San’an Opto Profits from Surging LED Market Growth

San’an Opto is expected to benefit extensively from the growing LED market value, according to a report from China Finance Media.

The market value of the Chinese LED industry achieved RMB 257.6 billion (US $41.32 million) in 2013, and is looking into a growth of 40% and 25% in 2014 and 2015 respectively to reach market value of RMB 360.6 billion and RMB 450 billion.

San’an Opto has covered the entire LED supply chain, including sapphire substrate, epi-wafer, chips, to packaging and application. As of mid-2014, the company owned 170 MOCVD reactors, and has the largest chip production in China. Hence, San’an Opto is definitely the first to benefit from the fast rising LED industry.

San’an Opto plans for 200 MOCVDs reactors installation

The company plans on installing 200 MOCVD reactors (based on 2-inch 54 PCS) in Xiamen project. The first 100 reactors will arrive around 2014-2015 and be put into production around 2015-2016. The company’s LED sale is expected to boom in coming years.

San’an Opto has signed partnership agreements with numerous companies since 2013, the amount involved is expected to exceed RMB 3 billion in the next five years. Listed companies that have signed agreements with San’an Opto include MTC, Jufei Optoelectronics, Nationstar and Honglitronic, which will enforce the execution of these agreements. The agreements also show that San’an Opto is recognized leader in the industry.

As profitability rises, San’an Opto reduces reliance on government subsidies

San’an Opto has recorded positive growth for four consecutive quarters, and reported a gross margin of 44.38% in its recent 3Q14 financial report. Moreover, the percentage of non-recurring profit’s revenue share was also down from 43.42% in 2012 to 21.17%. The company received approximately RMB 900 million MOCVD equipment subsidy as of 3Q14, and is expected to receive another RMB 500 million subsidy under the Xiamen project.

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