LED industry is now warming signs ahead of expansion capacity card

After extensive losses in the whole industry, China's LED industry is finally showing signs of recovery. "At present, the quality of unpackaged chips has increased by about 10%." In September 6th, Cheng Hongwei, superior product wealth Research Institute, said that the price of products in downstream applications was also about 5%. According to Zou Mingxiao, a consultant at CIC, the price of the LED packaging plant is only related to the display package. Although it has nothing to do with the lighting package, the price rise is also brewing in the downstream of the LED industry chain. After a two-year low price market, the LED price rebound trend is already obvious. Compared with the previous low market prices, the price of LED has risen by nearly 10%. However, the current price increase is not a comprehensive price increase. "After the downturn in the industry in 2015, this price increase is the beginning of a reasonable return to the industry's product prices, but it is still necessary to see whether the industry will recover in full after that." In response, another person who asked for anonymity believes that the current industry order has been re established. In the future market, the demand side of LED products still has huge room for development. After this adjustment, the industry will return to reason. The starting point of raising prices is that the previous LED business has gone through a long downturn. Since 2010, China's LED industry has entered a period of rapid development. "At that time, the market access threshold was very low." The head of a LED enterprise recalls that thousands of Yuan's investment can enter the industry. At that time, China's LED industry has just started, and the bright prospects for development attract many capital flows into the industry. At that time, the scale of domestic enterprises was not too large. A new entry into the industry might be able to catch up with the top domestic industry enterprises in half a year, with the help of capital. In the early stage of industrial development, there are problems in the industry, such as low product quality, serious homogenization and low technical content. The competition among enterprises is often the most common low price competition. In this situation, the price of domestic LED products began to decline significantly. "In 2013, the price of products in the LED industry dropped by about 30%, and in 2012 it continued to decline by about 20%, while in 2015 it continued to decline by about 5%." Cheng Hongwei remembers that in the past three years, although the decline in the LED industry has been shrinking, the price in 2015 has basically reached the cost line of various enterprises. Many enterprises have been running below the cost line for a long time, including many large LED manufacturers. Under such circumstances, the LED industry has stepped into the bottom of the industry. Judging from the data performance of listed companies, in 2015, the largest LED company in the country achieved 4 billion 858 million yuan in sales revenue, 1 billion 505 million yuan in operating profit, and a net profit of 1 billion 695 million yuan attributable to shareholders of listed companies. The number of LED chip products produced by huaxan optoelectronics Co., ranked second in China, grew by 65.52% over the same period last year, up 71.63% from the same period last year. The company achieved net profit of -9596.39 million yuan, down 205.56% compared to the same period last year, and its gross profit margin was only 16.75%. "Under such unreasonable low price competition, the product value and enterprise value of the LED industry are underestimated as a whole." The industry said, therefore, the price of the callback is a reasonable callback, and the gross profit margin of the industry needs to rise to around 30%, in order to match the current LED enterprise's return on investment and the current market value. The current price increase is a kind of time card. Since 2012, the state has promulgated "China's phased out incandescent road map". In October 1st of that year, China banned the import and sale of incandescent lamps of 60 watts or more. By October 1, 2016, China will completely suspend production and disable incandescent lamps. "That is to say, starting from October 1st this year, the production of white lantern enterprises across the country will be completely banned from production and sales." Cheng Hongwei said, adding that the previous industry has been at a low ebb. Combined with this time node, enterprises' price rise is a very normal market rhythm. About 10% of the increase is understood in the industry. The industry also said that the demand for LED products is increasing in the current market, and from the return on investment in the LED industry, the current price and the investment of enterprises still do not match, this is a reasonable rise. "This is also a tentative price increase." Cheng Hongwei explained that at present, the capacity utilization rate of the industry has risen to more than 90%. The current increase is mainly caused by the increase in the price of large manufacturers in the industry, but the rate of raising prices is not large, relatively conservative, and the current price increase has only allowed manufacturers to slightly recover to the cost line, and it will take time for the industry to really pick up. Specifically, although the LED industry has experienced the industry downturn in 2015, the concentration of the industry is not high enough in the overall industrial layout. Cheng Hongwei said that many enterprises relied on the relevant subsidies of the state to alleviate losses. Now the time for subsidies to be abolished is not long. Some enterprises are still within the scope of temporary support. The speed of capacity production in the market is not very fast. Therefore, the excessive increase may bring about a re growth of this capacity. In fact, China's LED industry has experienced a "barbaric growth" era of overcapacity, but demand for incandescent lamps has been increasing. The industry pointed out that at present, the replacement rate of China's lighting industry has risen to about 30%, and under the national policy and technological progress requirements, the replacement rate will reach 70%-80% in the next few years. According to this calculation, the domestic demand for LED products will double to less. In addition, at present, the mainland's share in the global LED market has risen from about 10% to around 30%, and the market share will reach at least 50% in the future. The demand for China's LED market is still growing rapidly under the development trend of demand side. It is precisely because of the development trend of this industry, after domestic enterprises have been accelerating the expansion of production capacity. Taking huaxan optoelectronics as an example, huaxan optoelectronics invested 3 billion 500 million yuan at the beginning of its listing in 2012 to expand its capacity in Zhangjiagang. In 2015, the company set up a new production base in Yiwu. Different from the past, the current industry order has changed a lot. According to the relevant data, in 2014, the number of LED enterprises in China was around 2, but by 2015, about 4000 enterprises had withdrawn from the market, and the number of enterprises in the industry dropped by 20%. "The industry after shuffling is more rational." The industry also said that the demand for technology is relatively high and the investment threshold is also increasing. At present, a large number of enterprises have emerged in the industry after the reshuffle, forming a preliminary industry concentration. That is to say, new entrants need more huge cost to catch up with existing enterprises. "At present, if we want to catch up with the scale of an enterprise, it will take at least 3-4 years, and the cost of investment will be doubled." Zou Mingxiao said that the problem of overcapacity and low end products in China's LED industry has improved, but it has not been completely eliminated. Despite the signs of a rebound in the industry, LED enterprises should remain rational, arrange production plans according to market demand, and focus on technology research and development.