Shanxi Securities: San’an Opto Benefits from Strong LED Orders

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Shanxi Securities

Shanxi Securities recently investigated San’an Optoelectronics (San’an Opto) to gain a better understanding of the company’s production capacity and manufacturing situation. 

The LED industry has entered into a developmental golden age. Since many countries banned the production and sales of incandescent bulbs, LED lighting will move into a period of popularization, said Shanxi Securities. LED retrofits already show economic benefits over conventional lighting, especially with the rapid price drops over the past two years. LED lighting prices have already reached a critical point for affordability, said the securities company. 

San’an Opto’s production capacity has reached full operation with product sales soaring on strong demands from downstream manufacturers. With demands booming for the company’s main business LED chips, San’an Opto has not only fully exerted technological advantages, it has also increased equipment operating efficiency to lower production cost and increase product market share. The company’s subsidiary has 130 MOCVD units already working at full capacity. Scale effect is anticipated to edge closer to actualization in light of increased production capacity. 

With the company’s high order visibility, profit margin is expected to gradually rise over the quarters. The entire industry is prospering. Order visibility currently maintained at around three months, with lighting growth rates soaring above 50 percent. Additionally, chip production cost showed a clear drop as the company’s technology and scale continues to increase. Profit margin has likewise increased. Shanxi securities projected San’an Opto’s gradual profit margin increase will become a trend. 

San’an Opto has been pursuing expansion efforts, with new equipment introduced by the end of the year. Facing the ever growing LED market demands, the company decided to move phase two of their optical industrialization plan from Wuhu to Xiamen. The project’s total investment of RMB 4.07 billion (US $651.6 million) will be increased to RMB 10 billion. The company has already begun factory construction and is estimated to introduce a total of 20-30 new equipment by the end of the year.

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