The high LED boom will continue, and the short-term correction will usher in a golden opportunity. From the past history, as the largest single market for LCD TVs in the world, seasonal fluctuations in the mainland market have a greater impact on the LCD TV industry. Before the Spring Festival and the peak of the May 1st TV consumption, the upstream component industry will have a cyclical upswing. In addition, the Christmas season in Europe and the United States is also at the end of the year, leading to the backlight stocking season generally appear in the end of the third quarter and the first quarter. However, due to the lack of lighting demand in the past few years, the overall backlight growth is insufficient, resulting in certain periodic characteristics of the LED sector. From the perspective of stock price movements, the LED sector market generally has a pulse characteristic, which rises continuously in the short-term when the industry is in good shape, and then slowly falls back. The LED sector has continued to fall in the near future. Investors have certain concerns about the industry's prospects. It is doubted that the overall industry boom will fall back as it has in previous years. However, we have previously pointed out that the source of periodicity in the past is mainly due to the seasonal fluctuations in the backlight market. From this year on, the source of the industry's prosperity is already the general lighting market. Affected by upstream chip technology and rapid price decline, the price gap between LED lighting and traditional lighting products is gradually narrowing, and the cost-effective advantages of downstream LED lighting products have emerged. In the future, as the penetration rate of LED lighting continues to increase, the industry will have a solid support. Investigate the current situation of Taiwan LED industry companies, we count 7 LED chip manufacturers such as Yuyuan, Dingyuan, Jingdian, Taigu, Guanglei, New Century Optoelectronics, and Addison, as well as Yuhong, Dongbei, Huaxing, Lizhou, Long 8 LED packaging and downstream manufacturers data such as Da, Yiquan, Yiguang and Addison. From January to April of the year, the total LED industry chain revenue totaled 36.249 billion Taiwan dollars, a year-on-year increase of 20.81. Investigate the growth of LED industry chain revenue over the years, such high growth rate has only appeared in 10 years. But 10 years is because the financial crisis has dug a big pit, and this year is the natural start of the industry demand, the meaning is not the same. LEDs enter the traditional peak season, chip and package manufacturers have a high rate of investment, the average visibility of orders is 1 to 2 months. However, Taiwan's industrial chain has seen a certain increase in revenue and no increase in profits. The revenue of various LED manufacturers has generally grown, and the profit margin is limited. Manufacturers generally hold a conservative attitude toward whether they need to expand production. Recently, Taiwan's LED industry chain has also seen a certain correction, which has affected the confidence of some investors. We must emphasize that the current trend of the LED industry shifting to the mainland is clear, and the trend of market share to the first-tier enterprises is also very clear. Even if the LED industry is in a high economy, there will be greater differentiation within the industry. First of all, in the field of chips, with the continuous improvement of the technology of mainland chip manufacturers, the gap between the overall performance level of medium power chips and Taiwanese manufacturers has been shrinking, and more and more packaging manufacturers are gradually accepting Chinese manufacturers' chips. According to LEDinside statistics, in terms of quantity, the market share of Chinese chips is expected to have reached 80%. However, the price of Chinese chip makers in the market still has a gap with the price of Taiwanese manufacturers, and the price drop of domestic chips is higher than that of Taiwan's wafer prices. Therefore, from the perspective of revenue scale, the market share of local manufacturers in 2013 was only 68.4, a slight increase compared with last year. The total revenue was 6.2 billion yuan, an increase of 17% over the same period of last year; the market share of Taiwanese manufacturers was 28.4, compared with last year. Compared with a slight decline, the total revenue was 2.6 billion yuan, a year-on-year increase of 10. From the perspective of corporate share, only looking at Chinese local manufacturers, Sanan Optoelectronics accounted for more than 40% of the total revenue of mainland domestic chip manufacturers; only look at Taiwan Manufacturers, Jingdian accounted for nearly 80% of Taiwan's total chip revenue. The current profitability of LED chip manufacturers is still difficult to improve. Many small and medium-sized manufacturers are under pressure from capital, customers are difficult to maintain, and technology is difficult to improve. Some manufacturers have already withdrawn from the chip market. The large-scale manufacturers represented by Sanan are actively preparing for the expansion plan. With the development of the industry, we believe that the concentration of China's LED chip market will be further enhanced. The development trend of the packaging industry is similar. Starting in 2010, under the dual factors of rapid expansion of upstream industry capacity and continuous expansion of downstream application market, Chinese local LED packaging manufacturers are usuring a period of rapid development. Mulinsen successfully ranked among the top five in the Chinese packaging market and became the leading domestic packaging manufacturer. In 2010-2013, the LED device revenue growth rate reached 53, making it the fastest-growing vendor. Other major manufacturers Ruifeng Optoelectronics, Jufei Optoelectronics, and Changfang Lighting have a compound annual growth rate of more than 30%. The huge demand for downstream applications provides a fast-growing foundation for Chinese local packaging manufacturers. In 2013, China's LED equipment market was US$7.2 billion, with an annual growth rate of 20. China is a major producer of LED application products. With the rapid increase in LED lighting penetration, the demand for LED devices is increasing, and China has become a global LED package. The main market for manufacturers to compete. The top five companies in China with the highest market share in 2013 were Nichia, Everlight, Cree, Mulinsen and Philips, which together accounted for about 1/3 of the overall market. We believe that 14 years of LED runs through the year, in lighting In the context of heavy volume and rapid growth in demand, many companies will usher in a double turning point in revenue and profit margins. Judging from the situation of industrial chain research, many LED companies have the demand for mergers and acquisitions and refinancing this year. Since the profit base of second- and third-line LED companies is generally not high, the corresponding performance elasticity is very large. Judging from the stock price increase in the year-to-date, the industry leaders led by Sanan Optoelectronics and Sunshine Lighting in the A-shares have lagged significantly. In the context of the increasing competitiveness of Chinese companies, the broad market for domestic demand and the bright future, we believe that the market underestimates the flexibility of this round of LED home lighting penetration to the overall industry. LED general lighting demand will have a deterministic explosive growth, and MOCVD machines are no longer able to repeat the previous high investment and high growth, LED chip supply and demand situation is constantly improving. We judge that the decline in chip prices this year is also around a dozen points, and there may be structural shortages in the second quarter. We continue to strongly recommend Sanan Optoelectronics, the company's leading position in the chip industry is consolidated, and wide-bandgap semiconductors are ready to go, with bright prospects. In the middle of the package, it is recommended to pay attention to the beneficiaries of industry integration, and continue to recommend Jufei Optoelectronics, which has the most outstanding management capabilities. On the downstream side, we continue to recommend Foshan Lighting, which has obvious channel advantages, and benefit from the improvement of the industry's prosperity, and actively deploy the sunshine lighting of its own channels. The recent correction of the sector has continued to deviate from the fundamentals of the industry, and investors are advised to actively deploy.
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