Investment-rising LED market "incubation without change"

As one of the earliest listed companies that entered the LED lighting industry, Sunshine Lighting (600261.SH) announced in its 2010 annual report that the total investment for LED will be 1 billion yuan in the next three years. Coincidentally, State Star Semiconductor (002449.SZ) holding company National Star Semiconductor Technology Co., Ltd. has invested 2.5 billion yuan in the LED epitaxial wafers and chips project in Foshan;

"The timing of LED is ripe." NVC Chairman of NVC Lighting (2222.HK) told reporters of the "China Business News". However, industry insiders believe that surging investment boom is difficult to hide the LED market "incubation without change" å°´å°¬ 2010 2010 2010 LED in the domestic lighting market penetration rate of only 1%, many companies rely on government municipal projects to survive, with subsidies profit .

One side is the high investment enthusiasm, while the other is the desolated market status. When will the LED spring come?

Troop layout

On March 15, Guangdong Benbang Electric Co., Ltd. laid the foundation for the LED lighting production project in Longkou Town, Heshan City. According to the forecast, the total annual investment value of this project will exceed RMB 2.5 billion.

This is just a microcosm of LED investment boom in the first quarter of 2011. In addition to the previously mentioned Sunshine Lighting, National Star Optoelectronics, BDO Runda also announced that 4.1 billion yuan investment in LED. At the same time, even some non-private lighting business listed companies will also be eyeing the LED, such as the main business for the metal logistics The distribution of the Australian Ocean Shunchang (002245.SZ) announcement, plans to invest 1 billion yuan to the LED project; Midea, TCL, Changhong and other home appliance giants have long been involved.

The LED boom that swept the capital market since 2010 has not converged in 2011.

All this stems from the expectation of the LED market prospects that have been out of the laboratory for more than 20 years. "The global LED industry outlook report released by Philips announced that by 2015, LED products will account for 50% of their shipments of lighting products, and we should be able to do so." Wu Changjiang told reporters that after many years of cultivation, LED lighting will not matter. Technology, industry support, market cultivation, etc., have all become more complete, "the timing of LED is ripe."

Based on the judgment of “Mature Opportunity,” on March 12, 2011, NVC Lighting introduced a series of more than 300 single-item LED lighting products with more than 100 varieties in more than 100 series and 6 series, which is equivalent to the entire industry in 2010. Nearly one-fifth of more than 500 varieties were introduced.

According to the 2010 annual report published by NVC on March 24, 2011, NVC Lighting achieved a total sales revenue of US$471 million in 2010, an increase of 54.3% from US$305 million in 2009, and a net profit of US$71.38 million, up from the same period of 2009. The year's $128.43 million increased by 455.5%. In terms of product points, LED products achieved gross profit of US$1.908 million in 2010, an increase of 548% from US$348,000 in 2009.

Shenzhen Shiye Rong, general secretary of the LED Industry Federation, told reporters that 2015 will achieve 50% market share of LED products is the consensus in the industry, and the flashpoint is likely to be in the next two years, this is the reason for the investment boom in 2010, 2011 .

According to statistics, the total output value of domestic traditional lighting industry in 2010 was 290 billion yuan, while the output value of LED general lighting was 18 billion yuan, an increase of 140% from the 7.5 billion yuan in 2009. Among them, LED street lamps, tunnels and other growth rates exceed 100%.

The new construction that has not entered, and the re-expansion that has entered, LED lighting industry has been like 2006's wind power, 2008 polysilicon, in addition to the traditional lighting industry to LED transformation, including PE (private equity funds), government industry funds, foreign capital The various funds have recruited troops and arranged troops.

M&A is another investment method. The LED industry chain is divided into top-down substrates: substrate, epitaxial wafers, chips, packages, and applications. Many enterprises that have already laid out LED industry have chosen to rely on M&A to improve their industrial chain.

On January 25, 2011, Neo-Neon (01868.HK) announced that it had acquired HCI of the United States for a consideration of US$17 million. According to the announcement, HCI is a designer, manufacturer and distributor of professional commercial LED lighting products, and has a wide range of architectural designers and distributors in the world.

“NVC Lighting has formed strategic partnerships with LED giants such as Cree and Taiwan Crystal Power. The next step will be to integrate some outstanding technology companies through capital operation.” Wu Changjiang told reporters. It is widely speculated in the industry that NVC will set up a new joint venture with Taiwan Jingdian to expand the LED lighting industry chain.

In the eve of the LED lighting era, "snapping food" has become the company's development ideas. "Everybody expects to use acquisitions to make up for their shortcomings in industry and channels." Zhang Xiaofei, CEO of Gaogong LED, said, "M & A is undoubtedly the best means to quickly enter and rush to eat LED lighting market."

"A group of dead"

But compared with the crazy investment enthusiasm, the market situation is not satisfactory.

According to the research report of GF Securities, in the current LED lighting industry, government municipal engineering is still the main guide for LED lighting industry. The main LED products on the market are concentrated in general lighting products including landscape lighting, tunnel lights, and street lamps. The LED lighting market did not start.

In supporting the development of the LED industry, the government has flooded the LED industry with a large amount of financial subsidies. In December 2010, Sanan Optoelectronics (600703.SH) signed an agreement with Huainan Government of Anhui Province to invest 8 billion yuan in the production of 1,000MW photovoltaic system and component projects. According to the agreement, Sanan Optoelectronics Co., Ltd. purchased only equipment and received a subsidy of 500 million yuan to start production. After the total limit of 1000MW, a subsidy of 1.4W per 1W sales of the product means that the full production will receive a subsidy of 140 million yuan.

At the same time, Sanan Optoelectronics has also signed the "LED Application Product Sales Contract" with the Huainan Urban Construction Committee. The latter will issue LED purchase orders worth a total of 450 million yuan in three years starting next year. According to the 2010 annual report of Sanan Optoelectronics, the net profit was 419 million yuan, of which 253 million yuan were non-recurring gains and losses including government subsidies.

“In the industry chain of LED lighting, only technology is not enough, and the construction of management teams and the expansion of channels are all crucial.” Wu Changjiang believes that the prospects of LED are all seen, but thousands of companies have flocked to It will die in batches, and in the end there will be a few companies that will survive.

Yu Shirong told reporters that 500 lumens (a luminous flux unit)/US dollar is a relatively recognized data in the industry. The international brand name LED products on the market are priced at around 90 yuan each, and the average selling price is close to 70 yuan, equivalent to approximately 10 lumens/US dollar. Around, "the price is still too high, with the influx of funds, technology upgrades, reasonable prices may be formed within 3 years."

In the LED product cost structure, epitaxial wafers, chips accounted for a relatively high is the LED is difficult to reduce the price of the main reason, because the chip's technical threshold is many domestic companies can not match, "Generally, home and industrial LED lighting products In the cost structure, the chip accounted for about 40%, while the landscape lamp lighting chip accounted for a higher proportion.” Sun Qing Lighting Board Secretary Wu Qingyi introduced.

“China is a manufacturing powerhouse and application powerhouse in the global lighting industry. When the LED war is about to come, rely on the advantages of management, cost, technology, and channels to take the initiative.” said Wu Changjiang.

In the surging investment boom, it is difficult to hide the LED market "incubation without change" å°´å°¬ 2010 2010 2010 LED in the domestic lighting market penetration rate of only 1%, many companies have to rely on government municipal projects to survive, with subsidies profit .