First quarter report performance exceeds expectations, LED industry enters high growth period

Laying out the LED industry that is sure to grow

Recently, affected by factors such as the continuous pre-disclosure of IPOs, the restart of new share issuance review, and the increasingly strong expectations for the restart of new share issuance, the trend of A-shares has been weak. Since mid-April, the Shanghai Composite Index once fell by more than 6%. Some stocks with poor performance have even gone straight to the limit. For example, Beingmate's "one" dropped by the limit yesterday because its first quarter report was lower than expected and its interim report was predicted to be lower.

In an interview with a reporter from "Investment Express", some analysts said that since the China Securities Regulatory Commission kicked off the pre-disclosure of IPO companies with the "midnight rooster crow" in the early morning of April 19, a total of 144 companies in 7 batches have made IPO pre-disclosures; at the same time, 4 companies attended the meeting today, which indicates that the countdown to IPO restart has begun. In an environment where macroeconomic fundamentals are very weak, a relatively stable operating strategy must be adopted.

"In an uncertain market background, it is advisable to choose growth industries with certain performance for deployment." The above-mentioned analysts told reporters that although the eggs are not finished, the market fluctuations also provide opportunities to attract chips, especially in some industries with relatively certain performance growth, such as LED. Since the penetration rate of the LED general lighting market is still low, the next 3-4 years will be a period of rapid development.

A researcher in the securities industry told a reporter from the "Investment Express" that as the price of domestic LED lights dropped, the civilian market for LED lighting opened up. The penetration rate of LED lighting in 2013 has rapidly increased from less than 3% in 2012 to 6%. In 2014, LED lighting will accelerate the replacement of traditional lighting, and the industry will enter a period of rapid growth.

In addition, thanks to the "incandescent lamp exit roadmap" launched by various countries, orders from overseas markets will also continue to experience explosive growth. Guosen Securities released an electronics industry research report stating that the ban on the sale of incandescent lamps in major countries and regions around the world will enter the batch effective stage in 2014. With the decline in the cost of LED lighting fixtures, it will surely promote the explosion of the LED general lighting market.

"As a sub-industry with relatively certain growth potential, the LED sector's falling stock price provides better layout opportunities." Industry insiders pointed out that the complete penetration cycle of general electronic products is about 10 years, and 2011 is the first year of LED lighting penetration. It is expected that high penetration will not be completed until at least around 2020. Judging from the past experience of rapid penetration in other industries such as consumer electronics, investment in the first 3/4 penetration period has very good returns. With falling prices and a new round of global white ban upsurge, LED lighting has entered a period of accelerated penetration, and the LED industry has investment value in 3-5 years.

 It is understood that the LED industry, especially the LED lighting field, is currently one of the key industries supported by the country. In recent years, my country has successively issued policies such as the "China's Roadmap to Phase Out Incandescent Lamps", the "Semiconductor Lighting Energy-Saving Industry Plan", and the "China's Roadmap to Gradually Reduce the Mercury Content in Fluorescent Lamps". The government will gradually increase financial subsidies for LED lighting products and gradually promote LED lighting products with mature application technology and obvious energy-saving effects. The ban on the sale of incandescent lamps in major countries and regions around the world will gradually enter into force this year.
　　
　　行业一季报表现超预期
　　
　　据悉，近期多家LED厂商都招兵买马，要在4月底之前完成紧急招聘，以便应对旺季来临后的供不应求。 The latest released Taiwan LED revenue in March shows that the industry as a whole increased by 20% month-on-month, hitting a record high.

In fact, the first quarter reports of many domestic LED companies are also quite bright: for example, Sunshine Lighting (600261)'s first quarter LED revenue reached 300 million yuan, doubling compared with last year's 140 million yuan; Huacan Optoelectronics (300323)'s first quarter revenue increased by 150% year-on-year; San'an Optoelectronics (600703)'s first quarter revenue increased by 30%. Hongli Optoelectronics (300219)'s first quarter operating revenue and net profit were 30.26% and 71.95% respectively.

"The strong first-quarter reports of Sanan Optoelectronics, Huacan Optoelectronics and others confirm that LED is in a high-level business cycle." Zhang Fan, a researcher at CITIC Securities, pointed out that LED lighting is in a high-speed penetration period of 20%-50%, and there will be backlight demand in the second quarter, further driving the acceleration of the business. Domestic chip companies are expanding production significantly. With the cooperation of capital, they are expected to seize the industry boom and achieve leapfrog development.

Qilu Securities Research Report pointed out that LED lighting is the third light source revolution after incandescent lamps and fluorescent lamps. Due to its many advantages such as energy saving, environmental protection, long life, and wide application, major countries and regions in the world are vigorously developing the LED industry. Currently, the global LED industry has entered a period of rapid development. The global LED market size was US$12.4 billion in 2013, and will reach approximately US$150 billion in 2020, with a compound growth rate of 42.6%.

"With the gradual advancement of policies and the explosion of demand, my country, as one of the world's major LED production and consumption countries, the LED industry faces major historical opportunities and will generate huge investment opportunities." A researcher from Qilu Securities pointed out that the investment gold mine in the LED industry is rich in changes in industry development trends. First, technological progress and industrial upgrading are accelerating, the application scope of LED products continues to expand, and the market size is expanding day by day. Second, demand activation and policy promotion have driven the entire LED lighting industry chain into a high-prosperity cycle. Third, the speed of industrial integration has accelerated significantly, and industrial concentration has gradually increased.

In terms of investment target selection, analysts suggest focusing on Xinhaiyi (leading technology in many aspects and releasing production capacity), Sunshine Lighting (leading LED lighting), Hongli Optoelectronics (leading white LED packaging), Ruifeng Optoelectronics (leading white LED packaging), Nationstar Optoelectronics (MDLED packaging), and Aoyang Shunchang, Leyard, Jufei Optoelectronics, etc.