CASE STUDY: Will I invest in LUMENPULSE? Why?

CASE STUDY:  Will I invest in LUMENPULSE? Why?

With the rise of energy and eco awareness, almost all societies, governments and decision makers actively promote the preference for ecofriendly products. Even at the level of individual choice, people are increasingly developing affinity and preference for the most sustainable solutions to their daily problems. Energy efficient and ecofriendly solutions appear to be the future goal of most industries. And for the lighting industry LED finds a seat near the front. Proving so far to be the most energy efficient lighting technology, it is ecofriendly, cost efficient and requires less maintenance that other lighting forms.

Even though there is a slower adoption of LED technology than envisaged, the market for it still grows. It has shown a continuous increase in penetration in the global lighting market since its start, with projections of 61% market penetration in an industry that will be worth $114billion by 2020. And it has potential to grow beyond this.

LED technology appears to have a bright and long future in growing markets, without so much rivalry. This makes the LED lighting industry an attractive choice for investment.

It’s therefore no surprise that giant electricity companies like GE, Phillips, Cree etc. are delving into LED. This creates steep competition for a young company like Lumenpulse that deals in specification-grade LED lighting and serves high-end professional customers.

It can be observed that Lumen pulse has built its strategy around conquering more markets through acquisitions, internationalization, low liquidity, diversification of customer base and the creation of a range of interconnected products (a family of products). The application of this strategy does 3 things for the company:

• Competitive advantage:

Lumenpulse’s product portfolio is wide and complex to address its high-end customers. The creation of new products lies at the heart of its strategy. The company’s plan to execute, deliver and leverage one of the strongest product portfolios in the industry, according to the president’s letter in the 2016 report, echoes that it takes innovation practices and research and development seriously and this is evident in the R&D expenses. This reflects the potential to come up with new attractive products, and now, with more ease as they have a wider base of ideas due to their acquisitions. The production of a family of products creates a certain amount of monopoly over its customers. This lessens the effect of competition and makes their prices resilient.Product creation is backed up by its investment in good sales and marketing initiatives like the regular participation at the international LightFair.

• Growth:

The core values that the president of Lumenpulse upholds (which go without saying to reflect the values of the company) seem to limit its tendency towards acquisitions. But it may be strategic. A few good acquisitions that can be managed well are better than hoarding numerous subsidiaries with the aim of increasing revenue. And Lumenpulse has followed this logic by buying Exenia and Fluxwerx in Europe and the west of Canada respectively. These strategic acquisitions give Lumenpulse the possibility to extend its markets internationally and enhance its services to the home market (mostly Eastern/Central Canada) with the introduction of foreign ideas. This is an indicator of growth potential.

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