Under the premise that the performance is getting more and more attention from the market, the possibility that the blue-chip stocks will receive financial attention is obviously higher.

The LED industry continued to grow in 2017. LED listed companies recently announced the first three quarters of earnings and handed over bright transcripts. The leading three-year revenue of Sanan Optoelectronics Co., Ltd. was 6.283 billion yuan, up 40% year-on-year; attributable to shareholders of listed companies. Net profit was 2.378 billion yuan, a year-on-year increase of 59%.

As the performance is bullish, the total market value of Sanan is even higher. As of yesterday's close, Sanan Optoelectronics' total market value was 102.368 billion yuan, breaking through the 100 billion yuan mark, ranking first in the market value of listed companies in the A-share semiconductor lighting industry.

Another institution based on the relative valuation method, the 2017 Sanan target market value of 111.7 billion yuan. At the same time, the DCF valuation shows that the company's intrinsic value is 105.3 billion yuan.

At the same time, Lin Xiucheng as one of the actual controllers of Sanan Optoelectronics, in 2015, Lin Xiucheng, Lin Zhiqiang and his son replaced the Xinhuadu Group boss Chen Fashu with the wealth of 34 billion yuan, becoming the richest man in Fujian. In recent years, Lin Xiucheng and Lin Zhiqiang have become frequent visitors to the wealth list.

Sanan Optoelectronics is the leader of LED chips in China. In recent years, it has been involved in the semiconductor industry. It is mainly engaged in R&D, production and sales of full-color ultra-high brightness LED chips, LED application products, compound semiconductor chips and epitaxial wafers.

Traditional products: LED chips, LED epitaxial wafers, LED application products (mainly related to road lighting, architectural landscape lighting, display screens, LCD backlights, automotive lighting, medical lighting, etc.)

New products: small pitch LED, Micro LED, automotive LED;

Compound RF semiconductor integrated circuits (mainly gallium arsenide / GaAs, gallium nitride / GaN semiconductor materials, the main application products are GaAs GaAs and GaN PA and other communication microelectronic components)

Competitive Advantage

1. High gross profit level

The company is in the forefront of the industry, ranking first in the A-share semiconductor industry listed companies, while the product gross margin remains above the industry average.

The gross profit margin of the company's 2017 mid-year report has reached a new height of 48%. The gross profit margin is higher than the industry average, mainly due to its technology leadership, product structure optimization, scale efficiency, and reduction of raw material costs.

Leading technology: In 2014-2016, the company's annual R&D expenditure is more than 300 million. In 2016, R&D expenditure was 443 million, a year-on-year increase of 32.1%. The direct result of the company's research and development is the increase in the gross profit margin of the new products, and the unit cost will be reduced, which greatly guarantees the improvement of the comprehensive gross profit margin of the products.

Product structure optimization: In the chips and epitaxial wafers sold by the company, the proportion of high-power chips and epitaxial wafers with higher gross profit margins increased, the proportion of small and medium-sized power products decreased, and the product sales structure was optimized.

Scale benefit: The company's production bases in Anhui, Tianjin and other places are gradually put into production, and the production capacity is fully released. At present, the company has the largest MOCVD production capacity in China, with an annual output of more than 310 billion chips. The production costs such as depreciation and amortization are relatively adequate, the unit cost is reduced, and the scale advantage is obvious.

In 2017, the company's gross profit margin increased further, and the industry was far ahead. It originated from the industry concentration. At present, Sanan has become a leading company in global manufacturing, and the company has strong bargaining power.

2, technical strength

For a long time, global LED patents have been concentrated in Japan, Europe and the United States. Chinese LED companies have entered this field relatively late, and they are in a relatively inferior position in the original technology accumulation and patent circle. In 2013, Sanan accelerated its global patent layout to enhance its patent advantage. On the one hand, it subscribed to Taiwan’s Yuyuan Optoelectronics Co., Ltd. and became its largest shareholder, realizing core patent technology authorization; on the other hand, it acquired 100% equity of American Lumen Company and entered the world. LED epitaxial wafer and chip core patent technology licensing network.

The company invested 443 million yuan in research and development in 2016, a year-on-year increase of 32.24%. The company continues to invest in high R&D in the field of LED and compound semiconductors, ensuring high added value, production efficiency and yield. As of the end of 2016, the company had 1,211 patents and proprietary technologies, most of which were independent invention patents. The continuous research and development investment enabled the intellectual property system to be continuously and effectively constructed, expanding and consolidating the company's technological advantages in the industry.

Sanan Optoelectronics Memorabilia

In 2000, the company entered the LED chip industry. In 2008, it landed on A shares and officially changed its name to “Sanan Optoelectronics Co., Ltd.”, and is committed to building a national high-tech enterprise with independent intellectual property rights.

In 2012, Sanan Optoelectronics became a shareholder and acquired 20% of the latter. The two parties said that they would jointly seek business opportunities in the Chinese mainland market and expand their international market share with the advantages of cost, capacity and technology. Sanan also obtained a stable product estuary.

In 2013, Sanan Optoelectronics announced the establishment of a wholly-owned subsidiary, Wuhu Anrui Optoelectronics, in the Economic and Technological Development Zone of Wuhu City, Anhui Province, to deploy automotive lighting business. The automotive lighting business of Anrui Optoelectronics' application products increased by nearly 50% in the first half of the year.

In 2014, the company established a joint venture with Chengdu Yaguang Electronics Co., Ltd. and Xiamen AVIC International Investment IC Industry Development Equity Investment Fund to formally participate in the semiconductor industry.

In 2015, Sanan Optoelectronics and the Institute of Botany of the Chinese Academy of Sciences jointly funded the establishment of Fujian Zhongke Biological Co., Ltd. and laid out a plant factory.

In 2015, Sanan Optoelectronics signed a Strategic Cooperation Agreement on Investment in the Development of Integrated Circuit Industry with Huaxin Investment, CDB Xiamen Branch and Sanan Group.

In 2016, the establishment of Xiamen Sanan Huanyu Integrated Circuit with GCS will facilitate the company's rapid development in the technical level of RF communication and optical communication components and the construction of patent platforms, and accelerate the development of integrated circuit business. (In March 2016, Xiamen Sanan Integrated Circuit Co., Ltd., a wholly-owned subsidiary of the company, tried to acquire GCS and signed the “Consolidation Agreement Plan”, and then terminated due to failure to pass the US Foreign Investment Committee approval.)

In 2017, Sanan clearly stated on the interactive platform that the micro LED company has sampled.

Investment logic

Full production, more orders, higher market share

After the rapid growth of the LED lighting industry in recent years, the overall growth rate of the industry is stable, the industrial concentration is increasing, and the speed is increasing. At present, there are about 360 MOCVD in Sanan, and it is expected to surpass Taiwan's Jingdian in two years. Sanan Optoelectronics currently has a global market share of about 12%. The company said it will aim at 30% in the future.

The company's original equipment is fully produced, and the production capacity is completely released. At the same time, the newly added capacity will be gradually released in the third quarter of this year. The company will start to launch new capacity at the rate of 10 MOCVD per month from August this year. Increased by more than 50%.

Whole industry chain layout

In addition to significantly increasing the market share of the company, the company also actively strengthened the self-sufficiency of raw materials such as upstream sapphire substrates and reactive carrier gas, and acquired downstream LED lighting from Luminus Devices. Through the vertical integration of the entire industry chain, the cost control and capacity support capabilities are further strengthened. When competing with other LED chip manufacturers, they can enjoy greater price adjustment space and have obvious advantages in gross profit margin.

Micro LED+ automotive lighting has high potential for high gross profit applications

Compared with traditional OLED, Micro LED has the advantages of high brightness, high contrast, wide color gamut, low power consumption, long life and small size, which makes it high brightness, high controllable, low cost, etc. compared with traditional lighting equipment. The advantage, so that it can become a new technology growth point against the OLED display technology in the future, the company's positive layout has great imagination in the future.

Compared with traditional lighting equipment, LED has high brightness, high controllability and low cost, which makes its penetration rate in the field of automotive lighting gradually increase. The wholly-owned subsidiary Ruian Optoelectronics Co., Ltd. and several major auto brands have cooperated (this year has passed The certification of several major car companies), the revenue increased from 260 million in 2015 to 510 million in 2016, the rapid growth, the future of automotive front-mounted lighting market has great potential.

Compound semiconductor production line landing, fully benefiting 5G RF chip

The compound semiconductor chips produced by the company have already sent samples to some domestic customers for certification, and some products have passed the certification. As the main manufacturing material of RF PA in 5G era, GaAs power amplifier accounts for about 85% of the high-end market. As the penetration rate of 4G high-end models increases and 5G falls, the company will be the pioneer of domestic compound semiconductors. Fill the gap of domestic RF chips, give priority to the domestic PA market and fully benefit 5G.

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