LED market rebound rebound supplier performance

2008 in the second half of the year, the impact of the global financial crisis, energy saving lamp market slowdown or even decline year on year. China's energy-saving lamps export volume in the 08 months 1-6 year on year increase of 20%, while the second half fell by 12%. Upstream component manufacturers in the energy saving lamp factory inventory action, the impact is even more.

However, as the original energy-saving lamp incandescent lamp replacement, the replacement process continues, especially in the current environment, governments have stressed that energy-saving emission reduction, accelerate the elimination of incandescent lamp, energy-saving lamps, which will speed up the recovery of the market: 1) the United States established lighting energy efficiency standards higher in 09 years in February, and all public buildings are replaced with energy-saving light bulbs (07 years in the United States accounted for only 290 million of the market of energy-saving lamp bulb 20%); 2) the EU in September this year to ban 100 watts and above high-power incandescent bulbs, 2012 a total ban on incandescent lamps, the European energy-saving lamp is only 350 million, the total number of 17% light bulbs; 3) Chinese also accelerate the promotion of energy-saving lamps. The national development and Reform Commission (NDRC) and the United Nations Development Programme (UNDP) work together to carry out the phase out of incandescent lamps and speed up the promotion of energy-saving lamps in china. In 2008, under the impetus of financial subsidies, sold a total of about 60000000 energy-saving bulbs. This year is expected to continue to increase financial input in this area.

Although the rapid growth of LED lighting, but it will be the first street lighting (instead of high pressure sodium lamp) began, its price is far from being able to form a threat to the domestic energy-saving lighting. Energy saving lamps for incandescent lamp replacement will still be the major changes in the lighting market in the next few years, energy-saving lamps will still have a huge room for growth (China's exports of incandescent lamps are energy-saving lamps 4.5X).

In the global downturn in demand for electronics, we still have confidence in the demand for energy-saving lamp market growth. At present, the global energy-saving lamp market has begun to gradually warming. We remind investors to pay attention to the upstream components of energy-saving lamps suppliers - Fala electronics and microelectronics, the future with the performance of energy-saving lamps and brought about by warming.

Fala Electronics (600563) capacitor products accounted for 40% in lighting applications, and the company is actively to product direction of the large capacitance to future products is not only used in hybrid cars, will also can be used for power generation equipment, power transmission equipment and other industrial control field. This will be the company's new growth highlights. We raised the company 09 years EPS from $0.34 to $0.4, 2008-2010 EPS was $0.4, $0.4 and $0.56. 6 months target price of $12, equivalent to 09 years 30xPE.

Hua Microelectronics (600360) transistor products in the field of lighting applications accounted for more than 45%, the future of the company to enhance the operating rate of heavy asset type business is huge. The amount of VDMOS products in the second half of the company's growth is the main aspect. We expect the company's 2008-2010 to 0.13, $0.17 and $0.41 in EPS. It is currently one of the key components of the company's lowest PB manufacturers. Six months target price of $6.15, equivalent to 2010 15xPE.