From 2008 to 2012, the operating income of Jufei Optoelectronics (300303) ranged from 105 million yuan to 495 million yuan, with a compound growth rate of 47%; net profit ranged from 30.23 million yuan to 91.52 million yuan, with a compound growth rate of 32%. According to the performance report, Jufei Optoelectronics' performance in 2013 was still impressive, with revenue of 753 million yuan, a year-on-year increase of 52.19%, and net profit of 131 million yuan, a year-on-year increase of 43.06%.
As a company that specializes in small-size packaging products, Jufei Optoelectronics lacks the merger and acquisition story and imagination space that the capital market loves. However, as the Chinese champion in the segmented industry, this company has achieved a gross profit margin of more than 30%, ranking at the forefront of its peers. Even with industry ups and downs, the company's gross profit margin since 2008 has fluctuated between 32% and 39%.
Because of this, the "Introduction to Listed Companies" event held at Jufei Optoelectronics in Dalang, Longhua, Shenzhen on March 5 was packed with seats, attracting many investors.
Yin Jinghuang, Secretary of the Board of Directors of Jufei Optoelectronics, introduced that Jufei Optoelectronics focuses on LED packaging. In the small and medium-sized backlight market, the company is not only the champion of China, but also the world champion. In recent years, it has continuously surpassed domestic and international competitors. The share of small and medium-sized backlights has increased from 5.92% in 2009 to 25% in 2013. In terms of product structure, currently small-size devices account for 59%; medium- and large-size devices account for 17%; lighting 10%.
Yin Jinghuang summarized that Jufei Optoelectronics’ today’s results depend on its advantages in three aspects. First, the company's cost-effective products have entered the supply chains of major terminal brand manufacturers. For example, small-size backlight devices have entered the supply chains of ZTE, Huawei, Lenovo, Yulong, etc.; large-size backlight devices have entered the supply chains of Skyworth, Hisense, Changhong, Konka, TCL, etc.; lighting LED devices have entered the supply chains of Qinshang, Unilumin, Alto, Absen, Sunshine Lighting, etc.
The second is lean management. In answering questions from investors, Xing Qibin, chairman of Jufei Optoelectronics, repeatedly emphasized: "The most core and core competitiveness that Jufei wants to build is 'lean management.'" He believes that "management" is a very critical factor in whether a company can go healthier and go further. The "Lean Management Evaluation Management Bulletin" and "Lean Management Garden" posted in the corridor of the company's factory area also highlight the company's "Lean Management" culture in details.
Thanks to this lean management, Jufei Optoelectronics’ yield rate is as high as 99%, the highest in the industry. In the packaging industry, yield is the most critical factor. Yin Jinghuang said that if the yield rate drops by 1 percentage point, the gross profit margin of the product will drop by about 3 percentage points. Judging from the fact that the packaging industry determines its heroes based on the quality of its products, lean management is indeed a core competitive advantage.
The third is an excellent management team. Behind lean management is that the company has an excellent management team. The leader of this team, Xing Qibin, describes himself as "steady" and "persistent." "No matter what you do, you can't do it well without these two principles of stability and persistence." He said that LED is a rapidly developing industry full of opportunities. Many people want to do it, but the key is who can do it well. Facts have proved that not many can really do it well.
Xing Qibin said that Jufei’s performance target is an annual growth rate of 30%, and institutional investors came to investigate. He also said the same, “Some institutions think that our ‘bubble’ is not big enough, but we are an industrial company.”
In fact, the company's existing production capacity and factory area are no longer sufficient. Fortunately, the company has already purchased a factory area with a total area of 39,000 square meters in Pinghu, Shenzhen, of which the production plant area is 30,000 square meters. Some production lines have been relocated and are expected to be completed around May. The company's production capacity is also expanding at a rate of 50% every year.
Xing Qibin said: "We treat LED as a business, and becoming more refined and stronger is the main business idea." In the past few years, Jufei will not consider entering the downstream. Even mergers and acquisitions will be mainly horizontal. The companies he is optimistic about are LED packaging companies with complementary customer advantages.
In addition to "stability" and "persistence", Xing Qibin, who is a technical person, places great emphasis on adaptability and innovation. He said: "Technological innovation will always be the strongest driving force for enterprise development, and technological innovation will always be the most important task of the company."
Because of technological innovation, lean management, and supplier recognition, Jufei Optoelectronics has successfully stabilized its gross profit margin level amid the trend of product price reductions. Through technological improvement, the company continues to improve the brightness of packaged products and improve the cost-effectiveness of products; seizing the trend of ultra-bright and thin products such as mobile phones, the company improves the product structure by increasing the proportion of small-sized ultra-bright devices to increase the overall gross profit margin. "For the same product, others sell it for 1 cent, but we can sell it for 15 cents or 2 cents." Xing Qibin said that he does not predict the market for investors in three years because the market is always changing. Even if the growth of the smartphone market slows down, the company can still gain considerable revenue by increasing its market share. In addition, success does not depend on how early you enter the market, but on who does it better. He said that the company's breakthrough in the large-size field in 2013 is the best proof.
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