The long-term development prospect of LED industry concentration is promising

From 2013 to 2015, the average price of LED bulbs replacing 60W decreased by 30.74%, 23.36% and 11.59%, respectively. The average price of LED bulbs replacing 40W decreased by 19.25%, 17.88% and 14.52%, respectively. In the future, with the decrease of LED subsidy, continuous contraction of supply side and decline of package size growth, the overall supply and demand relationship of LED industry will gradually improve. In 2015, the global LED lighting penetration rate reached 27% and maintained an upward trend. We believe that the domestic LED lighting penetration rate is slightly higher than the global penetration rate, about 30%, and there is still considerable room for development.

With the bottom of LED price and the improvement of industry concentration, we are optimistic about the long-term development prospect of LED, and the industry logic of "big Evergrande" will benefit relevant enterprises.

Demand recovery, LED penetration rate will gradually increase

In 2015, the global LED lighting penetration rate reached 27% and maintained an upward trend. Ping an securities believes that the domestic LED lighting penetration rate is slightly higher than the global penetration rate, about 30%, there is still considerable room for development. According to the report, the market size of LED packaging in mainland China was 8.8 billion us dollars in 2015, with a year-on-year growth of 2%. In 2016, the demand from lighting manufacturers for replenishing inventory is expected to reach 9.3 billion us dollars in the LED packaging market in mainland China in 2016, with a year-on-year growth of 5%. In terms of LED chips, Chinese manufacturers are expected to increase their market share from 73% to 76% in 2015. As domestic LED manufacturers expand in emerging markets such as southeast Asia and India, they will continue to benefit in the future.

Outdoor screen, car market is expected to form new market opportunities

With the continuous improvement of LED display technology, the display effect has been enhanced. Meanwhile, the progress of LED display technology has greatly reduced the cost of building screens for operators and the cost of post-operation and maintenance. Therefore, LED displays have become a new favorite of outdoor media. From 2008 to 2014, the compound annual growth rate of LED outdoor media screen reached 31.4%. The 13th five-year plan points out that the new energy automobile industry will be vigorously developed, and the market share of domestic automobile manufacturers will also gradually increase. Currently, LED suppliers mainly include OSRAM, Lumileds and honley. The rise of automotive lighting market provides new market opportunities for LED manufacturers.