LED industry three quarterly analysis

In the third quarter of this year, the revenue of LED panel companies was 5,288.93 million yuan, a year-on-year increase of 6.08% and a year-on-year increase of 20.62%. In the third quarter, the net profit of LED companies was 617.52 million yuan, a slight decrease of -2.25% from the previous quarter and a sharp increase of 38.36% year-on-year. The LED segment’s return on equity in the third quarter was 2.00%, a slight decrease of 6% from the previous quarter, but a significant increase of 27% from the same period of last year. In the off-season, LED companies have enjoyed considerable growth in revenue, net profit, and ROE in the off-season, indicating that the general lighting market, which has driven the industry to pick up, is gradually starting to open in the light of the gradual stabilization of the backlight market. We believe that the outbreak of the general lighting market has come from two sources: First, the cost of LED light sources has been further reduced; second, policy support has entered a substantive stage.

Sales margin and expense rate remained stable and improved. In the third quarter, the LED segment corporate net profit rate was 11.67%, which was a decrease of 1.1 percentage points from the previous quarter and a year-on-year increase of 1.43 percentage points. From the perspective of gross profit margin, the gross profit margin in the third quarter was 26.12%, a slight decrease of 1.81 percentage points from the previous quarter and an increase of 2.08 percentage points from the same period of last year; from the perspective of the expense ratio, the cost rate in the third quarter was 18.19%, which was an increase of 0.52 percentage points from the previous quarter. The year-on-year increase of 1.6 percentage points. The gross margin and expense ratio remained stable and improved, driving the net interest rate also stopped. In the past, the downward trend started to rise.

From the perspective of the industrial chain: The performance of upstream and downstream companies is quite different, and the performance of mid-stream packaging companies is relatively consistent. We believe that the differences in the size of enterprises in the upstream segment of the LED industry are different due to the differences in competitiveness, and there are great differences in the performance of upstream companies; Because of the large quantity and miscellaneousness, the performance of downstream companies is very different; the middle-tier companies have shown relatively consistent and good scale with certain scale and technical barriers. Specifically: Revenue growth - upstream differentiation, the middle reaches to the good, the downstream growth was significant; net profit growth - the upstream and downstream differentiation, the mid-season off-season is not light; ROE and its growth rate - the upper and middle reaches of the enterprise is different, the lower reaches The company is relatively low.

LED companies have sufficient confidence and the industry is making good progress. The fixed-asset growth rate of LED-plate companies in the third quarter has further dropped to 29.92% year-on-year, but the growth rate has stabilized somewhat. The overcapacity in the industry in the past two years has led companies to significantly reduce their investment. The stable growth of fixed assets from the previous quarter indicates that business confidence has been restored to some extent. Construction-in-progress projects recorded a growth rate of 5.27% year-on-year and a growth rate of 14.0% over the previous period. The increase in the growth rate of construction-in-progress projects was a strong support for future industry development. As the growth rate of fixed assets gradually stabilizes and the growth rate of projects under construction increases, we believe that the industry will continue to improve in the future.