LED industry trend analysis: Combining "channels + manufacturing" will be the ultimate powerhouse

With the arrival of the traditional LED peak season, the backlight market has returned to stable growth, lighting penetration has increased quarter by quarter, LED lighting companies have experienced rapid growth in shipments, and scale effects will gradually emerge. High-quality LED lighting companies have entered a stage of stable profitability, changing the past situation of increasing revenue without increasing profits. As the prices of LED lighting products fall, traditional lighting brands take advantage of their channel advantages to fully explore the LED market. Companies lacking core competitiveness begin to experience obvious profit pressure, and the speed of market concentration is also increasing.

Wang Wenxiang, manager of Dacheng Jingfu Closed Fund, believes that he is currently optimistic about the LED lighting industry and recommends actively deploying the LED industry. First of all, with the improvement of cost performance, the trend of LED lighting replacing energy-saving lamps and incandescent lamps is clear. The current penetration rate is 15% and is expected to enter a stage of rapid growth. Secondly, the LED lighting industry space is very large, with a global scale of 300 billion yuan.

Wang Wenxiang believes that from an investment perspective, upstream chips and downstream channels have higher barriers and have higher investment value; midstream packaging has relatively fierce price competition due to low entry barriers, and future expansion into engineering and lighting fields through mergers and acquisitions will be a focus. The industry will enter a period of high prosperity in the second half of the year, and the chip segment and downstream brand manufacturers with scale and channel advantages will demonstrate high growth.

Baoying Hongli Income Fund Manager Zhang Xiaoren analyzed that the LED industry boom began in the fourth quarter of 2013. On the one hand, TV/NB shipments have stabilized and LED backlight demand has bottomed out; on the other hand, LED lighting demand has increased since the fourth quarter of 2013. The superposition of these two factors has created an inflection point in LED demand.

Zhang Xiaoren believes that LED lighting will truly bring strong demand and huge space to the LED industry in the future. In 2013, the lighting output value of mainland China was 450 billion, and it is expected to reach nearly 700 billion in 2015. However, the penetration rate of LED lighting at the end of 2013 was less than 20%. Up to now, the penetration rate of LED lighting is estimated to be only about 30%. There is huge room for the future.

In the context of the rapid development of the LED lighting industry, Zhang Xiaoren of Baoying Fund believes that companies with both "channel + manufacturing" capabilities will be the ultimate powerhouse.

In terms of channels, channels are the foundation of the lighting industry. Regardless of traditional lighting or LED lighting, only by having channels can you have scale and pricing power, and thus have the possibility of growing bigger. At present, in China's hardware circulation, home monopoly, commercial lighting and other market segments, there are very few companies with national channel advantages. There are only a few companies such as Opple Lighting, NVC Lighting, Foshan Lighting, Feile Audio, and Sanxiong Aurora.

In terms of manufacturing capabilities, LED lighting currently has an obvious trend of integrating light sources and lamps. Since LED is a point light source, lighting design forms are diverse and a large number of new products are constantly updated. The product update cycle has been greatly accelerated from the previous 3-5 years of traditional lighting to 1-2 quarters. Frequent product updates and cost reduction through large-scale procurement have made the design and manufacturing capabilities of enterprises in the industry the core competitiveness. In other words, LED lighting requires lighting manufacturers to have design and manufacturing capabilities, and the barriers are much higher than in the traditional lighting era.