On November 22nd, Guangdong Ganhua announced that it will continue to publicly transfer the 100% equity and related creditor rights of Deli Optoelectronics. After reviewing the current performance of Deli Optoelectronics and market reactions from previous listings, the company has decided to lower the starting price for the sale of its 100% equity and a 230 million yuan credit to 300 million yuan.
The company stated that the poor financial performance of Deli Optoelectronics has placed a significant burden on its overall financial health and operating results. Given its current operational status, it is unlikely that the company will turn profitable in the near future. Selling the 100% equity and related rights at a price below the valuation could result in some losses, but it would help avoid the long-term negative impact of continued losses from Deli Optoelectronics.
In addition, Guangdong Ganhua has clearly outlined its strategic direction toward the big health industry. It noted that Deli Optoelectronics does not align with its long-term business transformation goals. The sale of Deli Optoelectronics' assets is expected to allow the company to focus more effectively on its industrial restructuring and development.
Originally, Guangdong Ganhua, which primarily operated in sugar, pulp, and paper chemical products, made a high-profile entry into the LED sector in 2011. In its 2013 annual report, the company highlighted that Deli Optoelectronics produced high-brightness and ultra-high-brightness LEDs, which were considered key to the future growth of the LED market. The company aimed to build an integrated LED industry chain by focusing on epitaxial wafer and chip production projects.
However, the development of its LED business did not go as planned. The LED epitaxial wafer production project started in the second half of 2014 but failed to meet its initial targets in the first year. By January to June 2015, large-scale production had been halted. Over the years, Deli Optoelectronics reported net losses of 20.75 million yuan in 2014, 53.39 million yuan in 2015, and a staggering 92.82 million yuan in 2016. Although there was some improvement in the first half of this year, it still recorded a loss of 16.45 million yuan.
Currently, the LED industry is becoming increasingly concentrated, with major players such as Huacan Optoelectronics, Mulinsen, Honglizhihui, Guoxing Optoelectronics, and Sanxiong Aurora gaining more market share. This consolidation has led to many companies either collapsing or undergoing restructuring. This year, Qinshang Shares established a semiconductor business focused on education, while companies like Landing International, Polyfluoride, and Guangdong Ganhua have divested their LED operations.
As the LED industry continues to consolidate, more competitive companies are likely to be eliminated. For listed companies with small LED segments and low or negative growth, exiting the LED business has become a necessary move. This trend reflects that the LED lighting industry is entering a new phase of maturity and efficiency.
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