Zhaochi is engaged in ODM business of LCD TVs, set-top boxes and video players, and more than 90% of its products are exported. In the first three quarters of 2010, the operating income was 2.07 billion yuan and the net profit was 250 million yuan. With the popularity of LCD TVs in the global market, LCD TV ODM has gradually become the core business of the company, accounting for 54% of sales revenue. Recently, the company announced plans to invest in LED projects and recommended to focus on project progress.
LED project content Zhaochi shares plans to invest 200 million yuan to set up Shenzhen Zhaochi Photoelectric Co., Ltd., which is used to produce and sell LED lighting devices, high-power LED light-emitting devices and various indoor and outdoor LED lighting products. . The total investment amount of the project is RMB 200 million, of which the fixed assets investment is RMB 90 million and the initial working capital is RMB 110 million. The company will fully fund its own monetary funds, accounting for 100% of the total share capital. The project construction period is 2 years. After the project is put into production, the company will be transformed from an export-oriented enterprise into a cooperative enterprise of export and domestic sales, and sell LED lighting products in China with its own brand.
The feasibility of the LED project has been relatively stable in the selection of the project. It is usually evaluated according to the technical, channel, production capacity and other indicators for the new project. Only the industry with more than 70% is selected. The LED industry is the company. Existing businesses form projects that have effective synergies and are able to leverage the company's channel resources and management experience. (1) LED TV backlights are used in the upstream products of the company's LCD TVs. LED lighting products belong to the company's expansion of existing product lines (LCD TVs, digital set-top boxes, video players). (2) LED lighting equipment coincides with the company's existing overseas channels, and the preparation for channel expansion is sufficient. (3) The chairman of Zhaochi Co., Ltd. has served as a distributor of consumer electronics products before starting a business. He has a better understanding of the domestic market channels and laid the foundation for LED lighting products to sell their own brands.
LED project benefit estimate Zhaochi's LED project chip is purchased from Taiwan, and the production starts from the package. At present, the red, blue and green photoelectrics have been invited to the relevant technical personnel for preliminary research and development. The LED project of Zhaochi will be put into production in March 2011, and mass production will be carried out in May and June to form 10 package lines. It is estimated that in the whole year of 2011, it will produce 500 million LED devices with a sales income of 232 million yuan, of which about 350-400 million will be used for self-produced LED TVs. It is expected to increase the gross profit margin of LCD TVs by nearly 2 percentage points.
The main growth point of 2011 is the volume of LCD TV ODM. In 2010, Zhaochi shares the way of relying on middlemen's export methods to be directly targeted to end customers, effectively reducing sales expenses and increasing gross profit margin. However, orders placed directly to end customers in 2010 are generally in the trial stage, accounting for only 30%-40% of total sales. With the emergence of the product market reaction, we expect 2011 to be the time for the expansion of the LCD TV products of Zhaochi. It is estimated that 3 million LCD TVs will be sold throughout the year, and sales revenue will account for about 60%.
The reason for high gross profit Although the adoption of ODM is the mode of operation of the ODM, the gross profit margin and net profit margin of the products are 17% and 12%, respectively, which is much higher than the industry average. The company's strong profitability is mainly due to the following reasons: (1) Since the company's cash flow after listing is relatively abundant, cash is paid when purchasing raw materials, usually a certain percentage of discounts; (2) direct and terminal retailers Contacting sales products reduces the cost of middlemen; (3) Compared with brand manufacturers, the company's product structure is relatively simple, so the number of employees is much less than that of brand manufacturers, and the same number of employees on the production line are 1/3 less than TCL.
LED project content Zhaochi shares plans to invest 200 million yuan to set up Shenzhen Zhaochi Photoelectric Co., Ltd., which is used to produce and sell LED lighting devices, high-power LED light-emitting devices and various indoor and outdoor LED lighting products. . The total investment amount of the project is RMB 200 million, of which the fixed assets investment is RMB 90 million and the initial working capital is RMB 110 million. The company will fully fund its own monetary funds, accounting for 100% of the total share capital. The project construction period is 2 years. After the project is put into production, the company will be transformed from an export-oriented enterprise into a cooperative enterprise of export and domestic sales, and sell LED lighting products in China with its own brand.
The feasibility of the LED project has been relatively stable in the selection of the project. It is usually evaluated according to the technical, channel, production capacity and other indicators for the new project. Only the industry with more than 70% is selected. The LED industry is the company. Existing businesses form projects that have effective synergies and are able to leverage the company's channel resources and management experience. (1) LED TV backlights are used in the upstream products of the company's LCD TVs. LED lighting products belong to the company's expansion of existing product lines (LCD TVs, digital set-top boxes, video players). (2) LED lighting equipment coincides with the company's existing overseas channels, and the preparation for channel expansion is sufficient. (3) The chairman of Zhaochi Co., Ltd. has served as a distributor of consumer electronics products before starting a business. He has a better understanding of the domestic market channels and laid the foundation for LED lighting products to sell their own brands.
LED project benefit estimate Zhaochi's LED project chip is purchased from Taiwan, and the production starts from the package. At present, the red, blue and green photoelectrics have been invited to the relevant technical personnel for preliminary research and development. The LED project of Zhaochi will be put into production in March 2011, and mass production will be carried out in May and June to form 10 package lines. It is estimated that in the whole year of 2011, it will produce 500 million LED devices with a sales income of 232 million yuan, of which about 350-400 million will be used for self-produced LED TVs. It is expected to increase the gross profit margin of LCD TVs by nearly 2 percentage points.
The main growth point of 2011 is the volume of LCD TV ODM. In 2010, Zhaochi shares the way of relying on middlemen's export methods to be directly targeted to end customers, effectively reducing sales expenses and increasing gross profit margin. However, orders placed directly to end customers in 2010 are generally in the trial stage, accounting for only 30%-40% of total sales. With the emergence of the product market reaction, we expect 2011 to be the time for the expansion of the LCD TV products of Zhaochi. It is estimated that 3 million LCD TVs will be sold throughout the year, and sales revenue will account for about 60%.
The reason for high gross profit Although the adoption of ODM is the mode of operation of the ODM, the gross profit margin and net profit margin of the products are 17% and 12%, respectively, which is much higher than the industry average. The company's strong profitability is mainly due to the following reasons: (1) Since the company's cash flow after listing is relatively abundant, cash is paid when purchasing raw materials, usually a certain percentage of discounts; (2) direct and terminal retailers Contacting sales products reduces the cost of middlemen; (3) Compared with brand manufacturers, the company's product structure is relatively simple, so the number of employees is much less than that of brand manufacturers, and the same number of employees on the production line are 1/3 less than TCL.
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