It is predicted that the output value of China's LED indoor lighting will increase by 110% year-on-year this year. The "First Financial Daily" reporter recently learned from the third G20-LED summit held by Gaogong LED that in 2012 China's LED indoor lighting output value reached more than 30 billion yuan, that is, the market size will reach 63 billion yuan in 2013.
The LED lighting era is expected to come, but the manufacturers are not full of pots, and some pockets are even more embarrassing. The market is not as optimistic as expected at the beginning of the year, revenue growth is not as much as imagined, and profits are getting thinner.
However, during the three years from 2010 to 2013, the price of LED lighting products dropped by more than 20% annually. This has not only led to the rapid growth of the LED lighting market, but also brought tremendous pressure to the overcapacity LED industry. From the performance of the 2013 third quarterly report of domestic LED listed companies, “increasing revenues without increasing profits†has become a common problem faced by LED upstream and downstream enterprises.
Zhang Xiaofei, chairman of Gaogong LED, predicts that in the next five years, especially in the next three years, big fish will eat small fish and fast fish will eat slow fish. The “shuffle†of China's LED industry will really come.
The era of LED lighting
Compared with 2012, the LED lighting market has recovered this year, and orders have increased significantly. Zhang Xiaofei expects that the total output value of LEDs in China this year will be 263.8 billion yuan, up 28% year-on-year. The output value of LED industry will exceed 320 billion yuan next year, of which 70% is applied in the application field, and indoor and outdoor lighting account for it. A large percentage.
However, from the performance of listed companies, in the first three quarters of this year, Dehao Runda (002005.SZ), one of the LED chip giants, earned 2.27 billion yuan, a year-on-year increase of 17%; net profit was 50.27 million yuan, down 56% year-on-year.
In the first three quarters of this year, the packaged large household Ruifeng Optoelectronics (300241.SZ) realized an operating income of 500 million yuan, a year-on-year increase of 48%; net profit was 45.41 million yuan, a year-on-year increase of 25%. Ruifeng said that due to the increase in R&D investment, staff salary and equity incentive expenses, office expenses, and industry competition, the gross profit margin of the products decreased, and the growth of net profit was lower than the growth of sales revenue.
Another packaging company, Hongli Optoelectronics (300219.SZ), earned nearly 500 million yuan in the first three quarters of this year, up 24% year-on-year; but net profit was 36.5 million yuan, down 19% year-on-year.
The application process is the same. Qinshang Optoelectronics (002638.SZ) in the first three quarters of this year, operating income of 800 million yuan, an increase of 35%; net profit of 87.85 million yuan, down nearly 5% year-on-year; net profit after deducting non-recurring gains and losses of 86.68 million yuan, down nearly 4%.
Why is there no increase in income? Overcapacity and fierce price competition are one of the main reasons. "The price of LED chips has dropped by 20%~30% this year." Wang Lianghai, vice president of Tongfang, told this reporter that the LED chip business of Tongfang was more difficult in the first quarter of this year and began to improve at the end of the third quarter. Due to overcapacity in the industry, Tongfang's LED chip production base has a planned output value of nearly 3 billion, and now only achieves 30% of the target. "The LED industry will have to be completely improved for another year or two."
While the market is fiercely competitive, the other side is R&D and rising labor costs. "The cost is quite big," said Li Guoping, chairman of Hongli Optoelectronics.
The reduction in government subsidies is also an important factor. For example, Qinshang Optoelectronics received government subsidies of about 2.43 million yuan in the first three quarters of this year, a decrease of 70% compared with 11 million yuan last year. “The industry is gradually maturing, and the reduction of government support is an inevitable trend,†said Zhu Bingzhong, deputy general manager of Qinshang Optoelectronics.
In addition, in order to expand the civilian LED lighting market, the investment in channel construction is very large, which also affects the performance. Zhu Bingzhong said that engineering lighting is a traditional advantage in diligence. The channel layout of civil lighting focuses on the medium and long term, and the benefits will be in the future.
Industry reshuffle in the next five years
Now it seems like the darkness before dawn, the integration of China's LED industry has been on the line.
“In the next five years, the industry will be reshuffled,†Zhang Xiaofei boldly predicted that China’s local chip factories will eventually survive no more than 12, and most upstream companies will die, with a survival rate of around 30%. There are 1750 mid-stream packaging factories, and only 40% can survive in the future. The death rate of tens of thousands of LED lighting companies in the downstream will also exceed 50%.
This is not an alarmist. The vertical and horizontal integration is constantly being staged, especially the upstream chip factory is accelerating the downstream penetration, and the future will be the competition between the supply chains.
At the end of last year, Dehao Runda formed a strong alliance with NVC Lighting and became the majority shareholder of the latter. In the first half of this year, NVC's performance improved, with revenue of 1.689 billion yuan, up 4.6% year-on-year; net profit of 81.234 million yuan, up 92.3% year-on-year; of which LED sales revenue was 282 million yuan, up 233.9% year-on-year. Recently, Dehao and NVC plan to spend 80 million yuan to form a joint venture to build a packaging plant.
Another LED chip giant, Sanan Optoelectronics, acquired the 19.77% stake in Taiwan's Yuyuan Optoelectronics for NT$2,352 million. In October this year, it successfully completed its “end†and became the largest shareholder of Yanyuan Optoelectronics. Recently, Sanan and Sunshine Lighting established a joint venture to jointly develop LED lighting products and jointly develop LED lighting channels.
Tongfang has established a strategic partnership with Hongli Optoelectronics. Li Guoping said that 80% of the chips in Hongli used Taiwan or foreign brands, and now 90% use chips produced in mainland China. Wang Lianghai said with respect and respect, "In the year when we cooperated, whether it was for Tongfang or Hongli, everyone did a lot of work in market development and also seized a lot of markets."
The large package in the middle reaches also extends to the downstream lighting market. Like Mulinsen began to push his own lighting products last year. Lin Jiliang, general manager of Mulinsen Co., Ltd., said that there are currently 52 direct distribution agents and project agents, 500 county-level distributors and 8,000 terminal retail outlets. With the channel, Mulinsen will further expand from the light source to the lamps. "Next year, I hope that the monthly production and sales of straight tube lamps and bulbs will be 20 million to 30 million baht, and the lamps will be more than 1 million per month."
Downstream, I smelled the scent of the LED lighting market, and LED display companies also swam over to share a piece of cake. Zhouming Technology spent 4.84 million yuan to increase its investment in Shanghai Wuyuan this year, holding 20.59% of the latter. Wuyuan has been the sales champion of LED lights for three consecutive years on Tmall. The LED display market is saturated, and the traditional offline lighting channels are dominated by giants such as NVC, Opus, Philips, and Osram. Therefore, Chau Ming wants to quickly cut into the LED lighting field through low-cost emerging e-commerce channels.
As Lin Jiliang said, “The more the channels are more difficult to find, the more difficult it is to do.†Many LED lighting companies lament that channel investment is a swamp. Zhang Xiaofei suggested that in this war-torn situation, it is necessary to identify its own product positioning, and then choose the matching channel, which is to do engineering channels, wholesale channels, overseas markets or substitutes for work, otherwise it is difficult to make profits.
The LED lighting era is expected to come, but the manufacturers are not full of pots, and some pockets are even more embarrassing. The market is not as optimistic as expected at the beginning of the year, revenue growth is not as much as imagined, and profits are getting thinner.
However, during the three years from 2010 to 2013, the price of LED lighting products dropped by more than 20% annually. This has not only led to the rapid growth of the LED lighting market, but also brought tremendous pressure to the overcapacity LED industry. From the performance of the 2013 third quarterly report of domestic LED listed companies, “increasing revenues without increasing profits†has become a common problem faced by LED upstream and downstream enterprises.
Zhang Xiaofei, chairman of Gaogong LED, predicts that in the next five years, especially in the next three years, big fish will eat small fish and fast fish will eat slow fish. The “shuffle†of China's LED industry will really come.
The era of LED lighting
Compared with 2012, the LED lighting market has recovered this year, and orders have increased significantly. Zhang Xiaofei expects that the total output value of LEDs in China this year will be 263.8 billion yuan, up 28% year-on-year. The output value of LED industry will exceed 320 billion yuan next year, of which 70% is applied in the application field, and indoor and outdoor lighting account for it. A large percentage.
However, from the performance of listed companies, in the first three quarters of this year, Dehao Runda (002005.SZ), one of the LED chip giants, earned 2.27 billion yuan, a year-on-year increase of 17%; net profit was 50.27 million yuan, down 56% year-on-year.
In the first three quarters of this year, the packaged large household Ruifeng Optoelectronics (300241.SZ) realized an operating income of 500 million yuan, a year-on-year increase of 48%; net profit was 45.41 million yuan, a year-on-year increase of 25%. Ruifeng said that due to the increase in R&D investment, staff salary and equity incentive expenses, office expenses, and industry competition, the gross profit margin of the products decreased, and the growth of net profit was lower than the growth of sales revenue.
Another packaging company, Hongli Optoelectronics (300219.SZ), earned nearly 500 million yuan in the first three quarters of this year, up 24% year-on-year; but net profit was 36.5 million yuan, down 19% year-on-year.
The application process is the same. Qinshang Optoelectronics (002638.SZ) in the first three quarters of this year, operating income of 800 million yuan, an increase of 35%; net profit of 87.85 million yuan, down nearly 5% year-on-year; net profit after deducting non-recurring gains and losses of 86.68 million yuan, down nearly 4%.
Why is there no increase in income? Overcapacity and fierce price competition are one of the main reasons. "The price of LED chips has dropped by 20%~30% this year." Wang Lianghai, vice president of Tongfang, told this reporter that the LED chip business of Tongfang was more difficult in the first quarter of this year and began to improve at the end of the third quarter. Due to overcapacity in the industry, Tongfang's LED chip production base has a planned output value of nearly 3 billion, and now only achieves 30% of the target. "The LED industry will have to be completely improved for another year or two."
While the market is fiercely competitive, the other side is R&D and rising labor costs. "The cost is quite big," said Li Guoping, chairman of Hongli Optoelectronics.
The reduction in government subsidies is also an important factor. For example, Qinshang Optoelectronics received government subsidies of about 2.43 million yuan in the first three quarters of this year, a decrease of 70% compared with 11 million yuan last year. “The industry is gradually maturing, and the reduction of government support is an inevitable trend,†said Zhu Bingzhong, deputy general manager of Qinshang Optoelectronics.
In addition, in order to expand the civilian LED lighting market, the investment in channel construction is very large, which also affects the performance. Zhu Bingzhong said that engineering lighting is a traditional advantage in diligence. The channel layout of civil lighting focuses on the medium and long term, and the benefits will be in the future.
Industry reshuffle in the next five years
Now it seems like the darkness before dawn, the integration of China's LED industry has been on the line.
“In the next five years, the industry will be reshuffled,†Zhang Xiaofei boldly predicted that China’s local chip factories will eventually survive no more than 12, and most upstream companies will die, with a survival rate of around 30%. There are 1750 mid-stream packaging factories, and only 40% can survive in the future. The death rate of tens of thousands of LED lighting companies in the downstream will also exceed 50%.
This is not an alarmist. The vertical and horizontal integration is constantly being staged, especially the upstream chip factory is accelerating the downstream penetration, and the future will be the competition between the supply chains.
At the end of last year, Dehao Runda formed a strong alliance with NVC Lighting and became the majority shareholder of the latter. In the first half of this year, NVC's performance improved, with revenue of 1.689 billion yuan, up 4.6% year-on-year; net profit of 81.234 million yuan, up 92.3% year-on-year; of which LED sales revenue was 282 million yuan, up 233.9% year-on-year. Recently, Dehao and NVC plan to spend 80 million yuan to form a joint venture to build a packaging plant.
Another LED chip giant, Sanan Optoelectronics, acquired the 19.77% stake in Taiwan's Yuyuan Optoelectronics for NT$2,352 million. In October this year, it successfully completed its “end†and became the largest shareholder of Yanyuan Optoelectronics. Recently, Sanan and Sunshine Lighting established a joint venture to jointly develop LED lighting products and jointly develop LED lighting channels.
Tongfang has established a strategic partnership with Hongli Optoelectronics. Li Guoping said that 80% of the chips in Hongli used Taiwan or foreign brands, and now 90% use chips produced in mainland China. Wang Lianghai said with respect and respect, "In the year when we cooperated, whether it was for Tongfang or Hongli, everyone did a lot of work in market development and also seized a lot of markets."
The large package in the middle reaches also extends to the downstream lighting market. Like Mulinsen began to push his own lighting products last year. Lin Jiliang, general manager of Mulinsen Co., Ltd., said that there are currently 52 direct distribution agents and project agents, 500 county-level distributors and 8,000 terminal retail outlets. With the channel, Mulinsen will further expand from the light source to the lamps. "Next year, I hope that the monthly production and sales of straight tube lamps and bulbs will be 20 million to 30 million baht, and the lamps will be more than 1 million per month."
Downstream, I smelled the scent of the LED lighting market, and LED display companies also swam over to share a piece of cake. Zhouming Technology spent 4.84 million yuan to increase its investment in Shanghai Wuyuan this year, holding 20.59% of the latter. Wuyuan has been the sales champion of LED lights for three consecutive years on Tmall. The LED display market is saturated, and the traditional offline lighting channels are dominated by giants such as NVC, Opus, Philips, and Osram. Therefore, Chau Ming wants to quickly cut into the LED lighting field through low-cost emerging e-commerce channels.
As Lin Jiliang said, “The more the channels are more difficult to find, the more difficult it is to do.†Many LED lighting companies lament that channel investment is a swamp. Zhang Xiaofei suggested that in this war-torn situation, it is necessary to identify its own product positioning, and then choose the matching channel, which is to do engineering channels, wholesale channels, overseas markets or substitutes for work, otherwise it is difficult to make profits.
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