Policy support LED industry demand growth can be expected

After a period of silence, the LED lighting sector's stock price performance has been quite active in the recent “resurrection”, including rectangular lighting, Qinshang Optoelectronics, etc.

“With the support of the policy, LED lighting market will have more space in 2013, and related listed companies are expected to benefit. From the valuation point of view, LED lighting company's current PE is indeed higher, but PEG is relatively reasonable. The location of the company.” Zhou Jianbing, an analyst with the Wealth Management Center of the State Securities, said in an interview.

Industrial demand growth under policy support can be expected
Recently, the LED lighting industry seems to be warming. With the EU's complete ban on incandescent lamps, LED lighting applications have entered the phase of qualitative change. With the support of domestic policies, LED lighting is also expected to accelerate penetration.

In addition, six ministries and commissions including the National Development and Reform Commission and the Ministry of Science and Technology recently issued the "Semiconductor Lighting Energy-Saving Industry Plan" to further clearly state the development goals, major tasks, and supporting measures of the Chinese LED industry during the "12th Five-Year Plan" period, and specifically to promote LED The average annual growth rate of lighting energy-saving output is about 30%. In 2015, it reached 450 billion yuan, of which the LED industry application products reached 180 billion yuan.

Data show that China's 2012 LED general lighting output value is close to 42 billion yuan, an increase of 40%; annual total output is 310 million, a substantial increase in the number of; LED lighting products manufacturing capacity and exports ranked first in the world.

"The industry depends on the development prospects, the main point of view in the field of LED lighting is also supported by the policy, will form a large-scale enterprises." Zhou Jian Bing said.

In fact, the global LED market gradually recovered from last October. Demand rose sharply in the first quarter of this year, and emerging markets performed particularly well. At present, Russia, Thailand, Vietnam, India, Africa and other countries and regions have seen rising investment in infrastructure construction. In 2013, the demand for LED lighting in emerging markets will continue to heat up.

Take Vietnam as an example, Vietnam will achieve a 38% urbanization level by 2015. This will be a great opportunity for China's LED lighting exports. In addition, countries including India, etc. have spared no effort in promoting the transition from conventional lighting systems to LED lighting, and they are expected to import a large number of LED lighting products in China.

"From the external market, first, the global economy began to gradually recover, especially the United States economic recovery is expected to increase; Second, the current tight energy supply, the global increase in energy requirements; Third, China is accelerating the pace of urbanization, the future of energy consumption The demand will be further improved. Therefore, whether it is from the current market performance or future development, LED lighting industry has a vast space, the market is more likely to pick up,” said He Zaihua, senior researcher at China Investment Consulting.

He believes that benefit from the global economic recovery and the improvement of the national energy-saving emission reduction requirements, LED lighting companies have improved their recent performance. In addition, the second quarter is the traditional sales season of commercial lighting, so it is expected that the performance of LED lighting companies will get better.

Founder Securities believes that LED lighting applications are the most directly benefited from the policy-driven link, although the energy-saving lamps will occupy the largest light fixture category in the coming years, LED will continue to decline in cost and price. Under the conditions, the cost difference between replacement and energy-saving lamps is further reduced.

In fact, in order to increase government procurement of energy-saving products, the Ministry of Finance and the National Development and Reform Commission have recently adjusted the issued “government procurement list for energy-saving products”. The adjusted purchase list has increased LED lighting products for the first time. According to statistics, LED lighting products entering the procurement list include LED road/tunnel lighting products, LED downlights, and reflective self-rectifying LED lights. The number of products selected is 251, 177, and 90, involving 84 companies, including listed companies. Nearly 20 homes.

To the long-term leading manufacturers can pay attention to the capacity
In spite of this, LED lighting has always had the problem of overcapacity. Many analysts believe that the structural overcapacity of the LED industry will continue in 2013, and related companies will continue to reduce inventory to obtain market share. .

In fact, the recent performance of the relevant listed companies is flat. Taking rectangular lighting as an example, the company expects net profit for the first quarter of this year to be 10.35 million yuan to 12.6 million yuan, a decrease of 28.87% to 13.4%. According to the company, it is currently in an expansion period and the cost is relatively high. As a result, sales expenses have increased substantially and the company’s profits have decreased.

“At present, the overcapacity situation in China's LED lighting industry has improved, but the problem is still serious. The lack of a unified industry standard leads to low barriers to entry, and high government subsidies and preferential tax policies have attracted a large influx of funds. LED lighting industry, there are even many companies do not have the relevant technology. This led to a large number of SMEs concentrated in the low value-added production areas, the situation of low-end excess production capacity is more serious, and the lack of competitiveness in the core technology." He Zaihua said .

He believes that China's LED lighting companies are still facing many problems, not only in the disorderly industry competition, while the lack of core competitiveness and the involvement of international giants will have an impact on their operating conditions.

So, for investors, how do you view the LED lighting sector investment opportunities and valuation?

"The overall market PE is only 11 and 12 times, and the overall valuation of LED lighting is about 30 times. Assuming there is a 35% growth rate in the future, PEG is still below 1. Investors can select companies with integrated capabilities as Subject, we are more optimistic about companies with upstream and downstream integration capabilities in the industry chain.In addition, the risk of this sector comes from policy changes on the one hand, and it also comes from overcapacity on the other hand, if the situation of oversupply does not change, then still Will affect the company's performance." Zhou Jian Bing said.

He believes that if there is a breakthrough technology to reduce the cost of LED lighting, then the space will be even greater. The current problem is still the price of LED lighting products is too high, affecting the market demand.

Founder Securities believes that the LED industry will gradually recover under the promotion of policies this year. From the analysis of the various aspects of the industry chain, it can be seen that the midstream packaging industry in the industry is affected by price suppression and upstream overcapacity and downward conduction factors, and the overall competition is still under greater pressure. .

The brokerage believes that the upstream investment progress of the industry is slowing, and the fundamentals will be improved if the production capacity is further digested. The leading manufacturers with scale advantages will further occupy a favorable position in the market. The LED lighting applications directly benefit from the policy-driven demand, and lamp manufacturers with advantages in brand and access have an advantage in the competition. The Sanan Optoelectronics in the upper reaches of the LED lighting industry chain and the downstream solar lighting deserve attention.