15 LED companies release H1 performance forecasts; upstream and midstream sectors underperform

Recently, several listed LED companies disclosed their 2019 H1 performance forecasts. Among them, HC SemiTek, Hongli Zhihui, Elec-Tech International and others are expected to report losses; Qianhe Photoelectric, Aucksun Optoelectronics and others are expected to see declines, with the chip packaging sector generally underperforming. Among companies forecasting growth, Moso Power performed best, with a substantial year-on-year increase of 537.10%-749.47%.

HC SemiTek forecasts H1 net loss of approximately RMB 530 million–RMB 535 million

HC SemiTek's performance forecast disclosure shows that the net loss attributable to shareholders from January to June 2019 was between RMB 534.70 million and RMB 529.70 million.

HC SemiTek stated that the main reasons for the decline in the company's performance during this reporting period are as follows:

During the reporting period, as the LED chip industry remained in the midst of industry reshuffling in the second quarter, competition in the mid- and low-end markets was intense, and overall chip prices continued to decline. The average unit price dropped significantly compared with the same period last year, and revenue from mid- and low-end chips accounted for a significant proportion of the company's revenue, resulting in a substantial decline in total LED chip revenue. Accordingly, the company adjusted its competitive strategy and production strategy, proactively reducing the production volume of mid- and low-end products, which led to a decline in overall capacity utilization, significantly affecting the gross profit margin and net profit during the reporting period.

In accordance with the Accounting Standards for Business Enterprises and the company's accounting policies, due to the decline in LED chip prices, the company conducted a thorough review of its inventory and made significant inventory impairment provisions based on recent market prices, future sales volumes, and expected future prices.

Qianzhao Optoelectronics' net profit expected to decline by 75.94%-95.99% in the first half of the year

Qianzhao Optoelectronics expects the net profit attributable to shareholders of the listed company for the first half of 2019 to be 5 million yuan – 30 million yuan, a decrease of 75.94%–95.99% compared with 124.697 million yuan in the same period last year.

Zhanrui Optoelectronics stated that the main reasons for the performance changes during the reporting period were: a decline in chip market prices, leading to a year-on-year decrease in gross margin. Meanwhile, affected by the construction of the Nanchang blue-green chip project, administrative expenses and financial expenses increased year-on-year; the Nanchang project had higher costs and lower gross profit in the initial period of production in the second quarter. In addition, the year-on-year decline in the company's non-recurring gains and losses had a certain impact on net profit.

Aoyang Shunchang's H1 net profit expected to drop 81.66%-87.77%

Aoyang Shunchang's earnings in the first half of the year were 20 million yuan to 30 million yuan, a decrease of 81.66%-87.77% from 163.5953 million yuan in the same period last year.

The report shows that the company's performance in the first half of 2019 declined year-on-year, mainly affected by the loss of its LED business. In the same period last year, the LED business contributed a net profit of approximately 87 million yuan attributable to shareholders of the listed company, but LED chip prices have continued to decline since 2018. Since 2019, market prices have remained at a low, and the company's LED business is in a loss state, with significant losses, dragging down the company's overall performance.

Dehao Runda's H1 expected loss of 300 million yuan to 400 million yuan

Dehao Runda posted a loss of 300 million to 400 million yuan in the first half of the year, compared with a profit of 20.1063 million yuan in the same period last year.

Dehao stated that the main reasons for the company's loss in the first half of 2019 are as follows:

1. Affected by the ongoing China-US trade dispute, overseas customers have shifted the operational pressure arising from tariff and exchange rate changes to overseas manufacturers, including those in China. As a result, the company's overall small home appliance export business came under pressure during the reporting period. Combined with factors such as intense industry competition, the operating revenue of the small home appliance business decreased by approximately 10% year-on-year, and the gross profit also declined;

In the first half of 2019, the LED chip market environment remained sluggish, and the overcapacity caused by industry capacity expansion has not been effectively alleviated. Combined with industry inventory backlogs, LED chip prices continued to decline, resulting in negative gross profit for the company's LED chip business. To reduce losses in the chip business, the company proactively reduced LED chip production volumes. At the same time, in order to accelerate cash recovery, the company cleared inventory through price reductions. The combination of these factors resulted in year-on-year declines in both LED business sales scale and gross profit margin.

The adverse conditions in the above businesses collectively resulted in a year-on-year decrease of approximately 21.92% in the company's operating revenue, with the overall gross profit margin declining to approximately 2.32%.

2. During the reporting period, the company's management continued the operating direction of reducing LED chip production capacity from the fourth quarter of 2018, and planned to advance the closure of the LED chip factory in July 2019. Therefore, part of the company's R&D investment no longer met the capitalization conditions, and the amount expensed in accordance with the accounting standards increased significantly year-on-year.

3. During the reporting period, the collection of some receivables fell short of expectations. In accordance with the accounting policies, the company accrued bad debt provisions of approximately RMB 36 million based on aging and individual assessment.

4. Due to the continuous decline in LED chip product prices, an inventory write-down provision of approximately RMB 23 million was accrued for some LED chip inventories at the end of the reporting period.

Hongli Zhihui expects H1 net profit to be a loss of 766 million to 761 million yuan

Hongli Zhihui expects the net profit attributable to shareholders of the listed company for January-June 2019 to be a loss of RMB 765.50 million to RMB 760.50 million.

Hongli Zhihui stated that the main reasons for the decrease in net profit attributable to shareholders of the listed company compared with the same period last year:

(I) The company's main business was affected by market conditions, slightly declining compared with the same period last year; government subsidies decreased by approximately RMB 40 million compared with the same period last year.

(II) A subsidiary under the affiliated company Cayman Wangli Co., Ltd. controlled Beijing Wangli Technology Co., Ltd. by agreement. Wanglibao is an online loan matching (P2P) platform operated by Wangli Technology. The office premises of Beijing Wangli Technology Co., Ltd. have now been closed, and the actual controller Zhao Runlong has lost contact. The company estimates that the probability of recovering this investment is very low and has confirmed a loss of RMB 69 million.

(III) Goodwill impairment

1. Danyang Yishan Auto Lamp Equipment Manufacturing Co., Ltd., a subsidiary, was affected by the contraction of the automotive industry market and the decline in the company's business, incurring continuous losses in the first half of 2019. The company expects to make a provision for goodwill impairment of approximately RMB 25 million.

2. The subsidiary Dongguan Jincai Hardware Co., Ltd. was affected by fluctuations in the consumer electronics industry and product transformation. In the first half of 2019, the gross profit margin declined and profits dropped. The company expects to provision for goodwill impairment of approximately 104 million yuan.

Optoelectronics Stock H1 Net Profit Expected to Increase 100% -130%

Optoelectronics Stock expects H1 profit of 68.2804 million yuan to 78.5225 million yuan, an increase of 100% -130% from 34.1402 million yuan in the same period last year.

Optoelectronics Stock stated that during the reporting period, the company's strategic layout continued to be implemented, the annual operating plan was advanced in an orderly manner, and the business scale continued to expand. The main reasons for the increase in H1 performance are: the company's LED lighting business received more orders from new customers, new products continued to be launched, the production and sales scale of the LED lighting business further expanded, and operating revenue and profits both increased significantly compared with the same period last year. In addition, during the reporting period, the impact of non-recurring gains and losses on the company's net profit is expected to be 8 million to 9 million yuan.

Qinshang Stock H1 Net Profit Expected to Decline 69.87%-100.00%

KINGSUN forecasts a net profit of CNY 0 – CNY 25 million for the first half, representing a decrease of 69.87% – 100.00% compared with CNY 82.9632 million in the same period last year.

KINGSUN stated that during this period, affected by Guangzhou Longwen's rectification or closure of non-compliant teaching locations and other factors, Guangzhou Longwen's operating revenue declined while related operating costs rose, leading to a significant drop in gross profit. In addition, affected by the external macroeconomic environment, overall market demand decreased, and the LED industry is highly competitive, resulting in reduced orders for the company's related LED business, which led to a decline in operating revenue, gross margin and net profit. Furthermore, in the first quarter of 2018, the company changed the accounting method for Beijing Caiyida from the cost method to the equity method, generating investment income of approximately CNY 26.1375 million, which accounted for 31.50% of the net profit for the first half of 2018 and had a significant impact on net profit. However, the impact of the investment income from Beijing Caiyida under the equity method in this period on net profit is relatively small.

Changfang Group forecasts a profit of CNY 36.5 million – CNY 41.5 million for the first half

Changfang Group forecasts a profit of CNY 36.5 million – CNY 41.5 million for the first half, compared with a loss of CNY 1.1285 million last year.

The turnaround from loss to profit in the first half is mainly due to the following: with the adjustment of the parent company's operating strategy and the integration of the new management team over nearly one year, the parent company's profitability has improved. During the reporting period, the company's equity holdings in its controlling subsidiary Changfang Group Kangmingsheng (Shenzhen) Technology Co., Ltd. increased by 44.08% compared to the same period last year, and 99.96% of Changfang Group Kangmingsheng (Shenzhen) Technology Co., Ltd.'s performance was consolidated into the company, enhancing the company's overall performance. Under the leadership of the newly formed management team with rich industry experience, orders gradually increased, and the parent company's production capacity was fully released. In addition, asset disposal losses decreased by 102.45% compared to the same period last year. Among these: the expected impact of non-recurring gains and losses on net profit for the first half of 2019 is approximately CNY 11.6 million.

Snowlight expects H1 loss of 130 million to 195 million yuan

Snowlight expects a loss of 130.00 million to 195.00 million yuan in the first half, compared to a loss of 16.1933 million yuan in the same period last year.

The report shows that due to tight working capital, the company's main business has been significantly affected, with a notable decline in operating revenue; the company has a relatively large loan scale and high financial expenses, resulting in operating profit losses. Additionally, as the main business of its subsidiary Fushun Optoelectronics Technology Co., Ltd. has stalled, combined with the progress of the company's litigation, based on the principle of prudence, the company intends to make impairment provisions for some assets.

Mingjiahui expects H1 net profit to increase by 5.00% to 30.00%

Mingjiahui expects a profit of 187.0863 million to 231.6306 million yuan in the first half, an increase of 5.00% to 30.00% from 178.1774 million yuan in the same period last year.

Mingjiahui stated that the main reasons for the steady improvement in the company's performance during the reporting period are: the industry in which the company operates maintained a favorable development momentum; at the same time, the revenue scale in the same period last year was relatively large, and during the reporting period the company adjusted its regional business focus, strictly screening high-quality projects, mainly undertaking premium engineering projects in first-tier and second-tier cities as well as cities with favorable payment terms or sound fiscal conditions. As a result, the growth rate of the revenue scale has slowed compared with previous years; secondly, the performance growth brought about by the acquisition of a 55% equity stake in a subsidiary in 2018. In addition, from January to June 2019, the company estimates that the impact of non-recurring gains and losses on the net profit attributable to shareholders of the listed company will be approximately RMB 394,800.

Unilumin Technology expects net profit to increase by 25%–37% in the first half

Unilumin Technology announced its earnings forecast, showing that the net profit attributable to the listed company from January to June 2019 ranged from RMB 251.42 million to RMB 275.56 million, representing a year-on-year increase of 25%–37% over the previous year.

Unilumin Technology stated that in the first half of 2019, the company actively responded to changes in the external trade environment, deepened its focus on its core business, continuously strengthened the development of domestic and overseas markets, and created industry-leading comprehensive LED application solutions for customers, achieving steady growth in operating performance. The company estimates that the impact of non-recurring gains and losses on net profit for the first half of 2019 will be approximately RMB 21 million.

Jiawei New Energy expects a loss of RMB 22 million–27 million in the first half

Jiawei New Energy is expected to report a loss of 22 million to 27 million yuan in the first half of the year, compared to a profit of 18.3790 million yuan in the same period last year.

The announcement shows that during the reporting period, the company's EPC business was affected by industry and funding conditions, with a sharp decline in the number of domestic projects under construction. Overseas EPC projects are still in the business negotiation stage and have not yet generated operating revenue, resulting in a significant year-on-year decrease in EPC operating revenue and net profit. Meanwhile, impacted by trade frictions, the company's lighting segment revenue declined compared to the same period last year. In addition, non-recurring gains and losses for the first half of 2019 are expected to be approximately -20 million yuan.

Xiamen Xinda's net profit expected to drop 94.99% in the first half

Xiamen Xinda expects to post a profit of 5 million yuan in the first half of the year, a 94.99% decrease from 99.8365 million yuan in the same period last year.

The report shows that the main reasons for the decline in the company's performance in the first half of the year are as follows: in the same period last year, the company disposed of certain fixed assets and equity in subsidiaries, generating a gain of 110.1826 million yuan, whereas no such gain occurred in the current period; secondly, affected by macroeconomic factors, the domestic auto market declined and the gross profit margin of new car sales decreased, impacting the company's automotive business. The company will continue to improve its operating quality to address the downward pressure in the auto market. In addition, affected by intensified competition in the packaging market and other factors, the profit margin of the company's optoelectronics business declined. The company will continue to coordinate and advance the integrated layout of its production bases, strengthen internal management, accelerate product structure adjustment, and improve profitability.

Maosuo Power H1 Net Profit Expected to Rise 537.10%-749.47%

Maosuo Power expects H1 profit of RMB 15 million — RMB 20 million, a substantial increase of 537.10%-749.47% from RMB 2.3544 million in the same period last year.

Maosuo Power stated that the significant H1 performance increase was mainly due to the company's steady implementation of various cost reduction and efficiency improvement measures, resulting in a higher product gross margin; exchange rate movements in the second quarter of the reporting period exceeded expectations.

DP-Three H1 Net Profit Expected to Change -15% to 15%

DP-Three expects H1 profit of RMB 7.7684 million — RMB 10.5101 million, a change of -15% to 15% from RMB 9.1393 million in the same period last year.

PCCOOLER stated that the company has steadily advanced various tasks in accordance with its annual operating plan. During the reporting period, the company's comprehensive gross profit margin remained stable, and the change in net profit attributable to shareholders of the listed company was mainly due to the impact of the market environment on the performance of its subsidiaries and associate companies. In addition, during the reporting period, the impact of non-recurring gains and losses on net profit is estimated to be approximately RMB 2.5 million to RMB 3.5 million, while the impact of non-recurring gains and losses on net profit for the same period last year was RMB 3,108,700.