The price increase of Jingyuan Optoelectronics and Sanan Optoelectronics should have become the turning point for the LED upstream epitaxial chip industry to usher in the market turnaround, but this does not mean the industry's recovery.
Yesterday evening, Guangdong Ganhua (000576) announced the announcement of Jiangmen Sugarcane Chemical Plant (Group) Co., Ltd. on the progress of the implementation of the controlling shareholder's investment commitment. The company decided to suspend investment in the LED industry.
In the past few years, the LED chip industry has experienced a large price drop due to the release of new large-scale investment capacity. In order to compete for market dominance, the irrational competition of market prices has caused many small and medium-sized epitaxial chip companies to face the continuous decline caused by the continuous decline in product prices. Loss.
According to the statistics of the High-tech Research Institute LED Research Institute (GGII), in 2015, the output value of China's upstream epitaxial chips increased by only 8.3% year-on-year, with an output value of 13 billion yuan, and its growth rate slowed down noticeably.
At the same time, however, the concentration of LED epitaxial chip companies has further increased, and the revenue of the top five chip companies accounted for 65%. Chip makers such as Sanan Optoelectronics, Huacan Optoelectronics, Ganzhao Optoelectronics, Tongfang, and Dehao Runda account for nearly 70% of the domestic market.
In 2015, the price of LED chips in China fell by 30%-40%. This has also caused many companies to become hesitant to continue to expand, transform, or retreat.
A paper announcement sees the clue
On February 15, 2011, in the process of state-owned equity transfer of Jiangmen Sugarcane Chemical Plant (Group) Co., Ltd. (hereinafter referred to as “the companyâ€), the current controlling shareholder Delixi Group Co., Ltd. (hereinafter referred to as “Delixi Groupâ€) Regarding investment, the following commitments are made:
"Delixi Group promised to transfer ST's investment in the financing industry through the additional financing channels within five years after the transfer of shares, and the investment in the photovoltaic industry is not less than RMB 1.5 billion; if ST Ganhua invests less than RMB 1.5 billion Delixi Group promised to supplement its investment of RMB 1.5 billion in Jiangmen with additional funds from its own funds."
Subsequently, the company implemented LED epitaxial wafer and chip project investment in Jiangmen High-tech Zone with its wholly-owned subsidiary, Guangdong Deli Optoelectronics Co., Ltd. (hereinafter referred to as “Deli Optoelectronicsâ€). In the second half of 2014, the top ten production lines of Deli Optoelectronics LED epitaxial wafers and chip projects were officially put into operation and continued to operate. As of June 30, 2016, the project has invested a total of about 800 million yuan.
However, in recent years, the LED chip market has undergone tremendous changes. The number of domestic MOCVD machines has increased significantly, showing a trend of oversupply. Especially since 2015, the LED industry's entire industry chain products have been plunged into price competition, and corporate profitability has declined. Fierce, the overall profit rate fell significantly, and Deli Optoelectronics produced losses.
According to the current actual situation, considering the factors such as industry and market, the company has no plans to increase investment in the optoelectronic industry.
Guangdong Ganhua semi-annual report data show that in the first half of the year, Deli Optoelectronics LED epitaxial chip operating income was 0.27 billion yuan, an increase of 33.01% over the previous year; product gross profit margin was -45.55%, net profit loss was 20,416,800 yuan.
In order to maintain the interests of the company and the majority of investors, and through the communication with the company's controlling shareholder Delixi Group, Delixi Group agreed that the company will not increase investment in the optoelectronic industry, and concentrate on the production and operation of the existing production line.
Once filled with confidence
Before Guangdong Ganhua was reorganized by Delixi Group, its main business was sugarcane comprehensive utilization industry, including the production of sugar, pulp and paper biochemical products, etc., but due to factors such as insufficient supply of raw materials and the inability to invest sufficient funds for development, the company The business has shrunk year by year.
Since 2010, Guangdong Ganhua has become *ST Ganhua, and its business has continued to deteriorate. It cannot rely on existing funds to restore its sustainable profitability and seek restructuring and restructuring. On September 5, 2011, the controlling shareholder of the company was changed from Jiangmen Asset Management Bureau to Tracy.
In October 2011, ST Ganhua announced a revised version of the non-public offering plan, which adjusted the total investment of the “LED epitaxial film production project†in the original plan from 700 million yuan to 836 million yuan, of which funds were raised. 600 million yuan, self-raised funds invested 236 million yuan, the amount of funds to be invested is unchanged.
On March 20, 2013, *ST Ganhua made a certain increase to Delixi and entered the LED field. After the increase, Delixi held 41.55% of the shares of *ST Ganhua and became the controlling shareholder.
According to the data, Delixi mainly produces high, medium and low voltage electrical appliances and industrial automation control electrical, and is engaged in integrated logistics, transportation, PE investment and other industries.
After being controlled by Delixi, Guangdong Ganhua said that it will focus on LED and biochemical industries in the future. Among them, Guangdong Deli Optoelectronics Co., Ltd. (hereinafter referred to as Deli Optoelectronics Co., Ltd.), a wholly-owned subsidiary of Guangdong Ganhua, has begun construction of the LED epitaxial wafer production project.
At that time, Guangdong Ganhua gave high hopes to the LED industry, and believed that the development prospects of the LED industry are promising. The government of the company has formulated a policy to support the LED industry. The LED industry chain in the region is relatively perfect. The company has a good environment and foundation for the development of the LED industry. The LED industry's senior industrialization team and foreign advanced equipment have competitive advantages.
Loss is not a case
However, Guangdong Ganhua's high-profile LED business has not brought about the expected results. The company has been unable to get rid of the situation of relying on non-recurring gains and losses in the past three years.
According to the financial report, the net profit of Guangdong Ganhua in 2013, 2014 and 2015 was 35.88 million yuan, 10.26 million yuan and 177 million yuan respectively. After deducting non-recurring gains and losses, the net profit was -5.84 million yuan and -25.64 million yuan respectively. -7938 million yuan.
This means that after three years of transformation, Guangdong Ganhua still has difficulty in relying on its main business to achieve turnaround. The LED industry sector still accounts for a small proportion of operating income, and its operations are still in a situation of high inventory and cost inversion.
According to the 2013 annual report, the first phase of Deli Optoelectronics LED epitaxial wafer and chip project, which was engaged in LED business in Guangdong Ganhua, entered the commissioning production stage smoothly, but it has not shaken off the loss since production.
According to the financial report, in 2013, 2014 and 2015, Deli Optoelectronics realized operating income of 0 yuan, 26.82 million yuan and 59.88 million yuan respectively, and net profit of 1.694 million yuan, 207.6 thousand yuan and -59.34 million yuan respectively.
The 2015 financial report showed that the operating cost of LED products was as high as 70.02 million yuan, the gross profit margin was -17.29%, and the revenue cost was upside down. The inventory was 78.28 million yuan, an increase of 37.09 million yuan from the beginning of the period, an increase of 90.04%, mainly for LED products, Homemade semi-finished products and inventory items increased.
As of the 2016 semi-annual report, the paper's main business is still paper trade (accounting for 66.82%), and the company's key transformation LED business only accounts for 16.31% of the operating revenue.
However, the increase in income does not increase non-industry cases.
Yuanrong Technology recently released a semi-annual report. The report shows that the company's operating income for the first half of the year was 156 million yuan, an increase of 0.98% over the same period of the previous year; net profit was 201.30 million yuan, down 91.28% over the same period of last year.
Yuanrong Technology said that operating profit decreased by 202.88% compared with the same period of last year, mainly because the sales price decreased and the sales revenue increased by 0.98% compared with the same period of last year. The increase in sales cost was 22.13%, and Qingdao Jiesheng and Shenzhen Yuanrong Health Subsidiary were added, and the expenses were all up.
Aoyang Shunchang (002245) released a semi-annual report. In the first half of the year, Huai'an Optoelectronics achieved operating income of 149 million yuan, revenue decreased by 37.12% year-on-year; LED product gross margin was 10.90%, a decrease of 22.83 percentage points from the same period of the previous year.
During the reporting period, although the LED chip market demand continued to grow, the price of LED chips in the first quarter continued the downward trend in the fourth quarter of 2015. Until the second quarter, the overall market began to pick up. The LED chip business was affected by the overall situation of the industry. The year-on-year decline in profitability is more obvious.
Although the overall profit of LED business in January-September still fell sharply compared with the same period of last year, Aoyang Shunchang still chose to continue to bet on epitaxial chips.
The company said that due to the judgment of the LED market trend in the second half of the year, it will speed up the construction of the second phase of the project with a slight slowdown.
Aoyang Shunchang expects that the new equipment will be gradually commissioned at the end of the year, and the production capacity will gradually be released early next year.
Where are the opportunities for the LED epitaxial chip industry?
According to data from the High-Tech Research Institute LED Research Institute (GGII), China has become a LED epitaxial chip manufacturing center, and shipments will continue to rise in the next few years. In 2015, shipments accounted for approximately 45%. 70% of the world's MOCVD equipment is in China, and capacity is further concentrated in large enterprises.
Huacan Optoelectronics (300323) semi-annual report said that in order to further consolidate and strengthen the company's core competitiveness, with the expansion of production scale, continue to increase investment in product research and development, and continuously improve product performance.
At present, the company's red light reverse polarity LED chip, backlight flip chip LED chip, yellow green light bright LED research and development project is basically completed, individual projects have been applied to batch products, enrich product categories, develop product market, improve the company's comprehensive competition force.
At the same time, we will continue to invest in independent research and development, aim at international leading level to further enhance product competitiveness, and actively seek opportunities for international cooperation in intellectual property rights.
In April, Huacan Optoelectronics and Australian company BluGlass reached a cooperation agreement to explore the use of RPCVD technology to explore the low-temperature deposition of aluminum nitride (AlN) and the application of P-GaN on high-brightness LEDs.
In addition, Huacan Optoelectronics has expanded its production scale, and its product sales are distributed in multiple market segments, reducing the risk of a comprehensive price decline in a single market.
Huacan Optoelectronics has also passed a number of major industrial layouts, with a total investment of 6 billion yuan in LED epitaxy, chips and sapphire projects. It has officially started the groundbreaking ceremony in Yiwu, Zhejiang, and the output will reach a new level. Yiwu Industrial Park will also increase. The production of sapphire cutting.
Moreover, Huacan Optoelectronics' site in Zhangjiagang is also expected to start 15 MOCVD, which has become another source of new capacity. In addition, it also includes a 1.5 billion chip strategic purchase agreement signed with Mulinsen, 3 million shares in the North, and the acquisition of Blue Crystal Technology.
"In the upstream competition, there will be more capital inflows in the future, and the industry will gradually move toward the development route of 'technology-capital-management-branding'," said Bian Difei, vice president of Huacan Optoelectronics.
At present, Huacan has also received many international cooperation intentions. The next step is based on the gradual expansion of production capacity, and the company's internationalization road will also be fully opened.
The LED chip industry has come to the key stage of competition for cost performance. Compared with many international companies, Chinese enterprises have already had a small advantage. The performance comes from the comprehensive environment of the whole industry. The arrival of the international market in the next step will also be natural.
"Next, UV, IR, smart lighting, LIFI and other fields, we are also looking for more opportunities. In the future, the chip factory will also enter a new cycle from technology, process equipment, market." Bian Defei said.
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