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as demand stagnates, china led lighting giant feels the heat

by:Demo     2020-08-30
For Sanan Optronics, the future looks less optimistic.
China\'s largest manufacturer of LED lighting, at least for now.
Driven by concerns about weak demand
LEDs in Shanghai Sanan\'s domestic real estate and automotive industry
Over the past 12 months, listed stocks have lost more than half their value and valuations have fallen to record lows.
Recently, a social media report questioning the financial transactions of its controlling shareholder scared investors, prompting Sanan to issue a statement denying the concerns.
\"Due to overcapacity and stagnant demand, China\'s LED industry is unlikely to recover in the next two years,\" said Lu Guangji, fund manager of Guoyao Securities Investment Trust in Taipei.
He added that after social media reports, concerns about the company\'s parent company\'s finances also prompted him to avoid stocks.
In response to Bloomberg News\'s inquiry about social media reports, Sanan said in an email on Thursday that its operations were \"completely separate\" from the operations of the controlling shareholder \".
It also reiterated its statement issued last week about the framework agreement signed by its major shareholders earlier this month to obtain 6 billion yuan ($887 billion)
Strategic Investment and working capital of new investors.
Sannan is one of many companies that have benefited from China\'s increased investment in led ---
A semiconductor that directly converts electricity into LED Light module-
Promote green energy.
This technology is much more energy efficient than conventional incandescent lamps.
According to a recent report from the China Solid State Lighting Alliance, in 2018, led accounted for 70% of the general lighting market in China (CSA).
This reflects a broader trend in which LED lighting has grown from less than 5% of the global lighting market to more than 40% over the past six years.
Sanan, which produces wafers for led, has seen explosive growth in revenue and profits since its launch in 2008.
On 2016, the company announced negotiations with Osram Licht AG on possible acquisitions, making international headlines.
As China\'s LED industry began to cool down, Sannan\'s share price peaked at the end of 2017.
The CSA said domestic demand for real estate, cars and consumer electronics slowed while a large number of new capacity was put into production last year.
The total output value of China\'s LED industry increased by 12.
8% in 2018, down 12.
In its report, the CSA said that costs and inventory increased compared to the previous year, and demand and government subsidies were also declining.
The report also warned that if the United StatesS.
Punitive tariffs on China\'s led, which will suffer as half of the industry\'s sales depend on exports.
China\'s trade and investment headwinds, as can be seen from GDP data, DataChina\'s car sales fell for the first time in more than 20 years.
Price growth slowed due to sluggish demand from buyers. Not everyone is completely bearish on Sanan, one of more than 30 Chinese LED manufacturers listed in mainland China.
Citigroup analysts, including William Yang, said in a report in January.
As an industry leader, Sanan is expected to gain market share over time.
According to CSA, Sannan\'s domestic market share may expand to 31% by 2020 from 28% last year.
Earlier this month, Citi lowered Sanan\'s stock price target to 12 yuan, as demand and profit growth slowed this year.
Sannan\'s stock is worth $6.
Close at 2 billion and 10.
27 yuan on Friday.
Sanan is expected to release 10.
8% Earnings per share rose 2018, down from 47%, following the previous year\'s average forecast by Bloomberg analysts.
Analysts at Morgan Stanley and China International Capital said in a customer report late last year.
Expressed concern about Sanan\'s inventory.
According to Bloomberg data, Sannan inventory days--
Measure the number of times a company Library has been sold and replaced for a period of time-
Climbing from 160 days in the same period last year to nearly 100 days in 2018.
Sanan said in an email response to Bloomberg News that the increase in inventory was the result of capacity expansion in recent years aimed at meeting growing demand.
Zhu Jixiang, an analyst at Capital Securities Company, said: \"Sanan\'s valuation is now very low, but there are still various concerns in the short term . \"
He added that it is not clear when the LED industry will meet. —
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