The LED chip industry is welcoming a rare market opportunity.
Sanan Optoelectronics released an annual report showing that the company achieved operating income of 6.272 billion yuan in 2016, an increase of 29.11% over the same period of last year; net profit at home reached 2.166 billion yuan, an increase of 27.86%. At the same time, the company's 2017 Q1 results forecast is expected to return to the mother's net profit of 457 million yuan, an increase of 45%-55%.
The industry's prosperity has reversed since the third quarter of last year. Sanan Optoelectronics' net profit for the fourth quarter of 2016 was 670 million yuan, a year-on-year increase of 170.65% and a year-on-year increase of 26.69%. In the fourth quarter, the company's gross profit margin reached 50.15%, which is close to the best level in the company's history.
The strong demand for the small-pitch display market and the exit of some of the industry's backward production capacity have strengthened the industry concentration to become a major factor in the profitability of LED chip companies.
The concentration of the industry is showing an increasing trend. There are two main reasons for this phenomenon: First, the continuous growth of downstream demand, especially the explosive growth of the general lighting market; second, the adjustment of the industry itself, the past two or three In the year, there was almost no expansion.
According to the statistics of the High-tech Research Institute LED Research Institute (GGII), the market size of China's LED chip industry in 2016 exceeded RMB 14.5 billion. The year-on-year growth was 11.54%, an increase of 3.2 percentage points over 2015.
After experiencing investment heat and overcapacity, in early 2016, Jingdian shut down 25% of production capacity, small factory supply reduction and downstream demand drive. The LED chip supply and demand structure gradually adjusted to make the LED chip industry gradually return to rationality.
The price of the cliff-type decline has been alleviated. In the second half of 2016, due to the rise in raw material prices and the change in supply and demand, chip makers such as Jingyuan Optoelectronics, Sanan Optoelectronics and Huacan Optoelectronics have increased their prices.
According to the GGII, the LED chip research institute has stabilized and rebounded in 2016, and the market demand is in good condition. However, the LED chip manufacturers Sanan Optoelectronics, Huacan Optoelectronics, and Aoyang Shunchang have a huge expansion scale. The small and medium-sized chip factories are not willing to act blindly, and they are in a wait-and-see attitude. On the other hand, the narrowing of MOCVD subsidies has further aggravated this trend.
The price increase has become one of the external performances of chip companies' profitability improvement.
In January 2017, Sanan Optoelectronics raised the price of some chips by 8%, which is the second price increase since August 2016. The first quarter is the traditional off-season of the LED industry. This time, the price of some products will continue to increase again, reflecting the high level of the industry.
Some institutions expect the company's gross profit margin to remain high in the first half of 2017, while the new supply in the second half of the year will continue to reach production. It is expected that the industry will maintain a high industry boom throughout 2017.
In addition, after the intensive investment in equipment and R&D in the past few years, the scale and technical advantages of LED chip companies have become obvious. Some first-tier chip manufacturers in Europe, America and South Korea have taken the initiative to limit the production capacity, and instead seek the OEM of domestic chip companies.
The new round of capacity expansion has also come.
It is estimated that Huacan Optoelectronics will expand its production by 100% in 2017 and reach 1.4 million pieces/month at the end of this year. The company's display chip is the leader in the segmentation industry, with a market share of 50% at the end of 2016. Small-pitch chips continue to grow at a high speed, and display chips are expected to be this year. Expansion of 62.5%;
The company's lighting chip products have core unique advantages, and have launched international advanced technology solutions such as high-voltage chips and filament chips. The market share has remained at the top three in China, and this year it is expected to expand 150%;
The company's backlight flip chip product technology continues to innovate and optimize, reaching the international first-class technology level, successfully entered the mainstream backlight supply chain, and has been recognized by mainstream customers in the industry, this year is expected to expand production by 150%.
According to the 2016 annual report, Huacan Optoelectronics achieved operating income of 1.582 billion yuan, an increase of 65.62%; net profit of 267 million yuan, an increase of 378.43%, turning losses into profits in the previous year. For the company's profit, Huacan Optoelectronics said that the scale effect is the key to successful losses. In 2017, the company will continue to expand the production of LED modules and sapphire modules of Zhejiang subsidiaries to ensure the growth of future performance.
For the reasons for the company's performance growth, Huacan Optoelectronics said in the annual report that during the reporting period, with the completion of the company's upgrade project, the scale of production and sales increased significantly, and the company's LED chip production increased by 93.95% over the same period of the previous year.
The increase in production capacity led to a significant increase in the company's sales scale and sales revenue compared with the same period of last year. The company's large-scale benefits gradually reflected, and the cost was reduced, which became one of the main sources of profit growth of the company this year.
In the opinion of the industry, with the end of the last round of price wars, after a round of reshuffle in the LED industry, the market has been occupied by several large LED companies, and the vicious price wars that have appeared before will be difficult to come back.
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