Sunlight lighting in the first half of the year, LED growth is rapid, net profit growth is expected to accelerate in the second half of the year

Dongxing Securities released an overview of the main financial data of Sunshine Lighting. Sunshine Lighting's second quarter operating income of 812 million yuan, a record high, revenue growth of 32% year-on-year, compared with 12% growth in the first quarter. In the second quarter, the company's net profit attributable to shareholders of the parent company was 34 million yuan, a year-on-year growth rate of 14%. The company's comprehensive gross profit margin in the second quarter was 20.4%, which was basically the same as that of the same period of last year; the net profit margin was 4.2%, a slight decrease from the same period of last year.

Dongxing Securities said that LED has become the main driving force for Sunshine Lighting's performance growth in the first half of the year. The company's main business is divided into energy-saving lamps, LED, T5 high-power fluorescent lamps and special lamps, of which energy-saving lamps accounted for 53% in the first half of the year, LED accounted for 28%. During the reporting period, except for LED's 337% increase in operating income, the other three business revenues all experienced different degrees of decline, and the gross profit margin of energy-saving lamps and T5 high-power fluorescent lamps decreased compared with the same period. These factors directly led to the company's first half of the year. Net profit growth has slowed down. However, the decline in revenue and gross profit of energy-saving lamps and T5 high-power fluorescent lamps was due to the fact that the state subsidy has not been confirmed, not due to business reasons. If the relevant subsidies are included, the combined revenue and gross profit of the two products are higher than the same period last year.

The sunshine of LED lighting products has risen steadily. One of the highlights of the company's first-half results is that LED gross margin has improved compared with the same period of last year. Dongxing Securities believes that the main reason lies in the company's LED business mainly in OEM and commercial lighting, reducing the erosion of price wars on product profits. At present, the number of LED downstream lighting companies in China exceeds 10,000. The homogenization of products is serious and the market competition is fierce. Therefore, manufacturers have reduced their product prices in exchange for more market share.

Since developed countries in Europe and the United States are more stringent in terms of LED lighting standards than in China, and have higher requirements on product quality, product prices will not fall sharply. The gross profit margin of Sunlight LED OEM business can therefore remain at a relatively stable level. At the same time, compared with home lighting, commercial lighting has high quality requirements for LED lamps and low price sensitivity, so the gross profit of LED products is guaranteed.

Dongxing Securities believes that the solar lighting LED production capacity will gradually release, and the net profit growth in the second half of the year is expected to accelerate. The company's “annual production of 60 million (sets) LED lighting products industrialization project” has been put into production in May. Currently, it is in the process of construction while construction. In the second half of the year, the company will continue to accelerate the construction progress of fundraising projects. The release of new production capacity has accelerated the sales of the company's LED products, increased the proportion of LED revenue in the main business, and the company's net profit growth rate is also expected to improve.

In view of the increasing demand for LED overseas market and the launch of the domestic commercial lighting market, Sunlight LED products can maintain good sales in the above two areas while ensuring the stability of product gross profit, thus helping the company to avoid the performance decline caused by price war. Dongxing Securities expects the company to achieve net profit of 275 million yuan, 342 million yuan and 434 million yuan in 2013, 2014 and 2015, respectively, an increase of 31%, 24% and 27%, EPS of 0.43 yuan, 0.53 yuan and 0.67 yuan respectively. The corresponding P/E is 31 times, 25 times and 20 times respectively, maintaining the “strongly recommended” rating.