Local LED street lights become domestic LED giants "over the winter cotton jacket"

(Text / high-tech LED reporter Sun Yanqi Ye Xiaoli Peng Rongfang) The black cloud that overshadowed the domestic LED industry for half a year, seems to have dissipated in the Chinese New Year celebration.

On February 22nd, at the China LED Exhibition, which was closed at the Guangzhou Pazhou Convention and Exhibition Center, the crowds and the exhibitors and buyers from home and abroad all showed a prosperous situation. On the last day of the closing ceremony, many LED display manufacturers brought LED screens to the exhibition, all of which marked the words that had been ordered by a certain company.

But the shadow of overcapacity has not completely dissipated from the upstream of the LED industry.

"There are a lot of external orders, but we are not willing to accept the whole." LED chip manufacturer Orende deputy general manager Han Guangyu said on February 19th, "High-tech LED", now the downstream customers are consistent and stable on LED chips. The demand is getting higher and higher. If the downstream orders are not more than a certain degree, it is easy to form inventory. "In the days of rapid decline in LED chip prices, any inventory may cause losses."

However, Han Guangyu's inventory concerns have been skillfully solved by the two leading LED manufacturers of Sanan Optoelectronics (600703.SH) and Dehao Runda (002005.SZ).

In late February, Sanan Optoelectronics and Dehao Runda released 2011 financial reports and performance reports on net profit growth of 123.29% and 107.12% respectively.

"High-tech LED" noticed that the main reason for the soaring performance of Sanan Optoelectronics and Dehao Runda in 2011, apart from the huge government subsidies, is more from the local government LED street light orders, and this has become the two major LED giants. "The winter cotton jacket."

Local government order

Sanan Optoelectronics 2011 financial report shows that in 2011, Sanan Optoelectronics revenue was 1.747 billion yuan, an increase of 102.56%, net profit of 936 million yuan, an increase of 123.29%, net profit after deducting non-recurring gains and losses reached 462 million yuan, year on year. The growth rate was 92.98%.

Sanan Optoelectronics said in the financial report that despite the significant decline in raw material prices of LED products and the decline in selling prices, the gross profit margin of LED products has declined. However, the company has actively adjusted its strategic thinking and introduced new methods, etc., in 2011. The year has achieved a substantial increase in performance.

Sanan Optoelectronics said that the adjustment strategy is to increase investment in LED street lights and other application products, and strive for local LED street lights and lighting orders.

The financial report shows that in 2011, Sanan Optoelectronics LED application products revenue of 580 million yuan, an increase of 160% compared with 223 million yuan in 2010. What is even more surprising is that the gross profit margin of its LED application products is as high as 63.39%, which is a full increase of 23.11 percentage points compared with the 2010 gross margin of 40.28%.

According to the calculation of "High-tech LED", in 2011, Sanan Optoelectronics LED application products accounted for 33.2% of total revenue. Comprehensive comparison of the gross profit margin of its products, LED application products have become the main source of profit for Sanan Optoelectronics, and the gross profit contribution has exceeded the LED chip business.

Sanan Optoelectronics Financial Report shows that its top five customers are Anxi County State-owned Assets Investment Co., Ltd., Wuhu City Housing and Urban-Rural Construction Committee, Huainan Urban and Rural Construction Committee, Kunming Yinpeng Industry and Trade Co., Ltd. and Shenzhen Anpu Optoelectronics Technology Co., Ltd. .

Judging from the nature of customers and the announcements announced by Sanan Optoelectronics, Anxi County State-owned Assets Investment Co., Ltd., Wuhu City Housing and Urban-Rural Construction Committee and Huainan Urban and Rural Construction Committee should be the main customers of Sanan Optoelectronics LED application products.

Interestingly, the operating income from Anxi County State-owned Assets Investment Co., Ltd., Wuhu City Housing and Urban-Rural Construction Committee and Huainan Urban and Rural Construction Committee has reached 569 million yuan, accounting for 98% of Sanan Optoelectronics' LED application revenue in 2011. .

The above data shows that Sanan Optoelectronics' LED application product revenues are almost all from local government orders. Sanan Optoelectronics also acknowledged that "High-tech LED" recognizes that the company's LED application products mainly rely on local government orders, and its sales to the external market are almost negligible. The relevant person emphasized that the focus of Sanan Optoelectronics business is still LED chips, and the LED application products business is only incidental.

Compared with Sanan Optoelectronics, Dehao Runda, which is also in the field of layout LED chips, has raised its LED lighting business to a position that is equal to the LED chip business.

Dehao Runda's 2011 performance report shows that in 2011, Dehao Runda's revenue was 3.067 billion yuan, a year-on-year increase of 18.18%, and net profit was 405 million yuan, a year-on-year increase of 107.12%.

In its performance report, Dehao Runda said that thanks to the increased support from the state and local governments, and the continued implementation of energy conservation and emission reduction policies, the demand for LED application products, especially street lighting products, has maintained rapid growth. . The rapid growth of the company's net profit is also due to the substantial increase in the profit of LED's main business and the increase in government subsidies over the previous year.

Since Dehao Runda has not released its 2011 financial report, it is difficult to determine how many LED streetlight orders Dherun has received from local governments.

However, Dehao Runda's financial report for the first half of 2011 initially reflected the growth rate of LED application products. In the first half of 2011, Dehao Runda LED application products revenue was 242 million yuan, an increase of 75.11% year-on-year, and the gross profit margin of products reached 42.72%.
“The majority of LED application revenues come from local government streetlight orders where the company invests.” Dehao Runda’s board secretary Deng Fei told Gaogong LED that the company has been setting its own product strategy based on the LED lighting market. This year will increase the expansion of the indoor lighting product line.

Industrial haven

In fact, local government orders for Sanan Optoelectronics and Dehao Runda are not only an increase in business income, but also a source of important profit and a safe haven for preventing investment risks in the LED industry.

In the second half of 2011, due to the overcapacity of LEDs, the sharp decline in the price of LED chips has become inevitable. According to the financial report, the gross profit margin of Sanan Optoelectronics in 2011 was only 26.15%, which was a full decline of 20.11% compared with the 46.26% gross profit margin in 2010.

The financial report also showed that as of December 31, 2011, Sanan Optoelectronics' inventory amount was 918 million yuan. Although it has increased by 195.88% compared with 310 million yuan at the end of 2010, it has narrowed compared with the 933 million yuan inventory in the third quarter of last year.

The above data shows that Sanan Optoelectronics adopted a substantial price cut in the fourth quarter of last year to digest inventories, basically defusing the crisis of rising inventory.

"This has also become the root cause of the sharp increase in the gross profit margin of Sanan Optoelectronics LED application products." A senior LED chip manufacturer in China told the "High-tech LED" that the local government street lamp orders are actually preferential policies for LED manufacturers investing in local areas. One of these street lamp orders is not market-oriented, and there is a taste of protecting LED enterprise investment.

The above-mentioned executives said that such purchase orders have been signed at the time of general investment, and the number and amount of products have been delineated, which means that the purchase price of LED street lamps has been set in one or two years. When the market price of LED chips drops sharply, it will naturally push up the gross profit margin of LED application products.

An official of the Wuhu National High-tech Industrial Development Zone Administrative Committee once admitted to Gaogong LED that the price of municipal lighting orders is high. But he said that without such support, LED companies are unlikely to invest several billion yuan in Wuhu.

According to the past announcement of Sanan Optoelectronics, Sanan Optoelectronics obtained an order for 600 million LED street lamps from Wuhu, and received an order for 450 million LED street lamps from Huainan City, and an order for LED street lamps from Quanzhou and Anxi County. , a total of 2.65 billion yuan LED application product orders.

The above orders will be completed before 2013, which means that Sanan Optoelectronics has at least 1.5 billion LED street lights in 2012 and 2013. The important thing is that the profit margin of this part of the order is quite guaranteed, and it can even resolve the business risks brought by the fluctuation of the industrial cycle.

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