LED industry integration starts

The LED industry, which was deeply stuck in the quagmire of overcapacity, seems to be making a comeback in 2013, ushering in a turning point. However, two listed company bosses frankly, need to wait until the three or four quarters of the data validation, on the one hand is the channel to digest the time required to precipitate the actual data, on the other hand depends on product quality feedback. Some fund managers also revealed that the industry has indeed shown better signs than in the past two years, and the logic for buying has become clearer. However, it is believed that the industry has begun to break out and still needs to continue to observe.

In the secondary market, this advance was advanced in advance. Since May, LED industry chain has been leading the rise in the entire electronic components sector. In addition, from the quarterly report of LED listed companies, most of them achieved a positive year-on-year increase in net profit, and are optimistic about the expectations of the Mid-year report.

Order popping with bargain injury

The price of products continued to decline. Terminal demand was generally warmed up driven by commercial lighting and indoor lighting. Orders of some companies in the upper, middle and lower reaches began to fill up.

The sudden emergence of the happiness phenomenon in the LED industry has caused many CEOs of listed companies who appeared in the "Tenth China High-tech LED Industry Summit Forum" to sigh. Gong Weibin, chairman of Ruifeng Optoelectronics, bluntly stated that the outbreak of this round of demand was one year ahead of its expectations.

According to Wang Lianghai, vice president of Tongfang’s stock, which focuses on chip production in the upper reaches of the LED industry, the company’s machines are now operating 24 hours a day, and customers have to wait in line for chips. The vice president of Dongguan Qinshang Optoelectronics Zhu Bingzhong said that the current order has been scheduled for two months.

Faced with the question of relying on government subsidies, Wang Lianghai frankly stated that it is indeed at a loss stage. However, it is confident that it will realize its positive cash flow in the third quarter of this year and achieve a meager profit at the end of the year. It stressed in particular that this was in the condition of eliminating subsidies.

Rapid changes in the upstream and downstream of the industrial chain also responded quickly in the secondary market. Since May, LED industry chain has been leading the rise in the entire electronic components sector. In addition, from the quarterly report of LED listed companies, most of them achieved a positive year-on-year increase in net profit, and are optimistic about the expectations of the Mid-year report.

However, in the thriving stage of the industry, the situation is actually uneven, and the cold part has been ignored. “In the distribution channels, some LED prices are even lower than traditional products. In the first half of the tenders for tunnel lights and street lamps in the engineering field, the bargaining price is still bloody.” Xu Min, deputy general manager of Guangyu Lighting Technology, bluntly stated that this indicates that the market does not have The whole is good.

Expansion of several listed companies

History always has striking similarities.

In 2010, based on the expectations of the industry outbreak, global LED companies have substantially expanded their production capacity, and domestic companies have followed suit. However, the demand for downstream applications for the next two years has continued to be weak, and the imbalance in market supply and demand has become a nuisance for almost all companies in the entire industry. At that time, what was known as the "first year" did not really open up.

This time, Zhuo Bingzhong was called the best year for the LED market. Can we really start the "first year"?

Gong Fengbin, chairman of Ruifeng Optoelectronics, expects the industry's growth rate to reach 15% this year, and even 40% in 2014.

The same optimistic general manager of Hongli Optoelectronics Li Guoping said that through the development of the LED industry in recent years, the price of LED has dropped drastically. Whether it is price or quality, it has already demonstrated a very good price/performance ratio. In the next two to three years, LED lighting will usher in the best period.

With this kind of optimistic pre-judgment, there are practical actions. The Southern Reporter noted that only in the last two or three weeks has there been news of re-expansion by many companies. Will these actions once again allow the industry to continue to fall into the quagmire of overcapacity?

On the evening of May 27, Sanan Electric announced that it plans to raise RMB 3.3 billion to expand its LED project. A few days later, the company announced that it has established an LED application product company with Haowei shares, with a total investment of over one billion yuan. Then he sent another 22 million U.S. dollars to the U.S. lumens.

On the evening of June 2nd, Lianchi Optoelectronics announced that it had purchased 51.8% equity of Shanghai Xinmao, which was a plus LED business, and carried out industrial and market layout in Shanghai and its surrounding areas.

On the evening of June 3, Australian Ocean Shunchang issued a fixed increase plan to raise funds not exceeding RMB512 million to invest in the LED epitaxial wafer and chip industrialization phase I projects and additional working capital, of which the LED project has a total investment of RMB 808 million. It plans to invest 400 million yuan to raise funds.

In addition, there are listed companies that set up joint venture companies to get involved, and non-listed companies also have LED projects with investment exceeding RMB 2 billion.

Obviously, if the pace of demand recovery does not keep up with the pace of expansion, then the industry will inevitably go back two years.

However, judging from the market judgment formed by 20 domestic LED companies in a recent closed meeting, they believe that the government’s encouragement of upstream investment in 2010 is different from the industry’s false fire. This year’s warming is based on the fact that product prices have loosened and gradually approached the price level of traditional energy-saving lamps. To. At the same time, due to the tight supply and demand trends in the mid-power LED device market, the demand for indoor lighting market is gradually heating up.

Outside the conference hall, the two LED company executives all told Nandu reporter that the real test in the third quarter and fourth quarter of this year, to see the data at that time the market will be more clearly judged. "Products are still in the channel stage. It will take a month or two for the end-users to enter the market to digest. In addition, feedback on product quality will gradually be received at that time," said a veteran of a listed company who declined to be named.

Industry integration boom

In summary, the LED industry chain consists of three major components: "upstream LED chip", "middle-stream LED package", and "downstream LED application."

Since the second half of last year, the industry consolidation has started.

For example, Sanan Optoelectronics successively attempted to invest in Yuen-Yuan Optoelectronics, the acquisition of Luminus Devices, Dreida Runda assault NVC Lighting, and investment in Weimei Shengjing.

Nandu reporter also found in the Hongli Optoelectronics Announcement that the company had stated clearly during the survey that it would actively extend to the downstream of the LED industry chain, taking advantage of complementary principles, taking into account synergies and growth, and actively looking for high-quality targets through integration. Realize the leap-forward development of the company.

However, according to Nandu reporters, the current wave of integration, the company's thinking is not the same.

For example, BDO Runda, National Star Optoelectronics, Sanan Optoelectronics and several other listed companies with relatively strong scales have chosen the integration of the entire industry chain.

According to Tan Changlin, general manager of TSMC solid-state lighting, the first phase of industrial optimization, not to mention the middle and lower reaches, consumer masses do not understand the middle and lower reaches, he just wants to buy a light bulb. The division between the upper and lower reaches is finally obscure, or there is no such thing at all. As long as you have the ability to make the best of your chips, and use the lowest cost as a light source, you can integrate LEDs, power supplies, etc. into a simple light source that can be used just like traditional lighting.

Gong Weibin admitted frankly that as the middle reaches of the industry chain, it does not dare to integrate easily with the downstream. Because then it will face a change from 100 partners to one, and high dependence will create risks. "Integration with the upstream is possible, because the upstream chip and the middle package output are light sources, originally should not be two industries, the integration of the two is not only fast and easy to succeed, but the middle and downstream integration is more controllable factors."

The valuation of the sector's trend valuation has been completed, entering the stage of performance performance

In the first half of the obvious recovery of the LED industry, the trend of the companies in the secondary market is strikingly similar. The reporter from Nandu discovered the basic pattern of convergence after looking at the stock price charts of several companies in the LED industry chain, such as Ruifeng Optoelectronics, Sanan Optoelectronics, BDO Runda, Qinshang Optoelectronics, Sunshine Lighting, Tongfang Stock, etc. : The stock price rose with the market's rebound started on December 4 last year. It rose significantly in April and May of this year, and all fell back at the end of May.

The analysis of all relevant factors for attribution can also find the following logic. Under the continuous decline in the prices of terminal products, commercial lighting and indoor lighting continue to pick up the industry demand for the entire LED industry, and even the chip supply and sales have become tight in the chip and packaging sectors. The situation thus reawakened the market's confidence in LED stocks. However, after the early rise, LED concept stocks do not have the relative valuation advantages, valuation restoration has been completed, and enter the industry to support the performance of the fundamentals under the support of the stage, so the overall end of May there was a collective callback.

A Shanghai-based fund manager who declined to be named said to the Southern Reporter that the LED industry is not as bad as before, but insists that there are only phase opportunities. “The industry has always been unable to break out of cyclical factors. As soon as there are signs of recovery, it will quickly usher in capacity expansion, and the low utilization rate will lead to an increase in depreciation rate, which will affect profitability.” The fund manager said that it is more concerned with upstream and downstream industries. In the company, there is not much barrier in the middle of the package, and money can be involved.

Another fund investment director in the south said that he is still waiting for data confirmation, and he is more optimistic about companies with downstream channel resources.

Individual stocks observe BDO Runda integration has not yet effective, cash flow tight

After the NVC lighting fight last year, BDO Runda became its single largest shareholder through the acquisition of NVC Lighting's shareholding, thus attempting to open up from LED epitaxial wafers, chips and packages to applications (lamps, displays). Integrated LED industry chain.

The market's interpretation of this move is that BDO Runda found the downstream exports through the acquisition of NVC Lighting, opening up sales for its huge chip capacity. However, both brokers and fund personnel made clear to the Southern Reporter that they are not optimistic about BDO Runda.

A stock fund manager in Shanghai bluntly stated that BDO Runda is not wrong in developing the entire LED industry chain (from substrate to terminal application), and gradually increasing the chip brightness and channel construction through integration of upstream and downstream to form a differentiated competitiveness. It still prefers to focus on companies with core competencies in a certain area. “The company’s chips have no technical advantage and are driven solely by prices. Before this, they were all losing money. They mainly rely on government subsidies to support them, and marketing strategies that are expected to do a 'price butcher' effect are not obvious.”

“People generally think that Wang Donglei is still telling stories more, and it is very bad for company evaluations.” A Shanghai securities firm researcher told the Southern Capital Reporter that if it is not to acquire NVC, the stock price performance of the company will be ugly.

The company announced on June 14 that the net profit attributable to shareholders of listed companies in the first half of 2013 was between RMB 50 million and RMB 87 million, a decrease of 30% to 60% over the same period of the previous year.

Southern Reporter noted that the company’s accounts receivable in the first quarter was as high as 1.5 billion yuan. Due to the fact that it is not known that the proportion of accounts receivable is within the account period, it is not known how much the impairment provision will affect the profit.

In response, the above-mentioned researcher analyzed that, depending on the total sales ratio of 1.5 billion yuan, it also depends on the proportion of seasonal accounts receivable of small household appliances. When the demand turns better, the receivables do appear to rise stage by stage, but The increase in the cash flow pressure is obvious. "In fact, we understand that the company's cash flow is indeed quite tense."

The Double-edged Swords of Optoelectronics' Self-built Channel

Despite living in Changping Township in Dongguan, Dongguan Qinshang Optoelectronic Co., Ltd., which was responsible for 12 gambling agreements and 21 venture capital institutions at the beginning of the listing, never lacked market attention. After the listing, many public funds have come in to allow them to become the industry's "star stocks." The "suspicion of fraudulent listing" that broke out in March of this year made it once again exposed to the whirlpool of public opinion. As of now, the regulator has stated that it is conducting investigation and verification of its violations. Regardless of the outcome, the company’s financing capacity in recent years will inevitably be affected.

With regard to this stormy attitude, the institutional views are very different. A long-term follow-up brokerage researcher believes that the market is gradually digesting negative, with the industry fundamentals of the company will gradually support the formation of stock prices. A fund manager who has been closely monitoring emerging industries revealed that for companies such as Qinshang Optoelectronics, which has already had “stains”, the company has already removed the stock pool and cannot even conduct research.

Looking at the company's fundamentals, it is currently mainly engaged in the research, development, production, and sales of semiconductor lighting products, providing customers with LED lighting solutions and energy-saving services. Last year, the market reported that Qinshang Optoelectronics hopes to merge with NVC. However, it was eventually dominated by BDO Runda. Logistically, it had to turn itself to build channels. At the recent annual general meeting of shareholders, Li Xuliang, chairman of Qinshang Optoelectronics, stated that he wanted to build 1,000 sales terminals this year.

"I think the biggest risk to the company lies in the boss's ambition to build its own channels. It is very risky to invest in self-built channels. Therefore, BDO Runda is very smart to choose NVC," said the Southern Capital Fund Investment Director.

The above fund managers in Shanghai have emphasized to Southern Reporters that such companies need to pay close attention to the boss’s ability.

According to Southern Metropolis reporters, Li Xuliang, who was only 27 years old in 1993, started the venture with a loan of 2,000 yuan. After 18 years, he pushed the company to the market. According to the 45 or so people who had contact with them, the reporter from Nandu revealed that Mr. Li Shan, who was a salesman, had made a connection. He initially felt that he was very generous and had high emotional intelligence. Over the years, he had successfully won many government orders and accumulated a deep network of contacts. However, based on the binding of the interests of many institutions such as PE, the individual is currently only rich in paper. In addition, the company also disclosed during the investigation of the agency, some of the company's sales department flight attendants origin, in order to confirm the company's ability to sell.

Looking at the comprehensive information, it is critical for Li to fully control sales and management and coordinate the interests of many institutions in the secondary market of the primary market.