The competition in the LED display industry is fierce here. Following the shutdown of Junduoli, Bolunte and Sinolight, recently, another large LED display enterprise Shenzhen HiboLED is on the verge of shutdown due to the financial problems. On Nov. 9th, our reporters interviewed several insiders and they pointed out that LED enterprises, including listed enterprises, will face agonizing ordeal, even Special Treatment (ST).
The LED industry was originally one with a “rosy” prospect, the market capacity of which amounted to RMB 200bn, but now many enterprises are draining their brains to solve financial problems. There are 7 LED enterprises that went public this year, but all of them saw stock price plunge at a rate of 20%-65%. Moreover, 4 of them saw decline in business performance with a minimum decline of 18% and a maximum decline of 94%. Among the 20 listed LED enterprises, 13 of them saw the decline in performance in Q3.
Many listed companies see falling profits
Statistics shows that 13 out of 20 listed companies saw year-on-year decline in net profit in Q3. Net profits of Shenzhen Jiawei, Silan Microelectronics, Elec-tech, Nanta dropped by as high as 92%, 88%, 57% and 52% respectively. Among the 7 listed companies who made profits, San’an Optoelectronics saw its rise in revenue and net profit of 23% and 13% respectively, Kingsun Optoelectronics 5% and 20% respectively. Conversely, the two companies had achieved a growth rate of 100% and 50% in 2011 and 2010 respectively.
Leading enterprises rely on subsidy to earn profits
Our reporters found that many listed LED companies made a slender profit in Q3. For example, Jiawei made a profit of only RMB 3.42mn, and Silan Microelectronics and Unilumin RMB 15mn and RMB 18mn respectively.
Enterprises who achieved large profits mainly benefited from the government subsidy. San’an Optoelectronics earned the mid-year profits ofRMB 460mn with the government subsidy accounting for around 50%. Elec-tech earned the mid-year profits of RMB 120mn, while it received government subsidy as high as RMB 150mn. Kingsun received RMB 9mn of government subsidy, accounting for 20% of its net profit. Nationstar’s government subsidy accounted for 25%.
Some enterprises may be delisted
Wu Yulin, General Manager of Kosio Lighting and President of Foshan Lighting Fixture Association, said frankly that small-scale enterprises will be exposed to larger risks in the future.
Zhang Xiaofei, Director of GG-LED Industry Institute, projects that it’s no surprise that some listed LED enterprises will get the Special Treatment (ST) and some of them may be delisted in the next few years.
Wu Yulin is optimistic about the prospect of LED industry. He pointed out that 2013 will be an essential year for the LED industry and the market will be promising with the strong promotion of the government.
Lin Zhaojing, Deputy Secretary-General of EMC Union of Guangdong Green Industry Foundation, is conservatively optimistic about the LED industry, “The industry will have a steady development.” From the financial prospective, LED projects are exposed to relatively larger risks. Next year, after the selection of new local governments, the demand for LED applications will have further growth in residential and commercial fields, while the development of streetlight will be slower because it involves multiple interests.
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