Sunlight Lighting LED Packaging Factory to Commence Production in June

Guan Yong, General Manager of Sunlight Lighting (600261.SH), a leading domestic energy-saving lamp manufacturer, revealed to First Financial Daily on April 24 that the company's LED packaging factory will commence production in June, with monthly LED device production capacity reaching approximately 1 million units by year-end. LED lighting revenue as a share of total revenue is expected to rise to 8% in 2011.

In 2010, Sunlight Lighting's revenue was 2.17 billion yuan, a year-on-year increase of 24.52%, with net profit of 182 million yuan, a year-on-year increase of 50.77%. LED lighting revenue accounted for only about 2% of total revenue.

The company's Q1 report showed that during the period, Sunlight Lighting's revenue was 484 million yuan, with net profit of 46.92 million yuan, a year-on-year increase of only 1.58%.

　　"The cost of raw materials, mainly phosphor powder, has risen by more than 100% since the beginning of this year, squeezing product gross margins and resulting in only a slight year-on-year increase in Q1 net profit," said Guan Yong. The cost of phosphor powder for energy-saving lamps accounts for approximately 10% of the total product cost.

　　Guan Yong stated that the biggest challenge for traditional lighting manufacturers in transitioning to LED lighting lies in the vertical integration of the industry chain. In the past, traditional lighting manufacturers had already vertically integrated the industry chain to gain cost advantages and enter international markets, but now vertically integrating the entire LED lighting industry chain in the short term is not possible.

　　"In the long term, domestic LED lighting manufacturers must vertically integrate the industry chain in order to gain a competitive advantage in the market," said Guan Yong.