Op Lighting is sprinting IPO product quality problems are exposed
The predecessor of Op Lighting can be traced back to August 1996. Wang Yaohai and Ma Xiuhui and his wife set up a small workshop with only 8 employees. After 19 years, the original small workshop has grown into more than 6,000 employees, with industry leaders in Shanghai, Zhongshan Industrial Park, Wujiang Industrial Park and other production bases; products covering LED and traditional light sources, lamps, electrical appliances, ceiling products, etc. In various fields, the company headquarters was moved to Shanghai in 2008. In 2012-2014, Op Lighting's revenues were 3.138 billion yuan, 3.390 billion yuan and 3.843 billion yuan respectively.
At present, the lighting industry is in the stage of rapid industrial upgrading, and the industry reshuffle is also accelerating. In the short term, the LED lighting market is still in a relatively chaotic and disorderly competition. In the industry's extensive use of OEM models, in the past few years, Op Lighting has also been exposed by the media due to quality problems.
"Oupu Lighting will follow the trend of LED intelligence and the Internet, take its own path, practice internal strength, continuously strengthen its R&D, manufacturing and supply chain capabilities, and provide excellent lighting solutions to consumers and professional users. We serve our customers well and enhance our brand advantage under the LED and intelligent lighting trends.†Opto Lighting’s secretarial office said in a written reply to the Times Weekly reporter.
Net profit decline
Wang Yaohai and Ma Xiuhui currently hold a total of 40.97% of the shares of Op Lighting. The two also hold 51.37% of the shares of Op Lighting through the jointly controlled Zhongshan Op. In addition, Ma Xiuhui also indirectly holds 0.0035% of the shares of Op Lighting. After the listing, Wang Yaohai and Ma Xiuhui are still in an absolute controlling position.
In the past three years, the sales of Op Lighting has increased from 3.138 billion yuan to 3.843 billion yuan; the net profit attributable to the owners of the parent company has not risen and fallen, from 427 million yuan to 293 million yuan.
“Mainly from the increase in operating expenses, management expenses and the decrease in non-operating income.†Op Lighting explained in the prospectus.
In the context of upgrading and transformation of the lighting industry, in 2014, Op Lighting expanded its management team in management and strengthened product R&D investment; expanded sales team in sales, and promoted domestic marketing channels to sink into third- and fourth-tier cities and villages, and improved Consumer service capabilities for online and offline businesses. These have led to the increase in operating expenses and management expenses of Op Lighting, which has affected the profit level.
At the same time, Op Lighting has increased its overseas business investment and opened subsidiaries in Europe, Brazil, India and South Africa. However, among the overseas subsidiaries of Op Lighting, in addition to Op Dubai, Op Brazil, Opto South Africa, Opum Holland and Op Op India are all at a loss, and the two companies in Opp Holland are the most serious losses, with a loss of more than 283.9 million yuan.
LED industry analyst Sun Zhihong told Time Weekly reporter: "Oupu Lighting's overseas subsidiaries are still not profitable, which has dragged down the overall performance of Op Lighting."
It is worth noting that in 2012-2014, Opto Lighting's home lighting business accounted for 37.66%, 43.52% and 38.72%, respectively, which is one of the company's main sources of income. The demand for home lighting products comes from the housing decoration market on the one hand, and from the replacement and upgrade of existing housing lamps on the other hand, the former is greatly affected by the real estate market.
In this regard, Op Lighting has told the Times Weekly reporter that in terms of product channels, Opus will adapt and lead the trend of LED lighting and intelligent lighting technology development, and continuously develop cost-effective, high-tech products that meet and exceed user needs. "Synchronize and strengthen home and business customers."
OEM mode concerns
Op Lighting is positioned as a professional green energy-saving lighting company. As seen from the fundraising projects, LED is still the focus of its future development.
According to the prospectus, in recent years, the lighting products of Op Lighting have shown a rapid growth trend. In 2012-2014, the sales revenue of Op Lighting's LED lighting products were RMB 53 million, RMB 720 million and RMB 2.159 billion, respectively, with sales accounting for 1.71%, 21.24% and 56.17% respectively. In this fundraising project, Op Lighting will also have about 567 million yuan for the construction of green lighting production projects.
According to the prospectus, the project is planned to cover an area of ​​53.1 mu in Wuhu Economic Development Zone of Wujiang City. It will build LED production lines, mold centers and engineering factories, and purchase advanced production line equipment, testing equipment and supporting facilities. After the project is completed, the LED workshop will achieve an annual production capacity of 22.74 million LED lighting products.
Although it is already the “leading boss†in the lighting application enterprise, a large number of Op lighting products are still produced in OEM mode.
In 2014, Opti Lighting's home lighting, light source, lighting control and other, commercial lighting OEM products sales revenue of 669 million yuan, 230 million yuan, 421 million yuan, 305 million yuan, accounting for 45.25%, 23.42% , 62.13%, 60.82%. Among them, lighting control and other, commercial lighting OEM products accounted for the highest proportion of sales revenue.
Lighting control and other products are mainly electrical products and integrated ceilings, while commercial products include basic functional products (such as spotlights) and customized commercial lighting. Opto Lighting has been using OEM production methods in the past. Since 2013, Op Lighting has strengthened its self-developed products, so the proportion of OEMs in 2014 has declined in 2012.
The OEM model brings a more economical production structure to Op Lighting, and it also brings product quality risks.
On May 4th, Guangzhou Administration for Industry and Commerce conducted a quality inspection on the plug-and-socket products sold in the circulation field of Guangzhou. Among the sampling results, the single-switch four-position converter "heat-resistant" item, which was produced by Op Lighting (Zhongshan) Co., Ltd. and trademark "OPPLE", was unqualified.
Op Lighting has confessed in the prospectus that during the reporting period, the company's individual products were classified as unqualified products by the quality inspection department due to quality problems.
“The lighting industry has a long industrial chain and complicated production processes. If there is a problem in one link, it will affect the quality of the final product. At the same time, the company has a wide range of products and some products are produced by OEM. Individual products may be due to product process design and electronics. Quality problems arise due to component compatibility, product transportation, installation and use environment, improper use of consumers, etc." Op Lighting said in the prospectus.
According to the prospectus, after the listing, Op Lighting will continue to adopt the self-made and OEM production mode: the self-made part is mainly for products with high standardization, suitable for automated production lines and good profit margin, as well as customized products with high requirements for products. Products, other products will continue to adopt OEM methods.
"Product quality problems will seriously damage the corporate brand and market image. If the situation is serious, even the company's overall performance will fall sharply. Enterprises must face this problem." Sun Zhihong told the Times Weekly reporter.
In a written reply to the Times Weekly reporter, Op Lighting said: "The incidental non-conformity is a matter of individual batch product quality. The company attaches great importance to it and has taken effective measures and sent the products to relevant departments for testing to ensure the products of Op. high quality."
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