Mini LED demand doubles, Jufei Optoelectronics plans to expand production lines

Q1 consumer electronics is still at a low ebb, but Jufei Optoelectronics (300303.SZ) performance has steadily improved, and its new "incremental" Mini LED and automotive business progress has attracted much attention. "The market development situation of each product terminal is not completely consistent. Among them, the company's automotive-grade business and Mini LED business have developed well in the past two years, with business volume doubling year after year and becoming the company's star product." Yu Fang, secretary of the board of directors of Jufei Optoelectronics, responded to the reporter's question at the performance briefing meeting held by Jufei Optoelectronics.

In addition, with the explosion of AI servers, Jufei Optoelectronics’ investment and business progress in the field of optical modules has become a topic of great concern to investors.

In 2022, Jufei Optoelectronics, like most LED industry chain companies, experienced a significant decline in performance, with operating income of 2.262 billion yuan, a year-on-year decrease of 4.62%; net profit attributable to shareholders of listed companies was 188 million yuan, a year-on-year decrease of 30.74%. The company maintains a low utilization rate. The annual report shows that the capacity utilization rate of the company's LED products in 2022 is only 71.27%.

After entering Q1 in 2023,Amidst the “thunder” performance of many consumer electronics manufacturers, Jufei Optoelectronics has bucked the trend and achieved operating income of 537 million yuan, a year-on-year increase of 5.79%; it achieved a net profit of 58 million yuan, a year-on-year increase of 11.11%. Financial Director Lu Jiakui said that the company's profit growth in Q1 this year mainly comes from the rapid development of new businesses (i.e. Mini LED business and automotive business) and the expansion of overseas markets of traditional businesses.

"The company's Mini LED business is progressing smoothly, and downstream demand is increasing month by month. The existing production line is relatively tight, and the company will continue to steadily expand related product lines in the future," Yu Fang further said.

However, although the company said demand for automotive, Mini and other projects has doubled, Jufei's Huizhou expansion project to expand the production capacity of backlight LED, display LED and automotive LED products has been postponed recently. Xing Meizheng, chairman of Jufei Optoelectronics, said that the project delay was mainly due to the impact of the overall market economic environment, the consumer electronics terminal market was generally under pressure, and the consumption potential was less than expected. At the same time, the logistics and transportation required for the investment project, personnel exchanges were blocked, and the trial operation and procurement of special equipment were delayed. Therefore, the construction progress of the project was delayed than expected.

In addition, since its own business and the business of investment companies are related to optical modules, Jufei Optoelectronics' progress in this field has received the most attention from investors.

Yu Fang said that the company’s main customers for some of its existing optical module packaging products are communication equipment service providers and high-speed data center companies such as the Internet. In addition to its own business, the silicon optical chips of Xilian Optoelectronics, a joint-stock subsidiary of Jufei Optoelectronics, can also be used in optical modules. “Currently, the company has some business cooperation with Xilian Optoelectronics and is producing silicon optical packaging products. Yu Fang further expressed.

It is worth noting that Jufei Optoelectronics’ current shareholding in Xilian Optoelectronics is not high. In 2020, Jufei Optoelectronics invested 60 million yuan to acquire 6.263% of the equity of Xilian Optoelectronics. As the financing valuation of Xilian Optoelectronics increases, Jufei Optoelectronics’ shareholding ratio has declined. According to Tianyancha, Jufei Optoelectronics currently accounts for about 4.77% of its equity.