GLII: Chip price and gross margin reduce capacity release without improving profitability

Key Analysis
LED key listed companies ushered in this year's first executive increase this year. On the evening of December 4, Sanan Optoelectronics announced that five senior executives of the company increased their shareholdings in the secondary market. The High-Tech LED Industry Research Institute (GLII) believes that the increase in holdings of Sanan Optoelectronics is an important manifestation of the company's executives' confidence in the company's future performance and stock price, while the price range of 10.85-11.88 yuan as the holdings of nearly three senior executives has Certain reference value.

GLII expects that Sanan Optoelectronics or other key LED listed companies in the morning market (before 2010) will still have executives' holdings in the near future.

GLII recently released "2012-2013 China LED Chip Enterprise Market Competitiveness Ranking". Overcapacity, price plunging, and gross profit drop are still the main styles of China's LED chip industry in 2012.

According to GLII statistics, as of the end of the third quarter of 2012, the domestic MOCVD stock reached 896 units, with an average operating rate of 58.4% and a capacity utilization rate of approximately 30.1%. In terms of price, the average domestic price of white light-illuminated chips in the first three quarters dropped by more than 30%, and the average price of display chips decreased by more than 50%. The rapid decline in chip prices has also led to a sharp drop in product gross margins. Most LED chip companies are in a break-even state, and the release of capacity has not brought direct profitability to the company.

High-tech observation

GLII: Insufficient inventory pressure, LED chips will enter the era of low profit GLII: The old energy-saving lamp enterprise Guolong Lighting collapsed, the traditional light source stalked the edge of the LED business growth, the sunshine lighting investment change changed the LED investment


Market review

This week's high-tech LED industry index closed at 909.82 points, up 2.43%.

This week, 25 key LED stocks were mainly up, with an average increase of 2.48%. The top three gainers were Han's Laser (8.07%), Sunshine Lighting (6.89%) and Dehao Runda (5.83%); the top three losers were Nanda Optoelectronics (-3.82%) and Huacan Optoelectronics (- 1.67%) and Moso Power (-1.44%).

Investment recommendation
Sanan Optoelectronics (600703), Alto Electronics (002587), Ruifeng Optoelectronics (300241).

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