Morgan Stanley: LED manufacturers fastest recovery in the second quarter revenue

Morgan Stanley Securities pointed out that for most LED suppliers, the first quarter of 2009 may be the coldest season. Because the order visibility is very low, orders are highly uncertain, with the decline in value of the product and inventory loss pressure, is expected to LED vendors in the first quarter revenue is still in recession trend, gross margin and 3%-5% repair space. With the inventory to go, is expected in the second half of the Christmas lighting and consumer electronics products season heating demand, the fastest revenue is expected to start in the second quarter of the recovery. But because the first quarter has not seen signs of improvement, it is still given crystal electric Underweight rating.

Taiwan LED manufacturers in December 2008 revenue fell more than 20% last month, compared with the same period in 2007, the decline of about 40%. Than the original estimate of the legal system may be reduced by more than 10%-20%. Morgan Stanley Securities believes that the main reason is caused by the order at the end of frozen, inventory and other factors. Among them, the Asia Pacific region, especially for crystal electric demand Chinese, low market, monthly revenue dropped to 4 million yuan NT; downstream LED package is also due to the demand slump, December revenue was 24%, the average monthly rate of 38% years.

Morgan Stanley Securities pointed out that, in addition to a small number of non consumer electronics manufacturers, the majority of LED manufacturers in December capacity utilization has been reduced to 40%. Due to the inventory of pending orders, and the lack of kinetic energy, LED industry believes that the current order visibility is very low, is expected in the first quarter of 2009 compared with the same period of 2008 orders may decline 40%-45%, of which 1-2 month revenue is still in decline. At the same time there is a high degree of uncertainty in the order, that is, at any time may arise urgent orders, but also may cancel the order.

Plus the manufacturers have to face heavy pressure to lower prices and inventory loss and so on, Morgan Stanley Securities estimates, LED manufacturers to the first quarter of 2009 gross margin and 3%-5% potential repair space, the overall supply chain vendors may most will fall into a loss.

However, it is pointed out that the LED industry expects the fastest recovery point, may fall in the second quarter of 2009. The premise is that if the inventory to the end of the second half of the new orders for Christmas lighting and consumer electronics, as well as the potential orders for the 2010 World Trade Show, is expected to start.

Because the climate is no signs of improvement, manufacturers are expected in the next few months have continued demand for lost temperature dilemma, Morgan Stanley Securities to maintain Underweight crystal Electric Holdings reduced rating, and has estimated crystal electric loss in the fourth quarter of 2008 and the first quarter of 2009, while the first quarter is not see signs of recovery.