Text | Xie Zefeng
Edit | Yang Xuran
If you want to ask who is the most poetic head of China's listed companies, Li Jun, chairman of Leyard, may come out on top.
In the opening speech of Leyard's 2023 financial report, Li Jun once again composed a poem:
Shame is hard to publish an annual report,
Performance is hard to escape;
After knowing the shame, we will work together,
Work hard to see the present.
It is clear from the poem that he is not satisfied with the company's performance in the past year, and he feels that he cannot escape the blame, and lists five major mistakes for investors to criticize and correct.
Since 2016, Li Jun has almost always shown off his talent in the company's financial reports, and although these poems do not necessarily conform to the rules of the Seven Uniques, it does not prevent investors from getting a glimpse of the company's performance changes.
From high-spirited, scolding Fang Xuan to being ashamed and living like a year, Leyard's performance and stock price have stepped out of a standard parabola - from listing to 2017, it is a period of rapid growth, in 2018 it fell into a growth dilemma, in 2020 due to the impact of emergencies caused by huge goodwill impairment caused losses, and in the following years it returned to profitability, but now it has stalled again.
Hard enough, sincere enough, but bad luck and the general trend is not there, no wonder this "poet chairman" is uneasy.
01 An unsatisfactory financial report
Li Jun's self-blame comes from the 2023 financial report.
In 2023, Leyard's revenue fell by nearly 7% to only 7.615 billion yuan, and its net profit increased slightly by 1.6% to 286 million yuan. Whether it is compared with historical performance or compared with peers, it is not qualified.
Since its listing, Leyard's performance has drawn a parabola with a steep arc. From its listing in 2012 to 2017, in the last round of economic golden period, benefiting from the dividends of night consumption, cultural tourism, and municipal engineering, Leyard's profits increased by nearly 20 times, and its total assets expanded by 12 times.
During this period, the company's stock price climbed as much as 13 times (post-weighting), achieving the standard Davis double-double, a proper high-growth stock role model.
At that time, Li Jun was full of pride: "What is there to fear when the performance is doubled, and who is the enemy to open up the territory and expand the territory." "From 2024 to 2016, Leyard's net profit doubled for three consecutive years, and in 2017, the growth rate was still as high as 80.88%. Li Jun also wrote: "Last year's great achievements, eighty percent of the growth is too difficult; ”
Li Jun compared Leyard at that time to a "young and innocent girl". In his view, LED display mainly focuses on the B-end and G-end markets, and will replace projection and LCD wall in the future, and enter the broader C-end market.
He even shouted to investors in the financial report: "You may have missed Hikvision's investment from a market value of 40 billion to 400 billion, and I hope you don't miss the second Hikvision - that is, the historical opportunity of Leyard's market value from more than 30 billion to hundreds of billions!"
Who would have thought that his prophecy would be fulfilled in reverse? Just three days after the release of the 2017 earnings report, Leyard's stock price reached its highest peak in history, followed by a sudden decline. By September 2018, as the stock price continued to fall, Li Jun took out his anger on a fund manager who had sold the company's shares:
A certain fund manager abandoned us in the most difficult times and gave us purgatory...... We will give him a regret pill for his all-round health and beautiful performance, which could be a big failure in his career.
Since then, Li Jun and his wife have increased their holdings and called on employees to buy their own stocks, and promised to cover the bottom. But in the end, the fund manager's actions were confirmed by the market to be correct - Leyard's profit increased by only 3% in 2018 and continued to decline in 2019-2020. Li Jun's "100 billion market value target" is more distant than before.
The joys and sorrows in the mall are not the same, and Leyard's competitor Absen is currently in a booming overseas business, with a net profit of 323 million yuan in 2023, a year-on-year increase of 58.92%, while its revenue is less than 4.1 billion yuan. In other words, Absen used nearly half of its revenue to generate 1.13 times the profit of Leyard, and the market value is less than half of Leyard's.
Another company, Unilumin Technology, has not yet released its annual report, but at present, Leyard is the most valued of the three peer companies, which shows that its stock price correction is still under pressure, which is not good news for Li Jun.
In addition to the basic financial data, industry analysis, technology trends, core competitiveness, performance dismantling, etc. are carefully written.
It can be seen that although the company's performance has fluctuated in recent years, Chairman Li Jun attaches great importance to the corporate image and market value management, and puts the stock price performance and investor returns in a very important position. This is very worthy of being recognized by the market and investors.
In the face of such an entrepreneur with a sense of public responsibility, rational investors and public opinion should not be ridiculed and ridiculed, but should be given sufficient support and encouragement during the trough period.
02 Entrepreneur in Economics
Li Jun graduated from Chinese University with a doctorate in economics and taught at the Central University of Finance and Economics at the age of 23.
At the end of 1991, Li Jun gave up his iron job and resolutely went to Lantong as vice president of sales.
Four years later, Li Jun decided to go it alone and officially founded Leyard. In the course of Leyard's development, Li Jun is an absolute spiritual totem and business leader, with his profound professional knowledge in economics, keen market insight and forward-looking industrial judgment, he has allowed Leyard to enter the fast lane of rapid development.
Li Jun was interviewed by Beijing Satellite TV video
Similar to the "Moore's Law" of the chip industry, the LED industry also has a "Haize's Law", that is, every 18-24 months, the LED brightness can be about doubled, and every 10 years the industry will produce a huge technological revolution, LED output lumens will be increased by 20 times, and the cost will be reduced by 1/10.
Li Jun has stepped on almost every outlet of industry change, which is the core reason for Leyard's rapid development in the early stage.
In 1998, Leyard developed the country's first full-color screen, and taking advantage of the development opportunities of municipal infrastructure renovation and sports events, Leyard got off to a smooth start.
Ten years later, an opportunity to rewrite the company's history fell to Li Jun. During the preparation period of the Beijing Olympic Games, the chief director Zhang Yimou set the LED super large ground display plan, and Leyard was finally selected, and he amazed the world as soon as he appeared at the opening ceremony, and became famous for a while.
However, at that time, the LED display still could not meet the needs of high-end customers, and there was an example that LV at that time searched all over the world and failed to find a high-level screen with enough delicacy to display its products. Li Jun believes that at least the spacing between the lamp beads should be reduced to less than 3 mm, but the result is that more than 100,000 lamp beads will be squeezed into each square meter of the screen, and the cost per square meter will be close to 300,000 yuan at the price at that time.
Almost all players in the industry have not considered such a practice. But Li Jun prefers Hushanxing, first, the demand blowout, and second, he believes that the cost will definitely be able to fall.
In 2010, Leyard successfully developed the world's first 2.5mm small-pitch high-definition LED, which successfully entered the supply chain of high-end customers such as BMW and Mercedes-Benz.
As the definition of small-pitch products, the industry refers to products with a dot pitch of less than P2.5 (mm) as small-pitch displays. During that time, Leyard struggled to find a rival and took almost every market.
At this time, the "Heits' law" came true, and the cost of lamp beads continued to decline, from 2 yuan to a few cents. Since mass production in 2011, Leyard's small-pitch products have been continuously iterated and the pitch has been reduced to less than P1.
After this battle, Leyard completely walked out of the jungle and won the first place in the global LED display market.
Li Jun, who is not from a technical background, relied on his profound knowledge of economic theory to help Leyard complete the strategic deployment in the early stage, and quickly broke through the encirclement and became the world's first, which is not unpleasant.
But in the face of the next generation of Micro LED, the competition is more intense. Li Jun's more than a dozen mergers and acquisitions in the past have gradually begun to show negative impacts. This is also a hurdle that enterprises must overcome in the process of upgrading and changing the industry step by step.
03 Strong enemies are everywhere
Success or failure is all about failure, and the gains and losses of enterprises are closely related to the strategy of the top leader. Since its listing, Li Jun has formulated a development strategy of "endogenous development + epitaxial mergers and acquisitions", which allows the company to rapidly expand its boundaries and continue to develop:
The year after its listing, Leyard acquired Internet Yida and extended its tentacles to the field of radio and television;
From 2014 to 2018, Leyard successively brought Shenzhen Kingdom Lighting, Lifeng Culture, Gionex Xiangyicai Technology, Xiamen Hedao, Zhongtian Lighting, Lanshuo Technology, Vanke Times, Purui Lighting and other enterprises under its command;
In 2015, Li Jun set his sights overseas, and spent 1 billion yuan to acquire the international display giant Pinda Electronics in the United States, knowing that Leyard's revenue at that time was only 1.1 billion yuan;
In 2017, it acquired NP Corporation in the United States for $125 million.
After some operation, Leyard's business scope has been extended to performing arts, cultural tourism, night tours, VR, AI spatial computing and other fields. Li Jun, who came from an economics background, knows this well, and his original intention was to use mergers and acquisitions to achieve two-way running of performance and stock price.
But he seems overly optimistic about the future. By the end of 2018, the company had accumulated 2.7 billion yuan of goodwill on its books, and with the deleveraging of PPP projects, these profit boosters became a big killer. In 2019, Leyard made a provision for goodwill impairment of 342 million yuan, resulting in a 44% plunge in profits that year.
Affected by the epidemic in 2020, the cultural tourism and night tourism economies were hit hard, and the goodwill impairment of 1.307 billion yuan that year caused an annual loss of nearly 1 billion yuan. To this day, the problems of this business segment remain unresolved, which is also one of the five "mistakes" stated by Li Jun.
Now, "Heitz's Law" is in effect again, and Micro LED is regarded as the ultimate display technology. Compared with traditional LEDs, Mini LED displays have a dot pitch of 75-300 μm, while Micro LEDs have a dot pitch of less than 75 μm.
The many advantages of Micro LED make it break through the limitations of large-screen commercialization, and are more suitable for close-up viewing fields such as smart watches, VR/AR, smartphones, and cars. And Li Jun's strategy is to skip the transition stage of Mini LED and go directly to Micro LED.
In 2020, Leyard promoted the implementation of Micro LED technology, and two years later, it launched the Micro LED Black Diamond series. But from the B-end G-end market to the C-end, to encounter more powerful opponents to grab food, in addition to Unilumin Technology, Absen, traditional panel and terminal companies BOE, Hisense video, Samsung Electronics are all laying out Micro LED.
As new technologies involve chips, new packaging and other technologies, the trend of vertical and horizontal industry and strong alliances is becoming more and more obvious. In 2020, Leyard and Ennostar Holdings established a joint venture to establish Lijing, realizing the layout of the whole industrial chain of upstream chips, midstream packaging, and downstream applications.
Coincidentally,2022month3month,Hisense Video subscribed for 496 million yuan to issue additional shares of Qianzhao Optoelectronics,After that,Continue to increase holdings,Now the controlling shareholder of the latter has become the largest shareholder,It belongs to"TV+chip"A typical representative of the strong combination。
In November of the same year, BOE subscribed for HC Semitek's issued shares for 2.084 billion yuan and became its largest shareholder, which is a representative of the "panel + chip" alliance.
Many companies have joined the battle, and the price war of small pitch LEDs in Leyard's advantageous area has intensified, and by the end of last year, the price of small pitch LEDs fell by nearly 56% compared with 2020.
Now, the creator of this small spacing is beginning to face more and more competition from strong players. This is not what Li Jun wants to see, but it is already a real problem that he cannot avoid.
04 Write at the end
The end of the technology is the war of costs.
Although the LED display industry is a technology- and capital-intensive industry, it does not have extremely high barriers like CPUs, mobile chips and AI chips. Therefore, whether it is small pitch LED, Micro LED, and Micro OLED, they will fall into the ultimate battle of cost competition like the photovoltaic industry.
Li Jun and Leyard have achieved great success in the germination period of the industry, relying on advanced vision and keen market insight. But now that the tide is receding and the crowd is competing for the buck, the decision-making risks of enterprises are becoming more and more great.
A true poet chairman will win people's emotional respect, but the performance and market value of the enterprise will ultimately be determined by the competitive environment of the industry and the actual operation of the enterprise, which is ruthless and cruel and lacks human feelings, but this is business.