Big fight price war to clean up inventory Sanan Optoelectronics 2012 performance pessimistic

The production capacity of Sanan Optoelectronics (600703.SH) has always occupied a considerable weight in the industry. For some time, the company's performance in the secondary market is at the bottom. Data show that as of March 7, Sanan Optoelectronics rebounded from the broader market last year, the increase was 25.33%, ranking the industry's last.

Destocking drags down annual results

The data shows that the inventory scale of 20 LED listed companies in the third quarter of 2012 was 5.013 billion yuan, and the inventory of Sanan Optoelectronics was 968 million yuan, ranking first in the industry. In the same period, Sanan Optoelectronics' inventory turnover days were 148.08 days. Although the company did not release the 2012 full-year performance forecast, but from the previous financial report data and industry situation, the company's performance during the period is expected to increase substantially.

Analysts said that last year, the listed companies in the LED industry basically started price war clearance, and as one of the largest listed companies in the industry, Sanan Optoelectronics is undoubtedly one of the main forces of this war.

The company's third quarterly report showed that accounts receivable during the period increased by 100% from the beginning of the period to 707 million yuan; short-term loans increased by 178.79% to 749 million yuan; sales expenses and management expenses also increased by 101.47% and 46.11% respectively.

The above analysts believe that while the company is fighting price wars, it is inevitable that the proportion of accounts receivable will increase due to the loss of inventory, and the increase in the credit period of customers will increase the marketing expenses in the same period.

In order to digest the inventory, and for the longer-term development, Sanan Optoelectronics also actively explored channels while participating in the price war. In November last year, Xiamen Sanan Optoelectronics Technology Co., Ltd., a wholly-owned subsidiary of the company, used self-raised funds of no more than 2.352 billion Taiwan dollars (about 506.68 million yuan) to subscribe for the private placement of the company listed in Taiwan. More than 120 million shares of common stock. Upon completion of the transaction, Sanan Optoelectronics Technology will hold approximately 19.9% ​​of the shares of Yanyuan Optoelectronics and become the largest shareholder of Yanyuan Optoelectronics.

According to the data, Yanyuan Optoelectronics was listed on the Taiwan Stock Exchange in 2003. It is one of the major manufacturers of LED epitaxial wafers and chips in Taiwan. The products are mainly used in full color display, backlight, traffic number, indicator. And 2 LED lighting applications. In the first half of 2012, the revenue was 2.372 billion Taiwan dollars (consolidated statement), a year-on-year increase of 6.66%, and the net profit after tax was -216 million Taiwan dollars, down 682% year-on-year. Judging from the scale of revenue, Yuyuan lives in the third place in Taiwan's LED extension and chip industry.

Holding Taiwan's Yuyuan Optoelectronics is considered to be an effective way for the company to explore overseas sales channels. The above analysts believe that: "The products of Sanan Optoelectronics are not sold in the mainland. If they are exported, the overseas manufacturers will have more control over patents. The company can achieve some breakthroughs in patent barriers with the cooperation of Yuyuan Optoelectronics. They realize patent sharing. The possibility is not without. On the channel side, Sanan Optoelectronics can undoubtedly share the channel of Yuanyuan Optoelectronics overseas."

Shareholders' holdings are difficult to change pessimistic expectations
On December 4 last year, the company announced that five directors and senior executives were optimistic about the company's current development and future development, and increased its holdings of 621,400 shares. In the same period, due to the rebound of the broader market, the company's share price also has a certain performance.

According to the fund's Four Seasons report, institutional investors reduced their holdings of 158 million shares in the fourth quarter, and the stock market value decreased by 2.564 billion yuan. The shareholding ratio of listed companies accounted for 22.92% of the shares outstanding.

"Sanan Optoelectronics not only has the problem of inventory, but the problem of falling chip prices and insufficient capacity utilization is still worth observing. It is justified that the stock price does not rise now." The above analysts believe that due to the large inventory size, accounts receivable Continued increase, insufficient capacity utilization, etc., the industry's pessimism about Sanan Optoelectronics still exists, and institutional reduction may also have this reason.

In addition, the person also believes that the related transactions between the company and the subsidiary is also a factor that makes the industry more worried. The reporter reviewed the company's 2012 semi-annual report and did not disclose details of major related party transactions.

Industry is still overcapacity
On Tuesday, Sanan Optoelectronics' share price began to strengthen, rising more than 6% for two consecutive days. Viewing the market software can find that such an increase is not new to Sanan Optoelectronics, which has been inflated for a while, but the company's stock price will be the same as before, constantly consuming the previous increase in the adjustment, or has it been on a higher level since then? Analysts give pessimistic views.

"This year, Sanan Optoelectronics may not have any performance. The poor performance determines that its stock price can only be this level." An analyst from Donghai Securities, who asked not to be named, told reporters that the overcapacity of the industry is facing Sanan Optoelectronics. The old problem, the poor performance last year is also dragged down by this.

In the 18 listed companies that have released performance forecasts in the LED industry, only five companies have achieved positive growth.

The above analysts said that the performance of listed companies in 2012 is not good, but this does not fully reflect the industry situation. Listed companies are only one aspect, and there are also some non-listed companies and Taiwanese companies. Depending on the industry, you can't just look at these dozens of smaller listed companies.

According to the industry report released by Industrial Securities recently, the overcapacity of LED in the mainland will continue, but from the inspection results at the end of 2012, the qualified rate of LED lighting products is only 51%, and the unqualified capacity will be gradually eliminated this year. It is a trend for the industry to control production capacity through alliances and mergers and surplus quality capacity.

An industry analyst in Beijing who asked not to be named said to reporters: "The situation now is that the overcapacity situation has eased slightly, and the supply and demand situation is better. The indicator is that the price decline of the chip has narrowed. But there are One problem is that the capacity utilization rate of domestic LED companies from January to September last year was relatively low, probably only 50% to 55%."

The above analysts believe that if the company's MOCVD capacity purchased in 2011 is the shortest to be released this year, since the private demand has not yet started, the backlight is more dependent on imports, so in fact, domestic chip prices still have room for volatility, the supply and demand of the entire industry. The situation has not changed or reversed.

At the beginning of the Year of the Snake, the six ministries and commissions jointly issued the "Semiconductor Lighting Energy-Saving Industry Plan", which seems to blow the policy warmth to the LED industry, which has been sluggish in performance. It is only how much the relevant listed companies can benefit, and I am afraid it will vary from person to person.

“The opportunities in the industry are still downstream, in lighting, and even in streetlights.” Donghai Securities analysts said that the planning of the six ministries and the planning of individual provinces and cities all mentioned the regulations on street lamps, so the opportunity for this piece is relatively large. The indoor lighting and macroeconomic correlation are relatively large, in the middle position, but the upstream chip still needs some time to digest the inventory.

As for when the industry reversed, the above analysts gave three indicators: chip prices, orders and operating rates. The above-mentioned analysts from Beijing said: "The indication of gross profit margin is not particularly strong, because the gradual reduction of gross profit margin from the industry is a must, so it is not obvious from the perspective of profitability."

(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)

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