Hongli Opto-Electronic Secretary to the Board of Directors Mr. Deng Shoutie (speaking at left and in standalone photo on right) sees a bright future for the LED sector. Photo: Aries Consulting
GUANGZHOU HONGLI OPTO-ELECTRONIC Co Ltd (SZA: 300219), China's top white LED light play, foresees bright prospects for the lighting technology, especially given greener illumination requirements in key markets and industry consolidation at home.
“In 2014 we expect a lot of LED peers to be phased out in China which will lead to explosive growth for better equipped firms with strong market positions,” said Hongli’s Secretary to the Board of Directors Mr. Deng Shoutie.
Speaking to investors on Jan 10 in Shenzhen at the Aries Consulting-organized “3rd Scaling New Heights – Asia Investment Forum 2014,” Mr. Deng said that not only was the pool of rivals in China’s crowded LED industry shrinking due to intense competition, but survivors like Guangzhou-based Hongli were stepping in to fill new voids.
Hongli's products light up the Guangzhou's Metro (left) and bring Shanghai's Lupu Bridge to life.
Photos: Hongli
“This year we will see our new production facility completed and brought fully on-line.
“Currently only two of our plants are in full utilization, and if all four were in operation, total LED packaging capacity would be closer to 2,000 KK,” he said, adding that the 2,000 KK monthly capacity goal was achievable within 3-5 years.
Technicians at Hongli's Guangzhou plant working to create even more efficient illumination. Photo: HongliHongli has an LED packaging capacity of around 750-800 KK at present, with a focus on lighting products.
To realize the company’s aims, Hongli Chairman Mr. Li Guoping recently said the Group would continue to invest in cutting-edge equipment, upgrading existing facilities and exercising prudent cost management to maximize profitability.
Management believes it will be able to report 1,200 KK/month capacity for end-2013.
“We hope to extend our LED product line into more downstream market sectors, and to realize this goal we are aggressively seeking out strategic opportunities and projects to expand operations beyond the current scope and scale,” Mr. Deng said, adding that market researcher TrendForce recently said global market demand for LED lighting products was enjoying rapid growth.
Many consumers use LED products every day, but few understand the technology – much less what the initials stand for.
A light-emitting diode (LED) is a semiconductor light source widely used as indicator lamps in many devices and increasingly for general lighting as well.
LED products can be found in applications as diverse as aviation lighting, automotive lighting, advertising, general illumination and traffic signals as well as remote control units of many commercial products including TVs, DVD players and other home appliances.
LEDs are also used to create a new form of wireless internet access called Li-Fi, or light fidelity.
Hongli, which has a market cap of 2.3 billion yuan, has seen a 52-week range of 5.68-10.57 for its Shenzhen-listed shares. Source: Morningstar
The main draw for LED lighting is the ability to emit brighter light in a more cost-effective way than traditional incandescent light bulbs.
“This year, some wattage incandescent light bulbs will be virtually banned in the US market under an energy-saving campaign.
“This significantly helps drive global demand for our greener illumination LED products,” Mr. Deng said.
Top LED Market Position
Shenzhen-listed Hongli enjoys a leading domestic market position for its white LED packaging technology, with its 40,000 sq m factory in Guangzhou utilizing the most advanced technology in a “garden style” production setting to produce high-power LEDs, SMD LEDs, COB LEDs and LAMP LEDs with downstream applications including traffic lighting, background illumination, auto signal lights and indicator lights among many others.
April-September revenue rose 24.4% to 492 million yuan while net profit slipped 19.5% to 36.5 million.
Hongli's lighting helps trigger photosynthesis. Photo: HongliAlmost three-quarters of Hongli’s revenue is derived from exports, with major markets being Japan, the US and Singapore.
“We are now also actively developing business in South Africa, South America and Australia,” Mr. Deng said.
He added that Hongli’s market position was bolstered by a wide range of LED products that boast market-leading illumination, longevity and durability qualities in China.
“As one of the first manufacturers in Mainland China to pass the IES LM-80 6,000-hour test, the Group’s LED package components comply with US Energy Star test standards, which provide a strong quality assurance for Hongli’s products sold both at home and overseas.”
China’s automobile market recently overtook the US to become the world’s biggest, but growth of the industry in the PRC has been slower of late for a variety of reasons.
But Hongli was immune to any tapering off of private vehicle sales in the world’s most populous country.
“We focus mainly on commercial vehicle sales so slower auto sales are not a big concern for us.
“We still market to the auto sector but we are seeing more and more sales from commercial vehicles,” Mr. Deng said, adding that urbanization in China and the country’s rapid development of public transportation networks will be a major driver for LED products going forward.
See also:
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