LED lighting industry growth slows down

With the rise of China's lighting industry, the structure of the lighting market has become increasingly clear. On the one hand, large enterprises have achieved rapid development with their core competitiveness, and the superior resources have further gathered to the industry giants; on the other hand, some small and medium-sized enterprises rely on their clear market. Positioning in the market segment or regional market to establish a certain brand influence, in the "post-lighting" era, companies are looking for new growth points.

LED lighting industry growth slows down

Last year, the year-on-year growth rate of Op Lighting's operating revenue decreased from 38.53% in the first quarter to 27.03% in the whole year. In the first half of this year, Opple Lighting's operating income was 3.53 billion RMB, a year-on-year increase of 17.21%; the net profit attributable to shareholders of listed companies was 360 million RMB, an increase of 38.37%. However, Op Lighting's revenue growth rate was 23.55% in the first quarter of 2018, and the net profit growth rate was 42.20%, which was significantly higher than the growth rate in the first half of the year. At the same time, compared with last year's revenue growth rate of 34.75% and net profit growth rate of 41.29%, Opple Lighting's growth rate in the first half of this year has also dropped significantly.

Even Sanan Optoelectronics, which is the leader of LED upstream chips, is not optimistic. In the first quarter of 2018, Sanan Optoelectronics' operating income even experienced negative growth, which was 2.26% lower than the same period last year. In the first half of 2018, Sanan Optoelectronics improved slightly, operating income was 4.17 billion RMB, up 2.62% year-on-year, reversing the negative growth momentum; net profit attributable to shareholders of listed companies was 1.85 billion RMB, an increase of 22.32%. However, its first-quarter net profit growth rate was 40.14%, almost double the net profit growth rate in the first half of the year. At the same time, in 2017, Sanan Optoelectronics' revenue growth rate was 33.82%, and net profit growth rate was 46.04%, both of which were higher than the growth rate in the first half of this year.

MULINSEN, who started out as an LED package, has experienced explosive growth due to the completion of the acquisition of the original OSRAM's LEDVANCE. According to its 2018 semi-annual report, MULINSEN's operating income was nearly 7 billion RMB in the first half of this year, a year-on-year increase of 92.91%; the net profit attributable to shareholders of listed companies was 480 million RMB, a year-on-year increase of 58.11%. In the first half of this year, MULINSEN completed the acquisition of the original OSRAM's LEDVANCE, expanding its business scope and sales channels, thereby increasing operating income and profits. However, from the comparison of the first quarter of last year and the first quarter of this year, the growth rate of MULINSEN's revenue decreased from 87.36% to 31.70%, and the net profit growth rate decreased from 162.70% to 24.94%. Both growth rates are decreasing.

At present, from a global perspective, large-scale lighting companies have been merged and reorganized continuously, and the industry has entered an adjustment period. While the concentration of China's lighting industry has steadily increased, it is still below the international level. Such an international and domestic environment has further intensified competition among lighting companies. Factors such as LED overcapacity and imperfect industry standards still plague LED lighting companies.

In this context, Sanan Optoelectronics expands the semi-conducting industry and focuses on the business of new semiconductor materials such as silicon carbide, gallium arsenide, gallium nitride, indium phosphide, aluminum nitride and sapphire, hoping to become a competitive semiconductor manufacturers. This year, we accelerated the mass production of LED chips for the new display products of Mini LED and Micro LED. In February, we established a strategic partnership with Samsung Electronics for Micro LED. At the same time, we expanded the LED lamp business.

In the face of the grim situation of increased competition in the LED lighting market, Op Lighting continues to develop new businesses. In the first half of this year, Op Lighting entered the home improvement market on the one hand, providing consumers with solutions for full roof wall customization, smart home, lighting systems and soft-pack design; on the other hand, it launched a home service platform business and sought new growth points.

MULINSEN continued to extend to the upstream and downstream of the LED industry chain, from packaging expansion to lighting, and acquired Super era Light Source (Group) Co., Ltd. in the first half of the year to consolidate the filament lamp business. At the same time, MULINSEN also took an important step into the international market through the acquisition of LEDVANCE, and enriched the product line and channel network, but the subsequent integration effect still needs to be observed.

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