Songsheng Shares and OPPLE Lighting provide the latest response on the development of horticultural lighting and smart lighting!
OPPLE Lighting
OPPLE Lighting announced on June 25 that from June 16, 2021 to June 24, 2021, the company received visits from 22 institutions including Huabao Trust for research. The main contents of the research are as follows:
1. Does the company cooperate with Huawei HarmonyOS?
A: Since partnering with Huawei in 2016, the company has achieved interconnectivity of smart home products through the HiLink protocol. As cooperation deepens, on top of technical interconnectivity, the company has further integrated its smart products into Huawei’s official online and offline store channels. Recently, Richard Yu, CEO of Huawei’s Consumer Business Group, stated that Huawei HiLink is about to be upgraded to HarmonyOS Connect, joining forces with multiple parties to build the HarmonyOS ecosystem.
2. What is the status of financial subsidies received by the company since the beginning of this year?
A: From the beginning of this year until May 15, the company has cumulatively received government subsidies related to income totaling RMB 78.5495 million, which have been recognized in the current period's profit and loss.
3. What is the replacement rate of company dealers?
A: The company's dealers have maintained stable cooperation for many years, with a low replacement rate. The company actively responds to market changes by empowering dealers to transform. Since last year, terminal retail stores have been renovated and remodeled to enhance store image, thereby increasing per-store output for dealers. Meanwhile, by developing new traffic channels and expanding cooperation projects with home decoration companies and designers, the company further diversifies channel traffic for dealers.
4. What are the company's achievements in smart street lights?
A: The company has implemented smart lighting control projects in multiple regions across the country, with over 300,000 nodes deployed last year. The company's smart lighting control platform maintains an online rate of over 99% and a fault alarm accuracy rate of over 99%. Its technical and operational maintenance capabilities lead the industry, providing city managers with convenient management methods and continuously supporting the development of smart cities.
5. What are the competitive advantages of the company's lighting products?
A: The company has built a strong reputation among users over many years in terms of product quality and service capabilities. Through large-scale production and platform-based development, the company effectively achieves cost advantages. By continuously accumulating experience for different (Sales) channel customer groups, it provides lighting Solution that meet customers' customized needs. The company prioritizes R&D investment, holding over 2,800 Patent items, with multiple products winning major international industrial design awards such as the German Red Dot, German iF, and Japanese G-Mark. The company always focuses on Human centric lighting (HCL) to provide users with a healthier lighting environment.
Sosen Shares
Songsheng Shares announced on June 25 that from June 23, 2021 to June 24, 2021, the company received research visits from five institutions, including BOCOM Schroders Fund Management Co., Ltd. The main contents of the research are as follows:
1. What is the company's position in the industry, especially in the niche field of horticultural lighting? What are the company's future plans and vision for the horticultural lighting sector?
A: Among independent LED driver enterprises in China that primarily focus on high-power products, the company's revenue ranks among the industry leaders, and it has maintained a rapid growth trend over the past few years.
Since 2020, in the field of LED drivers for horticultural lighting, the company has occupied a relatively prominent market position in terms of products and customer markets by virtue of its outstanding first-mover advantage. 2020 was the inaugural year of the boom in horticultural lighting. In the second half of 2020, the market witnessed an explosion in demand for orders for horticultural lighting. Last year, leveraging this significant advantage, the company achieved approximately RMB 83 million in revenue from LED drivers for horticultural lighting. In the first quarter of this year, revenue from these products reached RMB 112 million, accounting for about 46% of total revenue.
The company's outstanding advantages in the field of horticultural lighting are mainly due to its forward-looking layout of product R&D and safety certifications for various countries' markets for horticultural lighting drivers as early as 2018. In 2019, it launched driver products specifically for horticultural lighting, gaining market recognition for precise dimming and energy efficiency advantages, thus enabling it to seize market opportunities during the market boom in 2020.
Currently, the development prospects for LED horticultural lighting remain robust. Downstream customers are actively positioning themselves in this sector, and market orders are substantial. The company is optimistic about this market and will continue to focus on the emerging field of horticultural lighting this year and in the future.
2. What are the differences between horticultural lighting power supplies and ordinary high-power power supplies, and what are the barriers to entry for horticultural lighting?
A: In line with current applications in plant factories, horticultural lighting requires higher-power drivers to provide the light needed at various growth stages of crops. Therefore, compared to drivers used for street lights and industrial/mining lighting, horticultural lighting generally uses higher-power drivers, with stricter performance requirements for temperature control, precise light control, and service life.
The company's LED drivers for horticultural lighting mainly consist of medium and high-power LED drivers, which feature high technical barriers. The products emphasize high energy efficiency and require high-precision constant voltage and constant current performance. They incorporate advanced application technologies such as programmability, dimming, and intelligence, working in conjunction with the spectrum applications of horticultural lighting, while also highlighting high reliability and longer warranty life. In addition, there are barriers related to R&D and production, customers and brands, as well as scale. Therefore, high entry barriers are formed for new entrants in the industry.
3. Will the company place horticultural lighting in a very important position in the future?
A: Based on the current development of the horticultural lighting industry and the company's market position and performance in this niche, the company continues to place great importance on this sector. In the future, the company will continue to focus on the horticultural lighting power supply business, consolidate its first-mover advantage and market position, seize the golden development opportunities in horticultural lighting, and drive the realization of the company's development vision.
4. What was the proportion of the company's business in the horticultural lighting sector last year? Will this proportion continue to increase throughout this year?
A: In 2020, the revenue share of horticultural lighting power supplies was approximately 12%, with orders mainly surging in the fourth quarter of last year. In the first quarter of this year, the revenue share of horticultural lighting power supplies reached about 46%. The company has already established a relatively prominent market advantage in the field of LED drivers for horticultural lighting. This year, the company will continue to focus on expanding its horticultural lighting driver business to maintain this growth point.
5. In addition to horticultural lighting, what are the development trends in outdoor lighting and industrial lighting?
A: Outdoor lighting and industrial lighting have always been the core application areas where the company has deeply cultivated. By the end of 2020, focusing on outdoor road lighting and industrial/mining lighting, the company had formed 29 series with over 300 best-selling product models. The main medium-to-high power products cover a power range of 25W-760W. There are 9 series available specifically for industrial/mining lighting, making it one of the brands with the most comprehensive product specifications in the LED driver field for industrial/mining lighting.
The company's rapid growth in recent years has also benefited from the booming outdoor and industrial lighting sectors. The essential demand for LED is becoming increasingly evident, with significant room for expansion in both existing and incremental markets. Currently, domestic penetration remains below 30%, and it is even lower in Europe and the United States, indicating substantial future market potential. Additionally, the accelerated construction of smart cities and smart street poles will create new growth drivers for the market.
6. How does the shortage of raw materials affect the company? Are reserves sufficient to cope with it? How does the company view this issue?
A: In response to the current tight supply of raw materials, the company made strategic stockpiling preparations in advance in the fourth quarter of 2020. Especially for semiconductor materials, the company mainly adopts imported brands, and usually pays great attention to maintaining cooperative relationships with original manufacturers and agents. Relevant suppliers will also understand the company's planning and development in advance.
Since the beginning of this year, in the emerging horticultural lighting market, due to the company's strategic development and market advantages in the horticultural lighting power supply business, most semiconductor suppliers hope to explore new fields with the company to form long-term cooperative relationships. They have provided strong support to the company and, under equal conditions, have maintained a significant supply capacity for the company.
In addition, the company is continuously strengthening its supply chain management. With mature experience in refined management, the company formulated comprehensive response measures early this year, which will not have a significant impact on the company.
The current overall tight supply and demand for raw materials is the broader market backdrop, presenting both challenges and opportunities. This may further accelerate industry consolidation toward leading enterprises, which to some extent benefits companies with scale advantages, strong capital strength, and high industry standing in their continued growth and expansion.
7. The company's gross profit margin for overseas sales is approximately 40%, while that for domestic sales is around 30%. Is this mainly because overseas sales are primarily horticultural lighting?
A: The gross profit margin for overseas sales is higher than that for domestic sales, mainly because the company's overseas markets are primarily developed countries such as the United States, Russia, and Spain, as well as rapidly emerging markets in South America, India, and Brazil. The selling prices of power supply products sold to these overseas markets are generally higher than those in the domestic market. High gross margins for overseas sales are also a characteristic of the industry.
8. What are the company's plans and layout for expanding production capacity? What is the current production capacity utilization rate? What is the progress of fundraising investment projects and the production launch plan?
A: The company aligns its production capacity expansion with order conditions and has long maintained a planned, proactive layout for the next phase of production capacity requirements. Currently, the company's production capacity utilization rate is around 80%, providing ample room to meet potential future increases in order demand.
Currently, the company's fundraising project in Zhongshan—the "High-Power LED Smart Driver Production Base Construction Project"—is under active construction. It is expected to be completed by the end of this year and commence production next year according to the implementation plan. Upon full completion, the annual production capacity for high-power LED drivers is expected to increase by 12.15 million units.
9. How do the two actual controllers of the company cooperate with each other?
A: Chairman Mr. Tian Nianbin oversees the market, while Director and General Manager Mr. Wang Zongyou oversees R&D, production, and supply chain management. The two are acting in concert, maintaining a high degree of alignment on the company's strategic development and operational decisions. They are highly collaborative, and the company's management team demonstrates exceptional combat effectiveness.
10. In the long term, what are the company's development strategy, vision, and approach? Will it expand into other fields?
A: The company's medium- to long-term strategic development plan will continue to focus on the blue ocean market of high-power LED drivers, continuously deepening its core strengths in outdoor lighting and industrial lighting, while persistently focusing on emerging application markets such as horticultural lighting and smart lighting. With dedication and professionalism, we aim to strengthen and expand our core business, delivering strong performance returns to our investors.