Guoxing Optoelectronics: Benefit from small-speed LED high-speed growth

Guoxing Optoelectronics (002449) is one of the leading LED industry companies in China. In recent years, thanks to the rapid advancement of small-pitch LEDs, the company has seized the opportunity to achieve substantial growth. In 2017, the company's net profit increased by 86.74%, which was the highest performance growth of the company in the past ten years, and its net profit also reached a new high.

At the same time, the company also vigorously promoted the layout of the LED industry chain, and has strong competitiveness in upstream chips, midstream packaging, and downstream applications. Recently, including Wang Xing, general manager of Guoxing Optoelectronics, deputy general manager Lei Zihe, and chief financial officer Tang Qunli, many of the executives of the Securities Times and e Company interviewed the company to introduce the company's strategic layout and future development plan.

Whole industry chain layout

The domestic LED industry has always had a very distinctive feature of the division of labor in the upper, middle and lower reaches. In the past years, Guoxing Optoelectronics has relied on its advantages in the midstream packaging field to occupy a place in the industry. However, since its launch in 2010, the company has gradually expanded to upstream chips and downstream applications. "At that time, we realized that the upstream chip has a core supporting role for the LED industry, so we began to cut into the chip field." Wang Sen said.

Nowadays, the entire industrial chain of the mid-stream and downstream of Guoxing Optoelectronics has gradually taken shape. Wang Sen emphasized that the development of the company's entire industrial chain also has a focus, not "going forward." "The company will continue to adopt a package as the core, supported by chips and applications, and adopt a coordinated development model."

In terms of R&D, the company conducts large-scale R&D investment every year, with an average R&D investment of more than 4% of total revenue. “The company has a post-doctoral workstation and a large number of expatriate technical teams. It has obtained more than 300 patents and won many awards such as the National Science and Technology Progress Award. In the past few years, it has made many breakthroughs in technology research and development.” Wang Sen Said.

Improve chip self-sufficiency

For the LED industry, chips occupy a vital core position.

Lei Zihe, deputy general manager of the chip business, told reporters that after the listing of Guoxing Optoelectronics in 2010, it established the strategic direction of the integration of the entire industry chain and decided to extend to the upstream chip field. In 2011, the company began to deploy chips and started production in 2013.

"In the last two years, the company's product line has been continuously improved, from LED white light chips to diversified products such as flip chip and RGB chips. Last year, the company's chip business has achieved profitability." Lei Zihe said.

When talking about the company's current chip self-sufficiency rate, Lei Zihe said that it is about 30%, and the outsourcing part is mainly concentrated on general-purpose chip products. "At present, the company's self-produced chips are still relatively small, and mainly focus on certain models, especially some differentiated, specific products that are not available on the market, thereby enhancing the competitiveness of the company's packaging industry. ”

Lei Zihe stressed that the company will continue to expand production in the chip sector, increase self-sufficiency rate, and improve product technology.

"Small Spacing" Nuggets

In 2017, the growth of the small-pitch LED business was seen as one of the major contributions to the company's performance. In the view of Ouyang Xiaobo, general manager of Guoxing Optoelectronics RGB Business Unit, the sharp increase in the application of small-pitch LED terminals in the past two years is due to the fact that market demand and technology update have just reached a good combination.

“The market has been pursuing higher definition, better visual effects, the birth of small-pitch LEDs and technological advances, just to meet this demand, and the phenomenon of blowouts has appeared in these two years.” Ouyang Xiaobo said, “At the same time, small spacing LED application scenarios are more and more, in the past mainly display screens, building exterior screens, etc., now extending to commercial displays, including subway stations, shopping malls, billboards, etc., the market space is also growing."

The data shows that companies such as Liard (300296) and Chau Ming Technology (300232), which are engaged in the production of small-pitch TV products, have shown rapid growth in the past two years, and Guoxing Optoelectronics is their upstream supplier. It provides products such as small pitch LED lamp beads.

Overseas business

In addition to the rapid development of domestic business, overseas business is also a highlight of the company. In 2017, the company's exports increased by 100.26% year-on-year.

Xu Zhenfeng, general manager of Guoxing Optoelectronics Lighting Division, pointed out that in the past two years, the company has judged the replacement of light source products by accurately capturing market information, which is a major development trend, and has made a lot of technical reserves in advance. In 2017, the market finally broke out, and the company also benefited from the advance layout.

For export companies, one topic that cannot be avoided is the recent Sino-US trade friction. In this regard, Xu Zhenfeng believes that the key to the current trade friction between the two sides is not to ban exports. The main problem lies in patents. "In the past, the United States relied on strong patents to build technical barriers to suppress companies in other countries. At present, we have invested heavily in R&D and layout patents internally, bypassing the restrictions on patents in the US market as much as possible, and minimizing the impact."

Tang Qunli, the company's chief financial officer, also said that although Sino-US trade friction has no direct impact on the company, it may affect the company's downstream partners, and relevant pressure may be transmitted to the company. “To this end, the company has formulated a series of structural adjustment measures at the strategic level, including further optimization and adjustment of the customer structure, adjustment of investment and financing structure, further control of cost and so on; in the entire industrial chain structure, the company will also pass The industry chain is closely coordinated to withstand the pressure from the outside."

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