Sanan Optoelectronics' 2021 revenue first broke through 10 billion! This year's Q1 net profit...

1 Sanan Optoelectronics 2021 Revenue and Net Profit Both Grow

Sanan Optoelectronics released its annual performance report on April 26, stating that revenue in 2021 was approximately 12.572 billion yuan, a year-on-year increase of 48.71%, mainly due to the significant growth in sales volume of LED chips and integrated circuit products during this period; net profit attributable to shareholders of the listed company was approximately 1.313 billion yuan, a year-on-year increase of 29.20%. Sanan Optoelectronics stated that during the reporting period, the company focused on developing its core business around strategic planning, achieving a historic breakthrough in sales revenue and setting a new all-time high.

Sanan Optoelectronics is the leading domestic manufacturer in scale and quality for full-color ultra-high-brightness LED epitaxy and chip industrialization. Building on its traditional strengths, the company actively increases the structural proportion of products in niche segments such as Mini/Micro LED, automotive LED, horticultural lighting LED, and UV/IR LED. Its RF front-end, power electronics, and optoelectronic compound semiconductor IC businesses are growing steadily in revenue as production capacity ramps up.

The company's main products, materials, product series, and related application fields are listed in the table below:

In terms of the LED business, during the reporting period , the overall market demand for the company's LED chips was strong, and production and sales scale increased significantly; revenue from the company's niche segment products grew year-on-year (YoY) by 175.47% compared to last year, among which Mini/Micro LED sales grew year-on-year (YoY) by 246.61%, but the overall revenue scale of this niche segment is not large and accounts for a small proportion of total revenue.

The company has achieved preliminary success in expanding the Mini LED market, having entered into deep cooperation with international key clients such as S004 and A006. Some products have already been launched to the market. The Mini LED backlight solutions for TVs and laptops of domestic clients TCL, H002, CSOT, etc., are all set to enter small-batch production.

The company's wholly-owned subsidiary Quanzhou Sanan mainly produces products with vertical structures and flip-chip technology, while Hubei Sanan is primarily engaged in Mini/Micro LED business. Based on the company's received letters of intent and actual customer demand, the new production capacity of both entities is being gradually released.

In terms of integrated circuit business , during the reporting period, Sanan Integrated achieved a major breakthrough, realizing sales revenue of 2.231 billion yuan , a year-on-year increase of 129.15%, reaching a new milestone in revenue; meanwhile, expansion and capacity-building goals were met across all major business areas. The Hunan Sanan SiC production line and Quanzhou Sanan filter production line have both been commissioned and entered trial mass production. The total number of employees in the integrated circuit business has approached 5,000.

Sanan Optoelectronics also outlined its future plans in the annual report.

Sanan Optoelectronics stated that the next 2-3 years are a critical period for the company's development. The company will focus on the rapid expansion of its integrated circuit business and the continuous increase in the structural proportion of high-end LED products (Mini/Micro LED, automotive products, horticultural lighting, infrared/ultraviolet, etc.). The company has made all necessary preparations for this.

According to the company's project new production capacity plan, the additional production capacity in the LED business sub-sectors is mainly located in Quanzhou Sanan and Hubei Sanan. As production capacity continues to be released, the proportion of high-end product structures in the LED sub-sectors will increase significantly;

The planned production capacity for new integrated circuit projects is mainly located at Sanan Integrated, Quanzhou Sanan, and Hunan Sanan. Gallium arsenide RF capacity will expand to 30,000 wafers/month, filter capacity to 500KK/month, power electronics SiC supporting capacity to 30,000 wafers/month, silicon-based GaN capacity to 4,000 wafers/month, and optical technology capacity to 2,600 wafers/month. With these capacities gradually coming online, revenue growth will be driven significantly.

Sanan Optoelectronics mentioned that due to the addition of significant fixed asset depreciation and amortization expenses from new production line investments, and since it takes time for project capacity to be released and revenue to be realized, a substantial short-term loss occurred. Subsequently, as production capacity continues to be released and sales revenue is continuously realized, operating performance will continue to improve.

2 Sanan Optoelectronics Q1 2022 Net Profit Decline

On the same day, Sanan Optoelectronics also released its Q1 2022 report . In the first quarter, the company achieved revenue of 3.107 billion yuan, a year-on-year increase of 14.35%; net profit attributable to shareholders of the listed company was 429 million yuan, a year-on-year decrease of 22.94%.

Sanan Optoelectronics stated that, affected by pandemic controls, annual maintenance, and adjustments in downstream customers' schedules, its integrated circuit business achieved revenue of 620 million yuan and net profit of 152 million yuan. Among them, the filter business was impacted by the pandemic, causing some customers to be unable to complete factory audits successfully, which affected shipments. Only sales revenue of 16 million yuan was realized. According to preliminary communication with customers, as the impact of the pandemic is eliminated, this will gradually be made up in the future.

In the first quarter, the company's inventory amount increased by 712 million yuan compared to December 31, 2021, of which raw materials increased by 150 million yuan, work-in-progress increased by 139 million yuan, semi-finished goods increased by 65 million yuan, and finished goods increased by 358 million yuan. The increase in finished goods of 358 million yuan includes an increase of 230 million yuan from LED epitaxy chip business, 99 million yuan from integrated circuit business, and 29 million yuan from LED application products business.

The volume from one of Sanan Optoelectronics' Mini LED international clients is continuously ramping up; on March 9, 2022, the company announced 'Notice on Obtaining Customer Orders'. Shipments to another client have been increasing since April.