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As a national strategic emerging industry, the LED industry is an area that requires a lot of capital investment in the early stage. Although the market prospects in the future cannot be underestimated, the short-term input-output pressure is also very obvious.
"At this stage, I want to find a strong strength in the LED industry, and the daily operation is very healthy. In the aspects of product, technology, management, market and sales, companies with long-term development plans are actually very difficult." G20-LED Summit Dr. Zhang Xiaofei, secretary-general, said at the Guangzhou Summit held on August 16 that in the early days of the development of the domestic LED industry, some listed companies were more subsidized by the government. The hunger and thirst for funds has also led many listed companies to raise funds in the capital market by issuing additional issuance or issuing corporate bonds.
IPO fundraising in the first half of the year shrank
Since 2010, with the successful launch of the domestic GEM, LED companies have found a shortcut to seek financial protection. Even most companies regard IPO listing as one of the most important channels for enterprise expansion and accelerated development.
According to the incomplete statistics of the High-tech LED Industry Research Institute (GLII), there are currently 20 listed companies with LED as their main business. Among them, there are 8 IPO listed companies since 2012, and the actual raised funds are about 4.302 billion yuan. The net amount of IPO raised by LED companies listed before 2012 reached 11.262 billion yuan.
At the same time, since the beginning of this year, the enthusiasm for the listing of LED listed companies has also been extremely high.
On April 5, under the assistance of state-owned enterprises, Dehao Runda (002005.sz) once again completed a private placement of 1.561 billion yuan. This is only a year away from the last $3.5 billion private placement. In addition, in 2010, the company successfully issued a private equity of 1.5 billion yuan. In less than two years, Dehao Runda has raised nearly 6.5 billion yuan for the expansion of LED projects.
On May 7, the issuance of the bonds of Guoxing Optoelectronics Co., Ltd. was completed, with a total issue of RMB 500 million. In addition, the funds raised during the listing in 2010 were 1.48 billion yuan, and Guoxing Optoelectronics has raised 1.983 billion yuan in the capital market.
On June 7, Hangzhou Silan Microelectronics Co., Ltd. through the non-public offering of stocks, the total amount of funds to be raised does not exceed 879.95 million yuan; in 2011, the company completed the issuance of 600 million corporate bonds; plus 2010 company issued additional 57515 Ten thousand yuan invested in the LED industry. If the issue is approved, the company will also raise 2 billion yuan in the capital market in just two years.
Incomplete statistics of GLII show that only this year, LED listed companies have raised 3.541 billion yuan through the issuance of additional issuance and corporate bonds, and the scale is close to the IPO financing amount.
However, high investment did not bring about corresponding gains. According to the results report of the first half of 2012 released by 20 LED listed companies, more than half of them have negative growth in operating income, while 15 companies have experienced a decline in operating profit. In addition, the net profit of 70% of enterprises has a significant downward trend.
"Some companies are expanding, I don't think they have adjusted according to the real situation of the industry and the pace of industry development, which ultimately leads to their consumption of funds in advance consumption." Dr. Zhang Xiaofei said.
On the other hand, some people questioned the slow progress of LED listed companies' fundraising projects, and whether they were caused by the downturn in the industry. Gong Weibin, chairman of Ruifeng Optoelectronics, a member of the G20-LED Summit, said that the progress of the fund-raising investment has been greatly affected. Listed companies. “Because they have more funds, they will invest in the upstream or downstream of the industrial chain, even in areas that they are not familiar with.â€
Gong Weibin believes that the amount of financing for companies listed on LEDs as their main business IPO is not particularly large, so there will not be too many problems. “Ruifeng Optoelectronics does not have the problem of slow investment in raised funds, because the company itself has less funds to raise funds.â€
Non-listed company financing diversification
LED is an intellectually intensive and capital-intensive industry, especially when faced with competition from Taiwan, South Korea, and European and American companies. Capital demand has become very prominent. For non-listed companies, financing is the most important factor in the early development of enterprises. One of the tasks.
Yan Chunhui, chairman of Yaweilang, pointed out that in addition to equity financing, Chinese companies have another great advantage to have great potential to mobilize banking resources. He suggested that the mobilization of bank resources needs to be controlled to a certain extent. As for the financing costs, it must be related to the size of the enterprise.
In the initial stage of the enterprise, because fixed assets and net assets are not high, it is relatively difficult to obtain bank loans. Dr. Zhang Xiaofei gave some enterprises a trick: “Enterprises can guarantee interest-free loans through the government. Early enterprises can also consider accepting venture capital. If the development process, the company’s profitability is very strong, and at the same time, it does not want the company’s equity to be diluted too much. At this time, you can do it through banks and guarantee companies."
Zhang Ming, chairman of Xinli Light Sources, revealed that in 2008, Xinli Light Source was very short of money, bank loans were also due, and other funds could not enter, but unfortunately accepted a PE financing. "Now from the cost point of view, this investment is correct. Although at the time, we cut the meat, but let the company go to formalization, and the cost of follow-up financing has also come down."
Zhang Ming pointed out that the LED companies that are now listed are richer in funds. If it is facing a bigger market challenge, funding is still not enough. In terms of financing, first of all, enterprises must have forward-looking, technical reserves and accurate predictions on the market. 
[Source: "High-tech LED Research Review" August issue of the ancient month]