighting products, Ericsson has officially embarked on the road of IPO.
On September 5, 2019, Ericsson conducted counseling and filing, and its sponsor was Guojin Securities Co., Ltd.
Recently, Ericsson disclosed the prospectus (application draft) for the initial public offering of shares.
According to the data, Ericsson is mainly engaged in the R & D, production and sales of LED lighting products and IOT (Internet of things) intelligent hardware, as well as the development, design and operation services of the overall solution of the Internet of things. Its main products are divided into lighting products and IOT products.
Among them, lighting products are divided into LED lighting products and CFL energy-saving lighting products, and LED lighting products are further divided into LED light sources and LED lamps.
“LED lighting + IOT” keep pace
As the leading product of Ericsson, the sales scale of LED lighting products has remained stable in recent years. According to the data of the prospectus, its LED lighting products achieved a revenue of 3.858 billion yuan in 2017, 3.867 billion yuan in 2018 and 3.886 billion yuan in 2019.
According to the tabular data, the income structure of LED light sources and LED lamps is changing in recent years. Among them, the operating revenue of LED lamps has maintained rapid growth, but the revenue of LED light sources is declining significantly.
In the early days, the products of Hitachi were mainly light sources. In 2015, it began to develop LED lamps, and gradually expanded from home lamps to commercial, office, outdoor and other fields.
At the same time, since 2015, with the price of LED falling year by year, the cost performance of LED lamps is better than CFL energy-saving lamps, and the trend is becoming more and more obvious. LED lamps quickly replace CFL energy-saving lamps and become the mainstream of lighting, and the CFL market shrinks rapidly.
In order to adapt to this market change, in the CFL lamp business part, Ericsson mainly undertakes orders from existing customers, and will not expand production and expand new markets and customers. With the shrinking of stock customer orders, the sales of CFL energy-saving lamps are also shrinking year by year.
According to the data in the prospectus, the revenue of Ericsson CFL energy-saving lamp in 2017 was RMB 334 million; Revenue of 179 million yuan in 2018; Revenue of RMB 116 million will be realized in 2019.
In the field of Internet of things (IOT), Ericsson is making in-depth layout, taking intelligent lighting as the starting point, and actively expanding to fields such as smart home and smart building. Up to now, it has formed large-scale sales of four types of intelligent hardware: intelligent lighting, intelligent control, intelligent monitoring and intelligent sensing.
At present, the amount and proportion of revenue from Hitachi IOT products are not high, but it has always maintained a rapid growth trend.
The data show that in 2017, IOT products achieved a revenue of 247 million yuan, accounting for 5.37% of the total revenue; In 2018, the revenue was 491 million yuan, accounting for 10.51% of the total revenue; In 2019, the revenue was 820 million yuan, accounting for 16.64% of the total revenue.
Export accounts for more than 90%
As the “king of export” of China’s LED lighting products, the main sales revenue of Ericsson naturally comes from overseas sales.
According to the statistics of LED Research Institute of advanced industry and Research (GGII), Ericsson ranked first in the export list of LED lighting for two consecutive years in 2018 and 2019.
According to the data of the application draft of the prospectus, the overseas sales amount of Ericsson in 2017 was 4.357 billion yuan, accounting for 94.86%; In 2018, the overseas sales amount was 4.374 billion yuan, accounting for 93.61%; In 2019, the overseas sales amount was 4.556 billion yuan, accounting for 91.81%.
Overall, in the last three years, the proportion of export sales of Ericsson has declined slightly, and the domestic sales revenue has increased slightly, but the domestic and export structure is relatively stable.
Looking at the export destination countries, overseas sales of Ericsson are mainly concentrated in North America, Europe and Asia. In 2019, the total sales revenue of the above three regions accounted for 93.66%; The market economies of South America and Africa are relatively underdeveloped, while the market scale of Oceania is small, so the sales proportion of these three regions is relatively low, and the total sales revenue accounted for only 6.35% in 2019.
According to the international political situation, regional economic development and market demand changes, Ericsson continues to strategically adjust the global market layout of LED business: actively shrink regions with high economic risks such as the Middle East and South America, as well as Eastern Europe such as Russia and Ukraine with excessive price competition, focusing on the development of stable economic development in North America, the European Union, the United Kingdom and Japan Countries and regions with strong consumption capacity.
At the same time, Ericsson will also focus on developed countries and regions such as the United States, Europe and Japan. Because developed regions in the United States and Europe have a faster acceptance of life changing applications of science and technology, such as the use of intelligent Internet of things products. The market starts earlier than other regions and has a higher penetration rate. It is a must for IOT business strategists.
Senior Engineer LED found through consulting the prospectus that in 2019, the IOT products sold by Ericsson to Europe and America accounted for 85.15% of the total sales revenue of IOT products.
It is precisely because exports account for a large proportion that Ericsson is also faced with the risk of trade policy changes and exchange rate changes. In the application draft of the prospectus, Ericsson pointed out that due to the impact of Sino US trade friction, some of the company’s LED lighting lamps (including smart lamps) and some smart hardware were exported to the United States, and the main applicable tax rate was 25%.
In 2020, the outbreak of New Coronavirus pneumonia in the world, resulting in varying degrees of impact and impact on most industries. At present, most countries and regions in the world are affected to varying degrees.
Li said that novel coronavirus pneumonia did not cause any significant adverse effects on the production and operation of the company as of the date of signing the prospectus. However, if the subsequent adverse effects of the epidemic are negative, it will have a significant adverse impact on the global LED lighting and smart home furnishing, smart building and other fields, and will affect the business development and business performance of the company.
Building “lidaxin” brand in domestic market
In recent years, the domestic economy has continued to grow, the high-end consumer group has expanded day by day, and the demand for consumption upgrading is relatively strong. The domestic sales revenue of Ericsson has begun to increase year by year.
Although the domestic sales revenue is increasing year by year, the domestic sales revenue and proportion of Ericsson are still relatively small. According to the data, its domestic revenue in 2019 was 404 million yuan, accounting for only 8.19% of the total revenue. Moreover, domestic sales revenue mainly comes from ODM customers such as IKEA and Philips.
In addition to the sales to ODM customers, in recent years, the company has begun to invest resources to build its own lighting brand “Ericsson”, which is mainly aimed at two application fields of high-end home lighting and educational lighting, which has promoted the growth of domestic sales revenue.
With the gradual improvement of China’s economic development, the continuous improvement of residents’ income level, the state continues to increase investment in education and vigorously promote the construction of educational infrastructure, which has created a good growth environment for the development and maturity of the brand of Ericsson.
In the application draft of the prospectus, Ericsson also mentioned that shaping the “Ericsson” lighting brand is another development goal of the company. At present, the independent brand of “Ericsson” is still in its infancy, with sales accounting for about 1%.
It is proposed to raise 1 billion yuan for main business development
According to the report draft of the prospectus, it is planned to publicly issue 50 million new shares of RMB common shares (A shares), and it is planned to raise 1 billion yuan for the development of its main business, specifically investing in the construction of intelligent manufacturing base, R & D center and domestic marketing and service network.
In 2019, the production capacity of Ericsson in LED lamps and IOT products is close to saturation.
With the funds raised this time in place, Ericsson can expand its production capacity to meet the growing market demand; Greatly expand the production scale of intelligent hardware products and focus on the field of IOT technology.
Through the construction of intelligent manufacturing base, expand the production scale of LED lighting and IOT intelligent hardware products. Under the trend of global manufacturing transfer, LED lighting industry integration and the continuous expansion of Internet of things application industry chain, it is also conducive to give full play to the advantages of scale, enhance product supply capacity and better meet customer needs.