Overcapacity risks increased in 2016 LED continued oversupply

UBS Securities pointed out that in 2016 the LED industry will continue to grow more will be pile up in excess of requirement, shipping price downturn empty offset, optimistic about the mainland LED groups have a chance to win.

UBS Securities Industry Analyst Hong Ximin pointed out that the LED industry last year after a brief recovery after 2015, and entered the state for 2016, according to the pile up in excess of requirement, high brightness LED chips inside the model are still in the state, at the 2015 and 2016 pile up in excess of requirement, oversupply ratio estimates will be respectively 10% and 12%, compared with 4% last year rose sharply.

Hong Ximin believes that in 2016 the LED industry oversupply is still the main reason for two:

First, the weak demand for TV, tablet PCs, smart phones caused by weak demand for backlight than expected, will offset the growth from the general lighting;

Two, the mainland LED manufacturers to expand production capacity, will increase the risk of excess capacity; therefore, in addition to the mainland manufacturers outside the global LED industry will face price pressures, market share increase and large shipments can win.

Hong Ximin pointed out that the decline of benefit from LED lighting retail prices, estimated in 2015 and 2016 LED general lighting penetration rate will rise to 17% and 24%, such as PHILPS positive for $2.5 promotional LED bulb, almost with compact fluorescent lamps (CFL) about the price, but weak demand from the backlight and LED chip to enhance the efficiency of all, LED will affect the overall demand, so this year the high brightness LED chip area demand reduction of 6%.

According to the Taiwan factory million light, Hong Ximin said, with the panel module demand remained weak, fear of long-term impact revenue growth momentum, coupled with the industry competition, and the 2015 to 2017 profit per share estimates were lowered to 3.3, 3.43, 3.62 yuan.

As for crystal electricity, Hong Ximin directed at the current stage of the following 4 structural problems:

First, the loss of market share to mainland manufacturers;

Two, large-scale lighting customers bargain;

Three, mainland competitors easily cut key patents;

Four, M & a canyuan burden; 2015 to 2017 profit per share estimates were cut to -0.15, -0.27, 0.02 yuan.

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