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Can Cancan Optoelectronics in the name of production capacity IPO LED Red Sea can play?
Although the old-fashioned companies in Europe and the United States, including GE and Philips, are selling the consumer-like lighting business, they are still a field of ambition and wealth in China. With energy-saving as the bar, companies around the LED light source are trying to expand their voice. Recently, Jucan Optoelectronics Technology Co., Ltd. (hereinafter referred to as Jucan Optoelectronics) has started. God said that there must be light, and there will be light in the world. Edison said that in order to spread the light to thousands of households, the first commercial incandescent lamp appeared in 1879. Nick Helenak said that now is the era of energy saving, so there is LED. Although the old-fashioned companies in Europe and the United States, including GE and Philips, are selling the consumer-like lighting business, they are still a field of ambition and wealth in China. With energy-saving as the bar, companies around the LED light source are trying to expand their voice. Recently, Jucan Optoelectronics Technology Co., Ltd. (hereinafter referred to as Jucan Optoelectronics) has opened its capital road. According to the "Investment Times" reporter, the main business of Jucan Optoelectronics is the research and development, production and sales of LED epitaxial wafers and chips, and provides contract energy management services around the core of LED lighting applications. The company's main products are GaN-based high-voltage products. Bright blue LED chip and epitaxial wafer. The IPO Jucan Optoelectronics intends to go public on the GEM. The sponsor institution is Guotai Junan Securities. The total share capital of the company before the issuance is 193 million shares. The current issuance does not exceed 64.33 million shares, all of which are outstanding shares, with a par value of 1 yuan per share. The proportion of the total share capital after the company's issuance is not less than 25%. The raised funds will be about 350 million yuan, and will be invested in LED chip production and R&D projects in the future. Judging from the book alone, Jucan Optoelectronics can be described as shimmering and fascinating, and its revenue has also grown steadily year by year. However, as a newcomer in the industry, carefully inquiring about the various funds, you will find the real situation hidden under the perfect veil. According to the company's prospectus, Jucan Optoelectronics realized operating income of 296 million yuan, 351 million yuan and 480 million yuan respectively from 2014 to 2016 (commonly referred to as the reporting period), compared with 2015 and 2016 respectively. In the previous year, it increased by 18.81% and 36.61%. The operating profit for the same period was 39 million yuan, 06 million yuan, and 36 million yuan, while the total profit for the period was 65 million yuan, 0.27 billion yuan, and 69 million yuan. By comparing the reporters, Jucan Optoelectronics has a steady growth in operating income, while its operating profit is not high compared to the total profit. In 2015, the company's operating profit and net profit also experienced a sharp decline. Observing the company's financial data can also notice a phenomenon: during the reporting period, the company's net profit was 57 million yuan, 0.23 billion yuan, and 61 million yuan, but once the non-recurring gains and losses were removed, the current profit of Jucan Optoelectronics was only 0.34 billion yuan, 0.15 billion yuan, and 0.32 billion yuan, nearly half of the decline. After consulting the relevant materials, the reporter learned that the current profits and losses are almost the government subsidies received by Jucan Optoelectronics in recent years. That is to say, during the reporting period, the company received government subsidies of RMB 25 million, RMB 27 million and RMB 33 million, respectively, accounting for 38.96%, 98.60% and 47.80% of the total profit for the current period. The government subsidies related to income accounted for the current period. The total profit ratio was 18.66%, 29.86%, and 20.23%, respectively. It can be seen from the above data that Jucan Optoelectronics has long relied on local government subsidies to support performance. If the company no longer has the relevant preferential or subsidy conditions, not only its profit level will be like many actresses of makeup remover, but it may also have a negative impact on the company's business development, which will affect the company's long-term healthy development. Some insiders are blunt about this. As a growing company, if Jucan Optoelectronics relies excessively on government subsidies, it will be difficult to grow into a technology company with core competitiveness and a full moat. The main product price decline is serious as the company's main products, the sales performance of LED chips and epitaxial wafers are naturally important. During the reporting period, the operating revenue of Jucan Optoelectronic LED epitaxial wafer products was 10.257 million yuan, 51.875 million yuan and 104.84 million respectively. Yuan, LED chip products operating revenue of 237 million yuan, 245 million yuan, 286 million yuan, are in a steady growth stage, the two together accounted for the main business income ratio of 94.03%, 93.86% and 94.15%. However, in recent years, with the continuous advancement of related technologies in the LED industry, while the technology update has gradually reduced the production cost, the price of the LED chip market has also shown a downward trend. In fact, this is also a general rule in the semiconductor component industry. As a company whose main business is LED epitaxial wafer and chip sales business, there is no immunity from Jucan Optoelectronics. The data shows that the average unit price of chips sold in 2014 was 314.83 yuan/piece. In the following two years, the average unit price of chips has dropped to 224.95 yuan/piece, 143.51 yuan/piece, down 28.55% and 36.20% year-on-year. Although the unit sales cost of the chip has dropped from 206.76 yuan/piece in 2014 to 165.48 yuan/piece in 2015 and 117.32 yuan/piece in 2016, it is worthwhile to look at the gross profit margin: during the reporting period, the company’s chip The interest rates were 34.32%, 26.44%, and 18.24%, respectively, showing a trend of simultaneous decline. In addition, the sales unit price of the other main product epitaxial wafers of Jucan Optoelectronics has also been on the escalator in recent years. In 2014, the unit price of epitaxial wafers was 170.7 yuan/piece, which dropped to 127.02 yuan/piece in 2015, down 25.59% year-on-year. By 2016, the unit price of its sales has dropped to 93.57 yuan per piece. In the past three years, the unit price of epitaxial wafers has fallen by 45.18%, almost close to the waist. In recent years, supported by relevant government policies, the installed capacity of domestic MOCVD equipment has been increasing, the production capacity of LED epitaxial wafers and chips has risen sharply, and the expansion rate of production capacity has been faster than the growth rate of demand. As a result, the price of LED epitaxial wafers and chips has further declined. In the future, based on LED technology advancement and overcapacity factors, it is still possible to cause the prices of these products to continue to decline. Jucan Optoelectronics knows this well. It also stated in the prospectus that if the company cannot effectively control costs in the future, the cost decline rate is slower than the product price decline rate, and the company's gross profit margin will continue to reduce risks, which will adversely affect the company's future profitability. At the same time, relevant data shows that, without considering other factors, the break-even point of the price change rate of the main products in 2016 is -17.76%, that is, when the company's epitaxial wafer sales unit price and chip sales unit price both fell 17.76%. In the case, the total profit for 2016 is 0. Combined with the above relevant data, it can be found that the company's epitaxial wafer sales unit price and chip sales unit price are still in a downward channel, and the excess capacity in the market cannot be eliminated in a short period of time, and its future profitability is really worrying. Newcomers ignore the market expansion capacity LED industry as a dynamic and emerging industry (Aiji, net worth, information), low market concentration, is a relatively fully competitive industry. With the continuous expansion of market demand and the promotion of national industrial policies in recent years, social capital has been heavily invested in the industry, and the scale of LED epitaxial chip production has grown rapidly. On the one hand, existing LED epitaxial chip manufacturers are actively expanding their production capacity; on the other hand, new LED epitaxial chip manufacturers continue to join, which also increases the speed of capacity expansion. According to statistics from the National Semiconductor Lighting Engineering R&D and Industry Alliance, in 2015, China's epitaxial wafer manufacturers had about 1,400 MOCVD equipment, an increase of about 680 units from 2011, with a compound annual growth rate of 18.09%. At the same time, however, mainland manufacturers are facing direct competition from overseas LED chip manufacturers with considerable production scale, strong capital and advanced technology, and manufacturers in Taiwan. Under this circumstance, the leading enterprises in the Mainland have further consolidated the market through their own sufficient market share and technology update. Some new start-up companies have to withdraw from the market after testing the water due to lack of sufficient production scale and continuous capital support. As a newcomer in the industry, Jucan Optoelectronics has performed well in recent years, but it still can't compare with the influence of the industry leader in the market. For the funds raised by the listing, Jucan Optoelectronics will express The remaining funds, net of the issuance costs, will be used to expand capacity. According to the prospectus, although the capacity utilization rates of the poly-electronic epitaxial wafers and chips are at a relatively high level, they have not reached a fully saturated state. Specifically, the production capacity of the epitaxial wafers in 2014-2016 was 1.122 million, 1.914 million and 3.181 million, respectively, and the capacity utilization rates were 97.64%, 98.56% and 97.63%, respectively. The chip production capacity in 2014, 2015 and 2016 was 850,000, 1.24 million and 1.81 million, respectively, and the capacity utilization rate was 97.01%, 97.84% and 95.87%. In the current LED chip industry overall overcapacity and LED chip prices continue to fall, Jucan Optoelectronics is planning to raise funds of 350 million yuan for the development of LED chip production R & D projects, this approach has a higher risk. According to industry insiders, Jucan Optoelectronics may hope to expand its market share through capacity expansion and low-price strategy, but this kind of burning behavior is full of uncertainties for small businesses and is likely to get angry. The "Investment Times" reporter also learned that Jucan Optoelectronics had exceeded the standard in the production process due to the expansion of production capacity in 2014, and was warned by local authorities. In the next test, the company's exhaust emission level has not yet reached the target, and the relevant authorities have imposed a fine on this. If Jucan Optoelectronics successfully expands its production capacity, environmental protection issues will become one of the issues that this energy-saving enterprise needs to pay attention to.