Guangdong LED Industry Keeps Up High Growth Growth Rates and Acquisition Trends

The LED industry in Guangdong Province, China showed the most growth out of eight emerging industries in 2013, according to a Securities Times report.

The Guangdong LED industry has continued strong growth trend in first half of 2014. Related statistics showed the industry total market value was up 23.47 percent from January to June 2014 to reach RMB 1.55 million (US $250,000).

Performance of listed manufacturers on the Chinese bourse was outstanding. Financial reports published in first half of 2014 revealed listed LED lighting and LED display manufacturers revenue and net profits grew the most during this period. For instance, Absen Optoelectronics (Absen), Nationstar Optoelectronics (Nationstar), Ledman Optoelectronics (Ledman), Aoto Electronics (Aoto) and Honglitronics revenue were all above industry average.

Mergers and production capacity expansions have become hot topics in the LED industry during first half of 2014, with many Guangdong LED manufacturers announcing related plans.

Growth factors

Increased exports and lowered costs in the upstream LED sector were the main factors behind this new wave of LED growth.

According to the Guangdong government’s LED export statistics, in the first half of 2014 the province exported LED goods worth RMB 38.28 billion, up 39.35 percent YoY. LED lighting, package and display products exported were up 26 percent YoY.

New LED startup Absen reported stellar financial results for 1H14 in August, 2014. During the first six months, the company’s revenue reached RMB 470 million, and net profit was up 60 percent to about RMB 77.59 million. The company noted high color LED display demands in Europe and U.S. markets contributed to the high growth rates. The company’s color LED display still has plenty of room for growth on the international market, and there are still many markets to be explored, such as Brazil, Russia and more, said Absen Chairman Ding Yanghui.

Among emerging markets, Russian market demands have soared, and created many opportunities for Chinese LED manufacturers. Government statistics showed China’s LED lighting product export value totaled US $4.35 billion, and about US $440 million worth of products were shipped to BRIC countries. LED products shipped to BRIC nations grew exponentially 350 percent YoY. The Russian market soared 571 percent YoY to US $327 million during first half of 2014 to become the second largest LED export market in China.

Aside from exports, advancements in upstream LED chip technology and plunging prices bridged price differences between LED luminaires and conventional luminaires. LED products C/P ratio is increasingly evident, and these factors spurred the LED lighting product volume.

This “LED whirlwind” led to Foshan Lighting’s outstanding performance. Foshan Lighting’s LED lighting product revenue reached RMB 421 million in 1H14, an increase of 341.1 percent YoY. The company’s gross profit was up 6.68 percent during the same period last year to reach 20.37 percent. The LED industry has become the main growth drive for the company.

Ongoing M&A

The LED’s good development trend also stimulated manufacturers expansion desires. More listed LED manufacturers have chosen to acquire companies or expand production capacity to increase market shares. Listed Guangdong LED companies have been the most aggressive.

In 1H14, Foshan Lighting, Changfang Lighting and many other Guangdong manufacturers have announced merger plans. For instance, Foshan Lighting acquired Suzhou Mont Lighting, a company focused on LED commercial lighting products and products for construction projects. Changfang Lighting also announced spending RMB 528 million to acquire 60 percent of Kang Ming Sheng Industrial shares. The latter company is focused on mobile LED lighting applications, and the acquisition is expected to broaden Changfang Lighting product portfolio.

“Other industry bosses tend to greet each other with ‘have you profited yet?’, but in the LED industry, bosses of unlisted companies tend to ask each other whether they have sold their company yet,” said an industry insider. This is only the beginning of listed companies using financing advantages to acquire unlisted companies.

Another industry trend this year has been manufacturers production capacity expansions. Leading LED package manufacturer Honglitronic announced on Aug. 19, 2014, it will be investing about RMB 1.0 billion to RMB 1.5 billion in Nanchang City in Jiangxi Province to establish a new factory. The company expects to realize an annual production value RMB 1.5 billion within three years.

Nationstar announced plans of expanding production capacity in 1H14, and estimated package production capacity to reach 1,400 KK per month in mid-2014, an increase of 40 percent compared to 1,000 KK per month in late 2013.

Remembering the painful lesson from the last oversupply situation in the LED and PV industry, expeditious production capacity expansions have raised concerns. Many in the industry are worried the LED industry would repeat the same mistakes as the PV industry.

Oversupply in the LED industry will not be an issue, since the industry is still in its early development phase, said Chen Zili, a researcher at Shenzhen LED Industry Association. As the industry develops application fields and exports soar, the market scale has grown. Therefore, unlike the PV industry even if there are oversupply situations in the LED industry it will only be limited to certain regional markets and particular products.

Disclaimers of Warranties
1. The website does not warrant the following:
1.1 The services from the website meets your requirement;
1.2 The accuracy, completeness, or timeliness of the service;
1.3 The accuracy, reliability of conclusions drawn from using the service;
1.4 The accuracy, completeness, or timeliness, or security of any information that you download from the website
2. The services provided by the website is intended for your reference only. The website shall be not be responsible for investment decisions, damages, or other losses resulting from use of the website or the information contained therein<
Proprietary Rights
You may not reproduce, modify, create derivative works from, display, perform, publish, distribute, disseminate, broadcast or circulate to any third party, any materials contained on the services without the express prior written consent of the website or its legal owner.

Specifiers can realize the best quality of light and the highest levels of light output and efficacy at 3000K and 95CRI San Jose, CA – Lumileds today announced substantial performance improvements for its 90 and 95 CRI LUXEON CoBs with C... READ MORE

For many years, XLamp® XP-E2 LEDs have been the preferred LED choice for lighting manufacturers looking to combine different colors of light together to service specialty lighting applications. The XP-E2 platform offers an unbeatable combi... READ MORE