LED chip and packaging industry will usher in deterministic growth
[High-tech LED comprehensive report]
This year's overall market volatility will not be particularly large, and the systematic valuation market is over. It is recommended to look for certain opportunities from the segmented industries. After analysis, we believe that LED industry has relatively certain investment opportunities. The following is mainly an analysis of the industry from a top-down perspective. Overall, we believe that the industry will have absolute returns this year.
From the perspective of economic changes, the stock price of the LED industry chain may have bottomed out. The most typical example of industry changes in recent years is Taiwan's crystal power. The share price of Jingdian has been adjusted for five consecutive years since the 11th year. The stock price has been going down all the way. After the industry chain bottomed out in 16 years, the stock price began to rise slowly. Jingdian lost money for 15 consecutive years in 15 and 16 years. This year's third quarter report shows that it is also a loss. In fact, the market of crystal power has been largely seized by Sanan.
While Sanan’s share price has eliminated the increase brought by the bull market in 15 and 16 years, the overall adjustment process is also in progress. Therefore, at least from the perspective of market behavior, the stock price is already in the bottom area. Since the stock price represents a certain degree of view on the future trend, there is a chance that the industry will stabilize at the bottom and there is a rising cycle. This kind of opportunity mainly comes from the following three aspects: supply and demand, price increase and industrial concentration.
First, the industry supply and demand pattern has improved.
First of all, for the chip field, from the perspective of supply at home and abroad and Taiwan, the industry contraction is more obvious.
Taking Taiwan's Jingdian as an example, the cumulative production was reduced by 25% from 2015 to 2016. Its MOCVD has dropped from 500 to less than 400, a significant decline. From the factory point of view, the company announced the closure of a factory in Taiwan and the mainland, the capacity shrinkage is more obvious. In addition, CREE's announcement shows that the company's high-power chips are reduced by 25%.
On the domestic front, the exit of enterprises is also obvious. On the one hand, a large number of small and medium-sized enterprises have withdrawn due to price cuts and environmental storms. According to LEDinside statistics, at the end of 2016, a large number of LED enterprises in Guangdong were shut down and rectified. On the other hand, domestic leading companies have increased their ability to acquire. Whether it is inside or outside the industry chain, the entire merger is accelerating.
In addition, from the perspective of demand, it is estimated that the effective capacity of LED chips in 2017 will be less than 85 million pieces, while the demand will exceed 93 million pieces, and there will be a supply gap of 8 million pieces. The overall chip supply is in short supply.
Secondly, from the perspective of packaging, the shrinkage of the number of enterprises is more obvious. According to senior engineers, by 2020, there will be only about 500 package companies. The shrinking of the packaged enterprise will be more obvious than that of the chip enterprise. In the process of shrinking the number of enterprises in these two fields, the industry concentration is increasing.
At the chip enterprise level, the market share of the top 10 chip companies in 2012 is about 60%, and has now increased to 78%. This share increase is more obvious. In the process, many SMEs may gradually withdraw from this market.
From the perspective of mergers and acquisitions, mergers and acquisitions within the industry chain, such as Sanan, Mulinsen and other companies' M&A activities, can be seen as the process of industrial chain integration, and the overall layout of the industry chain is accelerating.
From the perspective of demand, there is still room for improvement in penetration. From the perspective of segmentation, small-pitch and automotive lighting are growing at a faster rate. In the field of automotive lighting, due to the increasing use of LED lamps for high-end models such as Mercedes-Benz and BMW, there is still room for growth.
In addition, the 13th Five-Year LED industry needs to solve the localization of equipment and materials. By 2020, the entire industry chain will be basically realized. LED products will enter thousands of households, and the penetration rate will be greatly improved. Judging from the scale of China's general lighting market, the market size can still maintain a certain degree of growth.
Second, the price war is over and the price increase cycle becomes the driving force.
There is a possibility of rising prices. On the one hand, the contraction of the supply end of the LED industry is a very important driving factor for price increase. In fact, the improvement of the supply pattern has a very large impact on prices. For example, last year's supply-side reforms have greatly increased the prices of industrial products.
On the other hand, the price increase of upstream materials is more obvious. This year, the PPI is at a high level. Since many of the materials required for LEDs are industrial metals, the price of industrial metals is rising, and it can be inferred that prices will continue to rise.
After March 2016, companies such as Sanan and Mulinsen dominated the four rounds of price increases. After January of this year, the Sanan chip increased its price again. These price increases are worthy of attention, and the price increase may not be over yet.
Third, the global LED industry chain pattern is changing, and China is drawing closer.
The pressure on environmental protection is so great that prices may rise. In addition, there is another important reason that the global industrial chain pattern is changing in a direction favorable to China. From the perspective of the chip industry, the third echelon is rising to the second echelon, and China is approaching or has entered the second. echelon. In fact, the gap between the first echelon and the second echelon is mainly due to the absolute advantage of the number of patents held by the first echelon. From the perspective of the packaging market, in 2015, the world's top ten China has occupied three seats. It can be seen that China is gradually closing the gap.
In terms of investment, in the chip field, Sanan is the absolute leader in the chip market. In addition, Huacan and Aoyang Shunchang in the industrial chain are also worthy of attention. In the field of packaging, Mulinsen is the absolute leader.