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.
LED epitaxial chip enterprises have further increased their concentration. The top five chip companies including Sanan Optoelectronics, Huacan Optoelectronics and Ganzhao Optoelectronics account for nearly 70% of the domestic market. The chip companies, including Aoyang Shunchang and Development Crystal, have the conditions for safe landing through the way of enrolling enterprises and the entire industrial chain.
This has also caused many companies to become hesitant to continue to expand, transform, or retreat.
Recently, Guangdong Ganhua released its 2016 financial report. The data shows that it achieved operating income of 473 million yuan last year, of which Deli Optoelectronics' operating income was 63 million yuan, up 5.76% year-on-year. However, the LED business accounted for 13.38% of the company's overall revenue ratio from 15.04% in 2015.
Among them, the gross profit margin of LED products was -90.22%, and the sales volume of LED products increased by 53.74%, mainly due to the increase in production volume and corresponding increase in sales volume. The production of LED products increased by 39.51%, mainly due to the addition of some chip production equipment and increased production capacity. LED product inventory increased by 35.60%. The main reason is that the output is greater than the sales volume.
According to the announcement, the main reason for the Deli Optoelectronics LED epitaxial wafer production project not meeting the planned progress or expected revenue: The current 10 production lines began to be put into operation in the second half of 2014.
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 caught in price competition, and corporate profitability has declined. Fierce, the overall profit rate fell significantly, and Deli Optoelectronics produced losses.
Taking into account factors such as industry and market, the company will not increase investment in the optoelectronic industry for the time being, and will decide the next investment plan based on specific conditions.
However, in the annual financial report, Guangdong Ganhua did not show much pessimism about the progress of the LED business.
According to the announcement, in 2016, the relationship between supply and demand has improved, and the downward trend in product prices has slowed slightly. At the same time, the industry's reshuffle and competition have intensified, and the overall profitability of the upstream LED chip industry has not been fundamentally improved.
Deli Optoelectronics is currently a small enterprise in the LED upstream industry, but has been committed to the improvement of professional technology. Deli Optoelectronics' chips are gradually recognized in China, especially for high-end applications, which has been listed as one of the recommended major brands. .
During the reporting period, the company's LED industry adhered to the technology leadership and took the road of differentiated competition. It combined organic R&D and marketing, and continuously increased R&D investment around customer demand. After nearly one year. Efforts have finally led to the mass production of 4 inch and flip chip, and at the same time, we are fully committed to reducing costs and reducing expenditures in management.
In October last year, Guangdong Ganhua announced that the planned major asset restructuring and acquisition of the target company was Hebei Zhitong Bio-Pharmaceutical Co., Ltd., mainly engaged in research and development, production and sales of chemical preparations and biochemical preparations.
For Guangdong Ganhua, the intervention in the big health industry has long been traced.
On October 15, Guangdong Ganhua released its forecast for the first three quarters of this year. The company's loss was between RMB 65 million and 75 million. Guangdong Ganhua explained that due to fierce competition in the LED industry market, product sales prices fell year-on-year, plus failed. Achieve large-scale benefits, so there is a large loss.
Due to the loss of operating in the LED industry, in September this year, Delixi Group, the shareholder of Guangdong Ganhua, said it decided to concentrate on the production and operation of the existing production line and not increase investment in the optoelectronic industry.
Prior to this, Guangdong Ganhua implemented a LED epitaxial wafer and chip project investment in Jiangmen High-tech Zone with its wholly-owned subsidiary, Guangdong Deli Optoelectronics Co., Ltd. as the main body.
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 about 800 million yuan.
As early as 2011, during the transfer of state-owned equity in Guangdong Ganhua, Delixi Group had promised to invest in the investment of the optical industry of not less than 1.5 billion yuan in Jiangmen City.
To this end, to complement the remaining investment balance, Delixi Group decided to increase investment in Jiangmen in areas such as health, energy conservation and environmental protection, and transportation logistics. Therefore, some analysts said that the acquisition is part of it.
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