BYD New Energy "hematopoiesis" restart LED business

When the main business continued to decline, BYD (002594.SZ) also began to expect that the development of new energy business can play a "blood" function, not just blindly invest.

In June, BYD, which had been "halving" for nearly a year in the LED industry, suddenly appeared in a high-profile appearance at Guangzhou Lighting Exhibition and exhibited its products from epitaxial wafers, chips, packaged devices to lighting and LED industry chain.

“BYD's investment in the LED field has reached 1.5 billion yuan, and its LED production base in Huizhou has also reached 130,000 square meters.” In mid-June, the responsible person of BYD's LED marketing department disclosed to “New Industry” that although BYD was in 2010, The company announced that it will invest 1.2 billion yuan to enter the LED industry. However, the interline is like a mountain. During this period, BYD LED business also encountered various difficulties.

In the first half of 2011, BYD significantly adjusted the personnel and channel models of its LED division until the second half of last year before it restarted the LED lighting business channel promotion.

“This year is the first year of BYD's LED business channel and brand promotion, and LED products are the second BYD's own brand products after the automotive business.” The relevant person in charge said: “From 2012, we will let The outside world is aware that BYD does lighting in addition to being a car."

An industry analyst pointed out that the reason why BYD LED power, in fact, like their competitors Foxconn Group, LED has become an indispensable component of BYD's foundry business. As BYD and Foxconn adopt the vertical integration business model, entering the LED field is a necessity.

However, the development of LED lighting business has a typical industry. It is still unknown whether BYD, which is good at OEM and industrial manufacturing, can rapidly emerge in the field of LED lighting.

Tossing LED

"Now, Wal-Mart, Tesco and other online malls can see BYD LED lighting products." A mid-level LED sales department of BYD said to the "New Industry" that although the above channels can not achieve too much sales, but BYD focuses on its Brand publicity effect, "We are also working hard to build BYD dealer team, and plans to open BYD LED lighting stores in major cities in China."

However, the middle level did not disclose the specific development goals of BYD's LED business this year, and the current size of BYD's LED business.

Xu Jun, sales director of BYD's LED marketing department, also expressed only a vague indication at the Beijing Lighting Fair in March that the company hopes that LED business will grow by more than 100% this year.

“New Industry” was seen at the BYD booth. BYD’s main exhibit was outdoor lighting and commercial lighting products.

"BYD LED lighting mainstream products used in Taiwan's crystal chip." BYD LED marketing, an insider revealed that the current focus of BYD LED business in the finished product packaging and application products, and BYD in Huizhou in MOCVD (LED epitaxial wafer production The number of equipment is still 5 units.

However, this argument seems to be quite different from BYD's 2010 layout in the LED field.

In 2010, “New Industry” learned from the BYD Industrial Co., Ltd. in Huizhou and the Administrative Committee of the Daya Bay Economic Development Zone in Huizhou that BYD has ordered 10 sets of MOCVD, and it has already arrived 5 sets.

The BYD financial report also shows that BYD last November alone from the Huizhou Daya Bay Economic and Technological Development Zone Industrial Trade Bureau received 13.33 million yuan of LED lighting subsidies.

According to the practice of subsidizing MOCVD equipment by local governments, the subsidies for five MOCVD equipment are at least 50 million yuan.

An LED chip factory executive pointed out that the above data shows that the five MOCVD equipments delivered by BYD have not been fully put into production, and that even the MOCVD equipment put into operation is only one or two. However, according to the practice of LED upstream operations, one or two MOCVD production can not produce large-scale economic benefits.

In this regard, BYD did not have any reply.

From the above-mentioned all kinds of signs, the development direction of BYD's LED business should also have major adjustments. From the investment of LED upstream in 2010 to the development of LED downstream applications in 2012, the development of LED lighting products will gradually drive the expansion of upstream production capacity. .

Hematopoietic function BYD's change in investment strategy in the LED field is also an action that BYD cannot take in the reality of declining main business performance. Because, BYD's main business has been unable to continue to provide "new blood" to the new energy business.

On the contrary, this year coincides with the transition from traditional lighting to LED lighting. If BYD's investment in the country is used, BYD LED lighting business should also be able to reap some government orders, and may even provide "blood transfusion" function for the suspended LED upstream business. .

BYD's financial report for the first quarter of 2012 shows that in the first quarter, BYD revenue was RMB 11.734 billion, a year-on-year increase of 0.2%, and a net profit of 27.04 million yuan, a year-on-year decrease of 89.86%. In the first quarter, BYD’s government subsidies reached 80.97 million yuan. In other words, if this government subsidy is removed, BYD’s performance in the first quarter has actually incurred a loss.

Even worse, BYD expects to have a net profit of only 68.84 million yuan in the first half of 2012. This also shows that BYD could not reverse the material loss in the second quarter of this year.

BYD said that the company's sharp decline in net profit was due to the inventory depreciation provision for solar energy business, and the performance in the first half of this year will continue to be affected by the customer structure of mobile phone business and the drop in solar product prices.

In addition, BYD's quick ratio fell again to 0.42 times in the first quarter of this year, and this number was still 0.44 times in 2011. The quick ratio reflects the liquidity of the company and the ability to repay the short-term debt of the company. It is generally said that the cash flow of the company is full, and the quick ratio is usually more than 1 time.

The decline in the above figures shows that BYD’s cash flow has become increasingly tight. Based on this, BYD publicly issued 3 billion yuan of corporate bonds on June 21.

In fact, BYD does not give up its LED business, and requires LED business to achieve its own "blood-making" function, but also because LED has become an indispensable component of BYD's business layout.

An insider of BYD's LED marketing department pointed out that the battery business is BYD's core competitiveness and is the cornerstone of BYD's entry into the new energy field. BYD has entered the field of new energy vehicles and photovoltaics with its battery business, and photovoltaic applications also have photovoltaic lighting products. Naturally LED lighting is used. Therefore, LED has become one of the necessary layouts for BYD in the new energy field.

In addition, LED chips have become indispensable components for products such as BYD's consumer electronics products and car lights. If self-sufficiency of LED components is achieved, there is no doubt that the cost of upstream raw material products will be significantly reduced.

In view of this, although the current LED chip layout of BYD's upstream is still unable to expand, it must be completed in the future. Therefore, in the current situation where BYD lacks money, using LED lighting to drive the development of LED business is also an outlet based on the status quo.

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BYD’s collective pay cuts have been reported by media. Unlike last August’s large-scale layoffs to cope with the decline in performance, BYD (002594.SZ;01211.HK) has adopted another strategy this time: leadership and employees have reduced their salaries.

The reporter learned from BYD that BYD has started a new round of pay cuts in June. This pay cut involves all departments. The company’s employee performance awards were uniformly lowered from June to September, with the A-level performance awards being 0%, and the GB, H, and operative performance awards being uniformly reduced from 33% to 15%.

The BYD people interviewed by the reporter said that the salary reduction policy will not affect the company's business operations. Whether the policy will continue in the future depends on whether the company's future business performance is good or bad. "There is no way for the company to be affected by the overall economic situation. The company's solar business and automotive business performance are not good," the source told reporters.

The annual report shows that BYD’s net profit after deducting non-recurring gains and losses in 2011 was only 629 million yuan, down 70% year-on-year.