LED market is in good shape

The LED chip and package index outperformed the broader market: Taiwan's LED chip index rose by 11.27% in September. The LED packaging index rose by 5.98% in September; the Taiwan Electronics Components Index rose by 2.37% over the same period, and the Taiwanese Weighted Index rose by 1.89%.

In September, Taiwan’s industrial chain posted poor sales: 9 LED chip companies in Taiwan tracked a total revenue of NT$3.803 billion in September, a decrease of 0.55% from the previous month. 9 LED packaging companies in Taiwan totaled NT$5,752 million in revenue in August, a decrease of 2.93% from the previous quarter. The demand for LEDTV backlighting weakened from June, continuing to affect performance in September, and the lack of demand for LED lighting has driven most of the packaging plants, and September revenues have declined from August.

Industry trends and comments: LED lighting industry will accelerate the reshuffle of two-tenths of companies will be closed; September global retail prices of LED bulbs showed a trend of fluctuations; energy-saving environmental protection policy intensive introduction of good LED industry.

Industry investment strategy: The withdrawal of energy-saving subsidies in mainland China in May will have a greater impact on Taiwan-based LED manufacturers, but according to our observations, this effect will gradually be eliminated by September.

The start of LED lighting is obvious, as the terminal prices continue to fall, the average consumer's acceptance of LED products continues to increase, LED lighting will gradually extend from commercial and industrial applications to home. Looking ahead to November, we continue to recommend the LED lighting industry chain. With the continuous price cuts driven by downstream brand manufacturers, LED lighting products have gradually entered the home market. Orders have started to increase sequentially since September. We maintain the "recommended" investment rating of the LED industry, recommend Sanan Optoelectronics, Sunshine Lighting, and BDO Runda. Sanan Optoelectronics has gradually established its position as the leading chip maker in China, and will benefit from the competitive landscape of Evergrande; Sunlight Lighting directly benefits from the growth of orders from Philips and other lighting leaders; BDO ​​Runda benefits from the integration effect with NVC.

Industry risk: The LED industry is imbalanced or lasting for a long time; LED lighting applications start at or below expectations; domestic companies' breakthroughs in core technologies and core technologies may lag behind expectations.