Lidaxin is going to do something big!

Planned total investment: 1 billion yuan!

Lidaxin helps achieve high-quality development and surpasses

Ledar: Aggressively expanding IoT business

Create a healthy lighting environment for campuses

Listed recently, Lextar has recently attracted attention from institutional investors. According to the latest disclosed investor research minutes, multiple institutions including Caitong Fund have conducted on-site research at the company recently. Li Jianghuai, Chairman and General Manager of Lextar, led a group of senior executives to exchange with the research institutions.

Q: What is the company's development history? And what are the future plans for development in which areas?

Answer: The company has primarily operated in ODM mode, providing lighting products to overseas customers ranging from energy-saving lamps to LED lighting products. The company firmly believes that technology and innovation are the foundation for sustainable development; therefore, since its inception, it has placed great emphasis on and continuously increased investment in R&D and innovation.

The company's development history can be roughly divided into three stages. The first stage focused on energy-saving lighting products; the second stage focused on LED lighting products, where the company seized the opportunity of the transition from energy-saving lamps to LED lighting, resolutely transformed, and entered the LED lighting field; the third stage saw parallel development of LED lighting business and IoT business. In recent years, in response to industry and technology trends, the company has entered the IoT business through smart lighting, evolving from non-smart hardware to smart hardware, from single hardware products to sets, and further expanding to software platforms. Recently, the company has made deep investments in the 'edge, cloud, pipe, and endpoint' of the IoT sector, accelerating investment and vigorously expanding its IoT business.

In the future, the company will continuously invest in R&D innovation to enhance the comprehensive competitiveness of its lighting and IoT businesses. At the same time, while effectively managing overseas markets, the company is also vigorously developing the domestic market. Leveraging its own brands and (Sales) channels, combined with existing smart hardware, Apps, cloud platforms, and big data, it aims to gradually build a semi-open ecosystem in niche segments, aspiring to become a comprehensive IoT technology service provider.

Q: What has been the growth trend of the company's IoT business in recent years?

Answer: The company's IoT business is growing rapidly. In terms of revenue, IoT business revenue increased from 490 million yuan in 2018 to 1.29 billion yuan in 2020, with its share of main business revenue rising from 10.31% to 23.83%. In the first three quarters of 2021, the IoT business maintained a strong proportion.

Q: What is the proportion of revenue from own-brand products and contract manufacturing in the company's revenue?

Answer: In the first three quarters of 2021, ODM business revenue accounted for over 90%, while own-brand business revenue accounted for less than 10%.

问：第四季度海外市场的照明需求下降，上游部分产业有反应需求较淡，这是因为下游企业的需求不足，还是之前涨价的过程中下游企业备了过多的库存？

Answer: From the perspective of the entire industry, lighting is currently trending towards "concentration among major manufacturers." As a leading enterprise in lighting exports, the company has benefited accordingly. Sales of the company's lighting business continue to maintain a certain level of growth. However, due to repeated shocks from the pandemic on the overseas economy, coupled with tight shipping capacity, rising raw material costs, and exchange rate fluctuations, the company's overseas business still faces significant challenges. The company is also striving to implement refined management and continuously enhance profitability.

Q: Are the company's lighting products sold under its own brand?

Answer: The company's lighting products in overseas markets are mainly OEM/ODM, while in the domestic market they are primarily under own brands.

The company provides products and services to users in different market segments in the domestic market under its own brands "Ledarin", "Hydexin", and "Langrui".

Among them, the 'Lidaxin' brand is simultaneously positioned in both B2B and B2C sectors. The B2B sector primarily focuses on campus healthy light environments and smart campus solutions, evolving towards a smart education management platform; the B2C sector primarily focuses on original design luminaire products, evolving towards smart home development. The 'Haidexin' brand primarily focuses on mass consumer lighting and commercial lighting. The 'Langrui' brand focuses on jewelry lighting and smart retail store solutions.

Q: Domestic education lighting is primarily project-based, requiring a large sales team to bid for and secure projects one by one. Under this model, what preparations has the company made?

Answer: The company primarily develops this part of the business through a dealer model; the company is mainly responsible for products and solutions, while dealers handle project bidding and after-sales services, etc. Each has its own focus and division of labor, achieving win-win cooperation with dealers.

Currently, in the education sector, the company does more than just educational lighting; educational lighting products are merely the starting point and entry point for the company into this niche. With the accumulation of IoT technology R&D capabilities, we are now building a range from healthy campus light environments to smart campus solutions, and will intensify efforts to expand our IoT business. This type of business will continue to be operated through dealers, growing and developing together with them over the long term.

Q: How has the company's growth in domestic education lighting been in recent years? How is the performance this year?

Answer: Educational lighting is one of the fastest-growing segments in the lighting industry in recent years, and we expect the market size to continue expanding in the future. With the growth in market demand, the company's educational lighting business has grown rapidly in recent years, maintaining a high growth rate in the first three quarters of this year.

Q: As lighting will become a very important carrier for the development of the Internet of Things in the future, what direction will the company's business model and product forms evolve towards?

Answer: The Internet of Everything. Lighting is part of the IoT Solution; lighting and the IoT represent a part-to-whole relationship. Lighting products have low experience costs, making them smart products that are relatively easy for consumers to accept. Moreover, lighting products are numerous and widely distributed in home/office environments, with strong feasibility for connectivity. Therefore, lighting products are an excellent entry point for IoT and one of the most advantageous hardware carriers. For this reason, the company's entry into IoT business via lighting is also顺应 the trend.

公司未来的商业模式和产品形态主要有三个趋势：一是发展多功能整合型产品；二是发展软硬件结合的智能化；三是基于不同应用场景的解决方案；最终通过大数据的挖掘为广大用户提供更多增值服务。

Q: The company positions itself as an integrator. In which dimensions does the company already meet this positioning, and which areas need further strengthening?

Answer: In the IoT stage, enterprise competition is no longer between individual companies but between ecosystems. Within an ecosystem, there are only two roles: 'integrators' and 'the integrated'. Becoming either an 'integrator' or 'the integrated' is a strategic choice for the company.

The company's development vision is to become a world-class IoT technology enterprise that is respected. Therefore, the company maintains strategic focus, adheres to long-termism, and firmly invests in R&D innovation, believing in the power of accumulation leading to breakthrough and the value of time. Although some detours were taken during the exploration process, the company will not change its development vision or strategy; it will continue to strive with the following key plans:

1) Continuously enhance R&D innovation capabilities. The company will continue to increase investment in R&D, further strengthening efforts in core areas such as cloud platforms, wireless modules, algorithms, smart hardware development, and high-end manufacturing, while improving integrated software-hardware design and development capabilities.

2) Achieve in-depth expansion of the industry supply chain. The company will increase vertical integration of the industry supply chain, forming an industry supply chain system that integrates R&D, procurement, and manufacturing, further highlighting the synergistic advantages of the industry supply chain.

3) Strengthen the capability of (Sales) channels domestically and internationally. In foreign markets, focus on enhancing localized service capabilities in countries and regions such as the United States and Europe; in domestic markets, continuously promote the layout of domestic channels for all own brands, and vigorously promote the integration of online and offline channels.

4) Further enrich the product and service system. Based on industry development trends and market demand, expand the company's existing product system, optimize the product structure, and deepen the integrated "scenario-based + intelligent" solution based on the cloud platform to achieve transformation and upgrading from hardware to software-hardware integration, and from single products to solutions.

Q: How is the future growth of the company's overseas ODM business expected to be?

Answer: The company's overseas ODM business involves products mainly including lighting products, control and security products, and smart home appliance products.

从行业发展态势和市场需求来看，LED 照明产品尤其是 LED 灯具未来仍将有一定的增长空间；控制与安防类产品处在快速发展的阶段，且正在往解决方案的方向发展；智能家电类产品也正处于从硬件单品往智能化服务的方向转变，人们对美好生活的追求和向往，智能家电未来存在较大的发展空间。上述业务的市场规模广阔，海外 ODM 业务仍有增长空间。