In the last article, LEDinside summarized upstream Chinese LED manufacturers performance during first half of 2014, now it is time to inspect midstream and downstream sectors.

Midstream LED manufacturers breaks free from “unprofitable curse”

The LED industry’s midstream package sector has been repeatedly criticized for “increasing revenues but lack of profit growths.” The sector has finally seen changes during first half of 2014.

Honglitronic’s revenue for instance was up 33.72 percent YoY to reach RMB 426 million. The company’s net profit was up 44.59 percent YoY to RMB 31.53 million. According to Honglitonic, the company’s performance during first half of 2014 mainly came from strong LED lighting market demands. The company’s expanded production capacity resulted in higher sales and revenue.

Juefei Optoelectronics has grown steadily in the eyes of investors. In 1H14, the company’s revenue was up 50.71 percent to RMB 481 million compared to the same period last year. Net profits were also up 36.56 percent to RMB 83.65 million. The company’s LED for backlight revenue reached RMB 414 million, while LED lighting peaked to RMB 58.40 million. Other LED revenues also amounted to RMB 7.06 million.

The LED industry showed good performance during 1H14, and the company was able to take advantage of growing market shares in the smartphone and tablet industry, said Jufei Optoelectronic officials. In TV backlight market, LCD TV manufacturers procurement of Chinese LED modules have increased. LED lighting market has created new business opportunities, and the company’s investments in innovative technology and management raised yield rates and achieved soaring revenue and net profit growths.

Nationstar Optoelectronics revenue during first half of 2014 soared 32.45 percent YoY to RMB 727 million. The company’s net profit was also up 29.30 percent Yoy to RMB 64.45 million. However, during the same period the company’s profit margin slightly dipped 1.13 percent to 25.01 percent. Additionally, upticks in sales and management costs have caused net profits and revenue to climb upwards, causing the inconsistencies in revenue and net profit growths.

Even MTC reported revenue growth of 29.78 percent YoY to RMB 3.37 billion, with net profits up 17.70 percent YoY to RMB 283 million. Out of these, backlit-LED TV manufacturers’ procurement of Chinese LED products has gained traction. Again strong demands in the LED lighting market pushed the company’s revenue up by 85.83 percent to RMB 313 million. The company’s LED business has grown exponentially, and will become a main development focus in the future.

Inspection equipment manufacturer Everfine also profited in 1H14. The company’s financial report noted the company’s revenue was up 16.43 percent to reach RMB 92.71 million, and net profits were also up 11.52 percent YoY to reach RMB 44.11 million. The company’s financial report concluded total assets were up 1.72 percent to reach RMB 1.06 billion.

China’s downstream LED sector overall delivers positive performance

The downstream sector has gained a lot of industry attention recently, mainly because upstream manufacturers’ revenue performances are reliant on downstream market demands.

In recent years, Leyard depended on small pitch LED display advantages to acquire high profits. In 1H14, the company’s total revenue was up 50.81 percent YoY to RMB 412 million. The company’s net profit also soared 76.02 percent YoY to RMB 53.99 million, and consolidated profit margin was about 37.83 percent.

Leyard’s performance has affirmed the industry’s previous outlook that the small pitch LED display industry will be entering a phase of explosive growth. The company’s new small pitch LED TV orders reached RMB 413 million as of Aug. 20, 2014, said Leyard. During the financial report period, the company’s revenue was up 235.49 percent to RMB 192 million. Small pitch LED display TV revenues shares also set new records of 46.56 percent of the company’s total revenue. Up to 20.33 percent of the company’s small pitch LED display TV revenue came from oversea markets, and the company has so far exceeded market expectations after selling 115 small pitch LED display TVs.

LEDman Optoelectronics revenue also saw 26.76 percent uptick to RMB 201 million during 1H14, while the company’s net profit was up 27.65 percent to RMB 18.83 million. The company finished expansions in the international market and received revenue for completed engineer projects. The company’s international display sales had grown RMB 22.01 million compared to the same period last year, while engineering revenue was up RMB 19.35 million. Luminaire sales increased 11.25 million, however, component sales declined by RMB 10.04 million compared to a year earlier.

Another display manufacturer Unilumen’s net profits also doubled. The company’s revenue during first half of the year reached RMB 446 million, and grew 35.05 percent YoY. Net profits soared 111.16 percent to RMB 23.83 million.

During first half of the year, the company’s small pitch LED display orders reached RMB 91.85 million. International rental market of small pitch LED displays has become the company’s main development focus in the display industry. The company projected small pitch LED display product sales target will be above 70 percent in 2014.

Linyang Electronics revenue was also up 10.83 percent to RMB 844 million. The company’s net profit grew 15.47 percent YoY to RMB 135 million. The company’s LED and PV business underwent exponential growth of respectively 15,003 percent and 726.87 percent.

According to the electronic energy meter company’s financial report, electronic energy meter was still the main source of revenue. Despite having a large revenue share of RMB 563 million, electronic energy meter revenue dropped 8.4 percent YoY. Communication and management systems revenue also declined 4.97 percent to RMB 100.78 million. In contrast, the company’s LED product revenue soared 15,003 percent (150 times) to reach RMB 74.32 million, while PV revenue also was up 726.87 percent to RMB 81.08 million.

Lighting manufacturer Yankon Lighting also delivered a “brilliant” performance. The company’s revenue was up 4.07 percent YoY in 1H14 to reach RMB 1.52 billion. Net profits were also up 35.05 percent to RMB 135 million. CFL revenue was down 17.66 percent to RMB 632 million. Despite sliding CFL revenues, profit margins were up 4 percent to 20.5% compared to the same period last year. LED lighting revenue was up 60.23 percent YoY to RMB 648 million. Profit margin was also up 2.29 percent YoY to 25.04 percent.

High power T5 fluorescent tubes and related luminaire revenues, however, dropped 24.77 percent YoY to RMB 137 million. Profit margin for these products was up 5.71 percent YoY to 23.35 percent. However, special luminaire revenue was down 20.94 percent to RMB 69.20 million, while gross margin was up 0.49 percent YoY to 24.29 percent.

In stark contrast to the positive developments in lighting and other LED sectors, Moso Power Supply Technology, the only listed LED driver manufacturer’s 1H14 performance “would bring tears to people’s eyes.” The company’s revenue in 1H14 had grown 21.56 percent YoY to RMB 326 million, but net profits plunged 94.15 percent YoY to RMB 1.37 million.

According to Moso Power Supply, the company’s order situation remained good during the reporting period, but intense market competition, rising labor costs, and increased factory rental fees impacted earnings. The company’s profit margin slid 4.4 percent YoY to 18.88 percent. New subsidiaries the company invested delivered lower than expected revenue performances, with several even incurring losses that dragged down the company’s net profit for 1H14.

(Author: Sophie Liu, Reporter, LEDinside China/ Translator: Judy Lin, Chief Editor, LEDinside)