Table
of Contents
Chapter One Summary of this Business Plan…………………………………………………...5
Chapter Two Company and Project Introduction…………………………………………….10
Chapter Three Product and Technological R&D………………………………………………15
1. Products ………………………………………………………………………………………15
2. Technological R&D…………………………………………………………………………..18
Chapter Four Market Analysis ………………………………………………………………….20
1. Market Overview……………………………………………………………………………..20
2. Market Characteristics………………………………………………………………………..21
3. Application Market Analysis………………………………………………………………….23
4. Major Manufacturers………………………………………………………………………….26
Chapter Five Competitive Advantages Analysis………………………………………………..30
1. Products Advantages………………………………………………………………………….30
2. Core Technology and Intellectual Property Rights Advantages………………………………30
3. Technical Team Advantages…………………………………………………………………..32
4. Market Advantages……………………………………………………………………………33
5. Cooperation Advantages………………………………………………………………………33
6. Policy and Geographical Advantages…………………………………………………………34
Chapter Six Operation Management Plans…………………………………………………….35
1. Development Strategy of the Company………………………………………………………35
2. Market Positioning of the Company………………………………………………………….36
3. Operation Plans of the Company……………………………………………………………..36
Chapter Seven Capital Requirements, Utilization and Financing
methods………………….42
1. Capital Requirements…………………………………………………………………………42
2. Capital Utilization…………………………………………………………………………….43
3. Financing Methods……………………………………………………………………………43
Chapter Eight Capital Withdrawal Method……………………………………………………43
1. Going Public…………………………………………………………………………………..43
2. Stock Right Transfer………………………………………………………………………….43
Chapter Nine Financial Analysis………………………………………………………………..44
1. Basic Premise Conditions……………………………………………………………………..44
2. Future Balance Sheet Conditions of the Company……………………………………………44
3. Future Cash Flow Conditions of the Company……………………………………………….45
4. Financial Indexes Analysis……………………………………………………………………45
5. Break-even Analysis…………………………………………………………………………..46
Chapter Ten Management Team………………………………………………………………...46
Chapter Eleven Risks and Control Methods……………………………………………………47
1. Policy Risks…………………………………………………………………………………...47
2. Technical Risks Analysis and Their Countermeasures………………………………………..48
3. Market and Competition Risks Analysis and Their Countermeasures………………………..48
4. Financial Risks………………………………………………………………………………..49
5. Purchase Risks………………………………………………………………………………..50
6. Operation Management Risks………………………………………………………………..50
7. Human Talents Risks…………………………………………………………………………51
Chapter One Summary of this Business Plan
1. Company Introduction
Founded in November 2003 with a registered capital of 50,
000, 000 USD$, Dalian Lumei Optoelectronics Co., Ltd. is a
new high-tech enterprise mainly engaged in the R&D, production
and sales of high-brightness light emitting diodes (LED) chips.
It is located inside Dalian Photoelectron Program Industry
Base at No.1 Huanghai Avenue in the Economic and Technological
Development Zone of Dalian City, covers an area of 200, 000
square meters, and its total construction area reaches as
much as 63, 515 square meters. Having been established for
more than one year, the Company has already conducted key
scientific and technological project in the “Tenth Five Year
Plan” of Ministry of Science and Technology of China, the
bidding project of development funds by the Ministry of Information
Industry as well as projects of the local government. It is
also one of the standing director organizations of the Chinese
semiconductor lighting R&D and industry alliances, and
has participated in the development of technical standards
and industrial regulations in the Chinese semiconductor lighting
industry.
2. Products and Technologies
The industrial chain of the LED industry is divided into four
industrial stages of the upper-end epitaxial wafers manufacturing,
middle-end chip preparation and lower-end chip package as
well as production of application products. LED products are
first made of epitaxial wafers produced with the tube core
processing technique that is similar to the manufacturing
of integrated circuit, and are then divided up into several
crystal grains, each of which can be processes into one LED
chip. Finally, LED chip becomes light emitting diode through
package. The key industrial process undertaken by Dalian Lumei
Optoelectronics Co., Ltd. includes developing GaN epitaxial
wafers into several tiny LED chips (that is chip of the light
emitting diode) through several key techniques including lithography,
plating and cutting.
As a revolutionary kind of new light source, LED has quite
obvious advantages in replacing current traditional lighting.
Traditional head lamps transforms electrical energy into heat
energy, which is then further transformed into light energy
through medium of noxious substances like mercury or inert
gases, and energy is thereby severely lost after two transfers
and transformations. LED, on the other hand, directly transforms
electrical energy into light energy and avoids great energy
waste and creation of harmful gases in the transformation
process of electrical and heat energies. It has quite remarkable
energy conservation and environmental protection benefits
and is of epoch-making significance. By adopting LED as the
new lamp-house, consumption of electricity under the same
brightness will only be 10% of that with ordinary filament
lamp, while life span can be extended up to 100 times. It
is estimated that the national consumption of electricity
in China will reach 2,700 bn. kwh in 2010 and the lighting
consumption will exceed 300 bn. kwh. Under the condition of
same brightness, if 1/3 of filament lamps are replaced by
semiconductor lamps, nearly 100 bn. kwh of electricity can
be saved for the country each year, which is equivalent to
the electric power generation of the Three Gorges Project.
At the present time, LED technology has been extensively used
in areas like automotive and traffic signal lamps, LCD backlights,
large screen display, decoration, landscape lighting, special
lighting, public lighting as well as tourism and light industry
products.
Main products of the Company include high-brightness blue,
cyan and green chip products. The Company will develop towards
production on the upper-end of the industrial chain -- epitaxial
wafers in the future, and become a large LED manufacturing
enterprise that integrates epitaxial production with chip
production. Chip products of the Company are characterized
by fairly good reliability, long-term stability and consistency,
high brightness anti-static levels, which are shown as long
acceptable life and low color and brightness decay rates,
etc. Thanks to the super fine quality performances of the
products, they have been mainly used in areas like full-color
large screen display and traffic signal lamps, which present
the highest requirements for LED product quality performances.
The Company has continued to use production technologies of
the former American AXT Inc. and taken up a relatively leading
position in the world. At present, it has mastered the unique
and advanced epitaxial growth technique and chip processing
technique, possessed complete intellectual property rights
in epitaxials and chips by holding 31 patents. Dalian Lumei
Inc. has technical teams made up of overseas geniuses from
AXT Inc., and specially hired domestic doctors, masters and
bachelors graduated from distinguished universities like Tsinghua
University, as well as experienced technical experts cultivated
by Luming Group for several years, all of which make up a
strongly professional R&D team with multi-national backgrounds.
Meanwhile, the Company has also attached great importance
to the input of technological R&D to accomplish research
and development of new products within a shore period of time
so as to keep the technological leading position of the products.
In addition, it has close business contacts and cooperation
relations with units like Dalian University of Technology,
Xiamen University, Jilin University, Zhejiang University as
well as Chinese Academy of Sciences. Through the above-mentioned
cooperation, the Company undertakes to solve key technical
problems in the manufacturing techniques of high-power LED.
3. Market Conditions
In recent years, the market size of LED products has been
continuously on the increase. The global LED market has increased
to US$ 4.7 billion in 2004 from the US$3 billion in2001, increased
by more than 20% annually. Among that, the increase of high-brightness
LED has been more rapid, and its market size has risen to
US$3.7 billion in 2004 from the US$1.2 billion in 2001. Its
annual growth rate within the decade from 1995 – 2004 has
reached as much as 46%. As predicted by Strategies Unlimited,
the market of high-brightness LED will continue to rise at
a rate of 17% in the coming few years, and will reach US$
5.9 billion in 2008, with the advent of LED white lighting
era.
As a new generation of green lighting industry, semiconductor
lighting industry plays a significant role in the development
of national economy and the environmental protection. In recent
years, developed countries in the world have introduced national
semiconductor lighting program one after another and invested
huge amount of capital into the R&D. At present, world
leading companies in lighting like Philips, Osram and GE have
all regarded LED as a key industry to be developed. Philips
even spent 95 million USD$ to acquire the 47% shares in Lumileds
originally held by Agilent in August, 2005, thus enabled its
total shareholding to arrive at 96.5%, which represented its
great expectation in the application of GaN LED into the lighting
business. According to the predictions of iSuppli, the annual
compound growth rate of LED in the ordinary lights market
will be as high as 52% in the coming five years. Out of considerations
of market and cost, the global manufacturing industry has
been gradually shifting to Asia and China in particular. China
has now become the largest manufacturing base for lighting
lamps and lanterns in the world, whereas developing the semiconductor
lighting industry has also become common sense of the Chinese
government and the industry. In addition, the Chinese government
has already started to actively promote a resource efficient
society in confronting with the increasingly severe energy
crisis. As an effective method to solve energy crisis, the
semiconductor lighting industry will be supported and developed
with priority by the government.
4. Corporate Competitive Advantages
Product advantages: Performance indexes of the product, such
as long-term stability, reliability, brightness and anti-static
capability have all reached international leading or advanced
level. Compared with US and Japanese companies, products of
this company also enjoy price advantage, while it has quite
clear technological advantages in comparison with domestic
and Taiwan companies;
Core technology and intellectual property right advantages:
The Company possesses 31 patents and all the LED technological
and intellectual property rights owned by the former AXT Inc.,
has mastered the unique and advanced epitaxial growth techniques
and chip processing techniques, as well as has been equipped
with complete epitaxial and chip intellectual property rights;
Technical team advantages: The Company has a pool of talents
with high quality and a quite strong technical team. Researchers
include technicians who have obtained doctors’ degree in the
US and had professional working experiences in large American
corporations, as well as specially hired experienced domestic
experts, all of which make up a highly professional R&D
team;
Market advantages: The unique resource structure of the Company
has brought it with out-border market advantages, and the
customer network of the former AXT Inc. plays a significant
role in the Company; thanks to their performance advantages,
the products can quickly take up the high-end domestic market
such as large screen display and signal lamps. The demand
of the products outstrips their supply, with quite obvious
market advantages.
Cooperation advantages: Cooperation of the Company with Dalian
Luming Science and Technology Group and the American LUMEI
OPTOELECTRONICS CORP. will create fairly remarkable cooperation
advantages. Combination of chip advantage at Lumei and fluorescent
powder advantage at Luming will bring out well coordination
effect;
Policy and geographical location advantages: Located at the
center of the Bohai-Rim Economic Circle, Dalian city is window
to the economic development in North East China and front
of revitalizing the old industrial bases in the North East.
At the prime location of the Bohai-Rim Economic Circle and
North East Asian Economic Circle, the city borders on hinterland
of North East China and Inner Mongolia, and is next to developed
countries and regions in the photoelectron industry like Japan
and South Korea in the south. Coupled with advanced air, water
and land transportation, it is the ideal place for developed
countries to shift and diffuse their technological projects
to China. The city has always taken the lead with regard to
taxation, land, talent introduction as well as investing and
financing mechanisms in North East China. The Dalian Municipal
Government has attached great importance to the development
of the semiconductor lighting industry, and has specially
set up a photoelectron industrial area of 10 square kilometers
in its economic and technological development zone to be used
in the development of semiconductor lighting industry, and
the area has been listed as a national “Semiconductor Lighting
Industrial Base”.
5. Corporate Operation Plan
The Company plans to expand its corporate production scale
based on the existing conditions and to increase its annual
production capacity to 3 billion pieces of standard chips
from the current 600 million pieces per year. It has already
invested in US$50 million to have a workshop capable of 3
billion pieces, power equipments, intellectual property rights
as well as production equipments of 600 million pieces. In
order to realize the production capacity of 3 billion pieces,
the Company will need to inject a further fund of 250 million
RMB. After realizing the production of the expansion, annual
sales revenue of the Company is expected to amount at 930
million RMB and the total annual profit will reach more than
90 million RMB.
6. Management Team and Human Resources
Management team of the Company is a high quality team with
reasonable staff structure and experienced and dedicated staffs.
It is made up of professionals with scientific research, market
and management experiences in various fields. The chairman
and president, Mr. Xiao Zhiguo, has years of technological
R&D experiences and corporate management experiences.
He founded Dalian Luming Group in 1992, and now the group
has developed into a large corporate. President Xiao owns
dozens of invention patents in total, and has been continuously
awarded the title of “Invention Genius in Dalian City”, “Excellent
Talent in Dalian City”, “Top-grade Model Worker”, “Excellent
Science and Technological Worker in Liaoning Province” as
well as “Excellent Private-run Science and Technological Entrepreneurs
in China”.
7. Financing Plan and Financial Analysis
The Company at present seeks a fund of RMB250 million in an
attempt to realize the objective of expanding production capacity
and improve market share. The financing methods is equity
financing.
In accordance with the investment plan and financial forecast
of the Company, it will realize an average annual profit of
RMB 91, 020, 000 after putting into place the newly added
investment of 250 million RMB. That means an average annual
returns rate of 13.83%, financial net present value of RMB254,
560,000, internal rate of return of 28.55%, break-even point
at 73.84% and payback period of 4.11 years, which indicates
that the Company has sound earning and anti-risk capacities
and is quite worth of investment value.
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