In the LED market for specialized lighting, Chinese LED packaging manufacturer Hongli Tonic accounced the company recently acquired 38 percent of Guangzhou Forda Single Co. Idt shares for RMB $31.12 million. This procurement shows Hongli’s ambition to increase future investment strength. The company has begun aggressively advancing into the LED automotive lighting industry enticed by higher gross profit margins than that of regular lighting. Hongli hopes that LED automotive lighting can become the company’s new profit generator.

A look into Hongli Tronic’s LED factory.

Hongli already held a share of 62 percent in Forda, but after the obtaining an additional 38 percent from the companies GM Dong Jinling and VGM Liu Xinguo, Hongli now owns 100 percent. The price of the share was bought at a rate of 10 times of its 2012 P/E. The company’s 2012 net profit reached RMB $8.34 million. Mr. Dong and Mr. Liu both expressed that Forda’s net profit excluding extraordinary items for 2013 to 2015 will reach RMB $11.7 Million, RMB $18.7 Million, and RMB 31.8 Million respectively. 

Aside from buses and other automobiles, Forda also produces LED lighting used on farming equipment.

Forda’s production is mainly geared towards exports, primarily producing lighting for automobiles, motorcycles, and boats shipping to over 20 countries like England, France, the U.S. and Germany. With the acquisition of Forda by Hongli, the company will be able to expand and increase cooperation with overseas factories increasing sales. The new acquisition has made automotive lighting one of Hongli’s principle industries, with the hope that it will drive revenue growth.