MLS To Raise RMB 960 Million in Shenzhen IPO

News Source: 
China Business News

China’s leading LED package manufacturer MLS, which has earned a reputation as “price slasher” in the LED industry, recently announced it will be raising RMB 960 million (US $ 153.87 million) through a Shenzhen IPO to expand its production capacity and increase liquidity, according to a Chinese Business News reports. MLS actions indicates the LED industry is entering another industry restructure phase.

MLS revenue has reached RMB 2.77 billion from January to September, 2014, and net profits peaked to RMB 340 million, according to MLS investment prospectus. Less than 44.50 million shares will be issued through this recent IPO, which is less than 10% of total company shares, and sold at RMB 21.5 per share. The RMB 960 million raised from the IPO will be invested into four projects, and the remaining as operating funds.

The launch of the new project will greatly boost MLS production capacity, which will assist in diversifying the company’s product structure, and further raise company profitability. MLS applied initiating IPO sales on Feb. 10, 2015, and shortly applied for listing on the Shenzhen bourse in China.

MLS will continue expansions regardless of whether it becomes listed on the bourse, said the company’s General Manager Ji-Liang Lin. The company plans to double luminaire and lighting business revenues in the Chinese market. MLS will continue to proliferate the online retail market, and support the growth of core agents. The company’s revenue aim is more than RMB 1 million, and has expanded secondary distribution channel network to 300 agents.

The company has also been deploying its market strategy in the oversea market, which will be quickly expanding this year. Some of the company’s regional market orders have exceeded last year’s since early 2015, fastest growing markets have been North America, Middle East and Taiwan.

MLS is experienced in implementing mass production strategies to lower costs, and utilize its advantages in mass producing LED packages to lower retail prices for a single LED chip. In 2012, MLS even sold a LED bulb priced below US $1, and has been quickly acquired market shares. Hence, earning the title as “price slasher.”

In the past few years, MLS has been “insanely” expanding. In 2011, MLS revenue reached RMB 1.27 billion indicating the company only spent three years to reach tripled growth. The company’s high growth rates can be attributed to explosive growth in the LED industry, MLS comprehensive product portfolio, its expansion in the Chinese online retail sector, and investments in automated equipment. The company even held a 3,000 distributor packed meeting in June 2014. Moreover, the company was ranked second in Cross-Strait LED package manufacturer industry in 2010 last year, right on the heels of Taiwanese LED manufacturer Everlight.

In a couple of years, China’s LED lighting will become increasingly common on the market and enter a crucial industry restructure period, which will also propel the industry forward.

Based on China’s national plans, 60W equiv. incandescent bulbs will be completely phased out by 2015. China’s LED lighting products market share will reach above 20%, while LED lighting industry market value will peak to RMB 450 billion by 2015 (with LED lighting product market value reaching RMB 180 billion).

Market research statistics indicates by 2013 the global LED package market will grow 7% YoY to reach US $14.4 billion. It is estimated the LED package market size will increase at a Compound Annual Growth Rate (CAGR) of 12.5% to reach US$ 25.9 billion by 2018.

MLS projects the next few years will be crucial for the LED package industry development, as smaller and less competitive package manufacturers are eliminated from the market. Large enterprises will be able to make the most of technology and cost advantages to acquire greater market share.

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