The penetration rate of LED will light up 2014

The first week of the new year, the LED industry, the Shanghai index has seen a significant rise in January 2nd rose 7% in January 3rd rose by 3%, becoming the best performing industry. In fact, during which there is no significant positive industry, but can be found from top to bottom LED industry investment logic.

Technological progress determines LED growth

2013 sharp rise in growth stocks, the common feature is derived from the broad space for the growth of the industry, therefore, one of the most important factors to choose growth stocks is the growth of the industry. From incandescent to energy-saving lamp and LED lamp, LED lamp, low energy consumption, long service life, the relatively tight energy in Japan, LED light penetration has reached 50%, while Europe and the United States LED light permeability is rapidly in the process of ascension.

Generally speaking, the LED lamp energy saving lamp power consumption is only 1/4, while the lifetime is 50 thousand hours, is 10 times the energy-saving lamp, because is cold light lamp, LED lamp, energy-saving lamp will not be like that appear often switch easily broken, so LED lamp replacement energy-saving lamp can also be said to be decided by the technical progress the.

LED industry growth space, should come from the home LED lighting penetration. A stock market, there is no lack of storytelling space industry or company, but many have large space industry does not have the conditions for short-term trigger. The LED industry in the short term growth in space from the industry to enhance the penetration of the future, the driving force to enhance the driving force from the policy as well as their own products to improve the cost.

The national development and Reform Commission has issued a "planning" semiconductor lighting energy industry, and clearly will promote LED lighting energy industry output during 12th Five-Year with an average annual growth rate reached 30%, the goal is to 2015 LED functional lighting products market share reached 20%, while the share of only 8%-10%, which means that in recent years, policy support and subsidies still is expected to be larger.

LED civilian biggest obstacle comes from the price, but in the past few years, LED chip prices in 2011 fell 40%-50%, 2012 30%-40%, 2013 15%-20% fell down, the current price of LED lights has been basically achieved with the economy of the marginal. Some 6 watts bulb prices on the market has dropped to 30-50 yuan per watt, equivalent to the price of 5-8 yuan, even like PHILPS brand price dropped to 8 yuan per watt, which means that the demand for indoor lighting industry in the future will likely grow rapidly, resulting in rapid increase in LED light permeability.

Growth stocks rose in 2013, one of the investment ideas from the rapid rise in overseas markets for the subject of China's investment targets, such as typical 3D printing, hand travel, etc.. A bright spot in 2014 is expected to come from the rapid growth in demand for LED. With the rapid growth of downstream demand, we expect global LED chip demand grew by 29%, while supply increased by only 17%, excess capacity rate dropped from 4% in 2014 to 31% in 2012; the global LED industry boom is expected to boost the A shares related industrial chain investment opportunities.

Performance support is now dawning

LED industry is expected to get performance support, we expect growth in 2014 between 30%-50%. In 2013, growth stocks rose in the process, more from the valuations, and we think 2014 in relatively tight liquidity, capital prices rising trend, by telling the story provided valuation pattern will be ended, so the performance of the importance of industry performance will be greater than 2013. We expect the company LED still has 30%-50% growth in neutral conditions, and the performance of the base is not high (as of 2013 2013 a quarterly year-on-year -11.3%), so in the first quarter is expected to achieve high growth, or it will make early investor confidence to hesitate.

On the other hand, the current LED sector valuation is not high, only about 24 times in 2014, far lower than other growth stocks, if the future industry needs rapid growth to be confirmed (either overseas or domestic), valuation has significant room for improvement.

Finally, from a top-down perspective, growth stocks in 2014, the lack of systematic investment opportunities, but also the relative advantages of the LED plate. The market is always looking for "beauty" of the industry, we believe that the LED plate industry space, the growth path is clear, and the short term, the industry already meet the necessary conditions for the rapid growth of demand, while the rise in global economy will also boost the China boom, and the market for the industry in the future high growth performance and may exceed the expected response is not sufficient that valuation is significantly lower than that of other growth stocks, so the future once the results confirmed the economy upward trend in the industry, will bring significant excess returns.