There is no shortage of stories in the capital market. Internal strife in NVC Lighting has resumed, but it is difficult to shake the recovery of the entire industry on its own.
Wind data shows that since August, the Shenwan Electronics sector has increased by 8.20%, ranking first among all sectors. Among all secondary industries of the Shenwan Electronics sector, the LED sector has led the way with an increase of 11.35%.
Many industry insiders said that the release of the LED industry’s brilliant performance and determined future growth are important reasons for the sector’s rebound. The continuous increase in the penetration rate of LED lighting has allowed the industry to develop faster.
At the same time, many listed companies have begun to make plans, involving various fields in the upstream, midstream and downstream of LED. Whether capital can create a feast remains to be revealed by the market.
Stocks led the gains, and no company in the industry suffered losses
In early August, internal strife broke out again at NVC Lighting, and the entire market was in an uproar. However, this farce in the LED industry has not affected the market's attitude towards the entire sector. On the contrary, the Shenwan electronics sector has made a gorgeous market line and ranked first among all Shenwan industries. LED, the secondary industry in the electronics sector, is one of the important leaders.
Wind data shows that since August, the Shenwan Electronics sector has increased by 8.20%, significantly ahead of the 5.83% increase of the second-placed public utility sector. Among all secondary industries of the Shenwan Electronics sector, the LED sector has the highest growth rate, up to 11.35%, only lagging behind the semiconductor materials sector.
Relaxing the time span to the beginning of the year, the Shenwan Electronics sector rose by 32.50%, ranking fourth among all Shenwan industries, while the LED sector rose by 39.15% over the same period.
"In fact, LED had seasonal fluctuations in the past, because LED demand was mainly for TV backlights, and TV sales were seasonal. Sales were better during holidays and Spring Festival, so the industry also fluctuated during these times. But now, from a downstream perspective, the proportion of lighting has exceeded backlighting. During the off-season for TV sales, LED companies can also release performance." A new wealth analyst in the domestic electronics industry said.
Since August, many listed companies in the LED industry, led by the country’s leading chip companies, have delivered brilliant half-year results.
On July 31, Sanan Optoelectronics released its 2014 semi-annual report. In the first half of the year, the company achieved operating income of 2.177 billion yuan, a year-on-year increase of 30.03%; the net profit attributable to shareholders of listed companies was 666 million yuan, a year-on-year increase of 43.87%. Basic earnings per share in the first half of 2014 was 0.42 yuan, compared with 0.32 yuan in the same period last year, a year-on-year increase of 31.25%.
Immediately afterwards, seven LED companies including Ledman Optoelectronics, Alto Electronics, Nationstar Optoelectronics, and Hongli Optoelectronics announced their 2014 semi-annual reports. Including Sanan Optoelectronics, all eight companies' operating income and net profits all achieved substantial growth compared with the same period last year. Among them, Huacan Optoelectronics' operating income and net profit led the way in year-on-year growth rates, reaching 172.19% and 239.24% respectively.
In addition, judging from the performance forecast for the first half of 2014 released by LED industry companies, in the first half of this year, none of the 21 LED companies suffered losses. Except for 5 companies whose net profits may have declined to a certain extent, the net profits of the remaining 16 companies are expected to grow.
Among them, the net profits attributable to shareholders of listed companies in the first half of the year for Huacan Optoelectronics, Unilumin Technology, Lianjian Optoelectronics, Jiawei Co., Ltd. and other companies doubled year-on-year, with year-on-year increases of 239.24%, 111.16., 247.61% (estimated lower limit), and 148.65% (estimated lower limit) respectively.
At the same time, this year, LED listed companies have changed the "performance cycle" of increasing revenue without increasing profits. Data show that in the same period of 2013, Sanan Optoelectronics' operating income increased by 22% year-on-year, but its net profit fell by 0.7%; Hongli Optoelectronics' operating income increased by nearly 24% year-on-year, but its net profit fell by 30%.
Sanan Optoelectronics' semi-annual report stated that during the reporting period, the company's LED chip products were in short supply, and management regarded production capacity expansion as a top priority. On the one hand, it improves the effective operation efficiency of equipment, while adding new equipment, and is also actively seeking other ways to add production capacity.
Industry insiders close to Sanan Optoelectronics said that the continuous growth of LED lighting has led to strong demand for Sanan Optoelectronics' chips, and there is no slowdown trend yet.
Lighting explodes, and the upstream, middle and lower reaches are preparing for the war with capital
In fact, LED can be roughly divided into three areas: upstream chips, midstream packaging, and downstream applications. According to industry insiders, "Currently, there are three main applications: lighting, backlighting, and display screens. Display screens are now saturated, with an annual growth of about 10%-30%. TV backlights are not growing much, while LED lighting is experiencing explosive growth."
At the beginning of last year, six ministries and commissions including the National Development and Reform Commission and the Ministry of Science and Technology jointly issued the "Semiconductor Lighting Energy-saving Industry Plan", which clarified that the output value of the LED lighting energy-saving industry will be increased by about 30% annually, reaching 450 billion yuan in 2015, of which 180 billion yuan will be in LED lighting application products.
At the same time, the subsidy policy for energy-saving lamps released in 2008 is coming to an end this year. According to industry insiders, subsequent subsidy plans are likely to be implemented for LEDs.
"Next, the country will cancel subsidies for energy-saving lamps. This is certain, because LED is now more energy-saving than energy-saving lamps, and the supplement will definitely be LED." The above-mentioned New Fortune analyst said.
People close to the Guangzhou Lighting Association told reporters, "The subsidy for energy-saving lamps will indeed be cancelled. LEDs will be subsidized next, and directly to manufacturers."
In fact, LED lighting has been in the Chinese market for many years, but due to the high level of technical requirements and price factors, the market penetration rate of domestic LED lighting is still low. It is currently mainly used in landscape lights, street lights and public place lighting.
"The penetration rate of LED in home lighting is very low. It is only a few points at best, less than 10%, and the price is about 2-3 times that of ordinary lamps. With the decline in prices and the arrival of subsidy policies, the penetration rate of LED will become higher and higher, and the market will become more and more recognized. Now it is time to explode." said the above-mentioned New Fortune analyst.
It is said that, unlike the so-called "smart home" that was previously hyped, the "smart lighting" that Ruifeng Optoelectronics is committed to has good industry support.
Industry insiders close to Ruifeng Optoelectronics said, "This year Ruifeng's LED lighting revenue has been several times that of backlight, and this is not cyclical and should continue." The explosion of the LED lighting market has also driven the growth of midstream packaging, upstream chips and even the entire industry, leading to major changes in the market structure. Half of LED listed companies have begun capital deployment, involving all links of the upper, middle and lower levels to cope with increasingly fierce competition.
Since this year, Sanan Optoelectronics has signed cooperation agreements with Hongli Optoelectronics, Jufei Optoelectronics, and Nationstar Optoelectronics. The three companies will purchase LED chips from Sanan Optoelectronics in the next three years. The transaction amounts in the first year reached 280 million, 200 million, and 250 million respectively. Hongli Optoelectronics, Jufei Optoelectronics, and Nationstar Optoelectronics are all LED packaging companies, and their cooperation with Sanan is mainly to ensure the supply of raw materials.
Sanan Optoelectronics stated in its semi-annual report that the company's LED chip products are in short supply, and management regards production capacity expansion as a top priority.
On the one hand, it improves the effective operation efficiency of equipment, while adding new equipment, and is also actively seeking other ways to add production capacity.
Qianzhao Optoelectronics signed an "Investment Agreement" with the Xiamen Torch High-tech Industrial Development Zone Management Committee on July 25. The total investment is expected to reach 5 billion yuan, and the new scale will be 100 MOCVD units to expand the company's LED chip production capacity.
Ruifeng Optoelectronics announced on August 4 that it plans to use its own funds to invest in lighting LEDs (including EMC products, LED filaments and small and medium-power LEDs) and full-color LEDs, with a total investment of over 400 million yuan, to lay out the downstream lighting field.
Wanrun Technology released a fixed-increase plan on August 14, intending to raise no more than 711 million yuan, which will be used to acquire 100% equity of Rishang Optoelectronics and supplement working capital to enter the LED advertising sign lighting market.
In addition, in the LED industry, Jiawei Co., Ltd., Lianjian Optoelectronics, Nationstar Optoelectronics, and Dehao Runda are still suspended from trading. The latest announcements indicate that major events are being planned.
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