How do LED companies make money overseas?

At present, although the annual reports of LED companies in the A-share market have not yet been fully released, the market conditions and the survival status of the companies can already be glimpsed.

LED display: Overseas markets have become an important driving force

Most LED display companies have delivered a satisfactory answer in 2023.

Among them, Unilumin Technology is expected to achieve net profit attributable to the parent company of 130.7262 million yuan to 169.9441 million yuan in 2023, a year-on-year increase of 105.46% -167.09%.

Lianjian Optoelectronics is expected to achieve a net profit attributable to the parent company of 7.5 million yuan to 11.25 million yuan in 2023, and a loss of 57.9503 million yuan in 2022, turning a loss into a profit.

Absen said that in 2023, it will achieve total operating income of 4.0447564 million yuan, a year-on-year increase of 44.66%; net profit attributable to the parent company is 322.6424 million yuan, a year-on-year increase of 58.92%.

In addition, it can also be seen from these announcements that overseas markets are becoming an important driving force for the performance growth of LED display companies:

Unilumin Technology bluntly stated that thanks to the company's years of deep cultivation in the international market, advance channel layout and brand advantages, its overseas business contribution continues to grow;

Absen will implement and implement the "domestic and internal dual attack" strategy in 2023, and strengthen market expansion efforts in overseas and Chinese markets through a series of effective methods;

Ledman Optoelectronics' overall performance in 2023 will be under pressure, but it also bluntly stated that the gross profit margin of the international display business will increase slightly in 2023.

Although Leyard has not announced its performance in 2023, when it accepted a survey from a specific target on March 11, it stated that the LED smart display business accounted for 85%, and overseas revenue in this business accounted for about 35%.

Combined with the performance previously released by major screen companies, we can see the importance of overseas markets.

Note: The data in 2023 are semi-annual data, so they are shown with dotted lines.

The export journey of China's LED display industry has been going on for more than ten years. By 2024, after a brief contraction due to special factors in previous years, overseas revenue has once again become an important part of corporate revenue. But the current market demand is different from before.

First, virtual shooting has become a major growth pole for LED displays. Although the terminal market growth will slow down due to the impact of the Hollywood strike in 2023, in the long term, as more and more manufacturers enter the virtual shooting LED display market, the supporting industry chain will mature, and the application scenarios of virtual shooting will extend to movies, TV, drama, music, advertising shooting, etc. The overseas market is relatively mature and has the characteristics of many projects, large demand, and strong customer purchasing power. It is a "strategic highland" that cannot be missed for virtual shooting.

The second is the promotion effect of sports events on LED displays. In fact, LED displays have been used in sports arenas for a long time, and the NBA announced in February that in addition to the All-Star Game, all individual events and Masters Games during the 2024 All-Star Weekend will be played on LED stadiums. This news further proves that LED displays have diversified application characteristics.

It is reported that in recent years, LED screens combined with intelligent AI, AR/VR and other technologies have been used in sports event data presentation, event replays, commercial advertising and other scenarios, continuously improving the viewing and entertainment of sports events. In 2024, the Olympic Games, European Cup, America's Cup, Asian Cup, the four major tennis championships, Thomas Cup and Uber Cup, World Swimming Championships, World Ice Hockey Championships, etc. will be staged in turn, which is a major benefit for sports screens.

Third, rental screens have made a strong recovery. LED rental screens have always been a relatively active area in the LED display industry, and their application areas cover commercial markets such as large-scale theatrical performances, major sports events, and even high-end conferences and large-scale exhibitions. At the same time, as the small-pitch LED display industry chain matures, the entry threshold for this market is gradually lowered. Whether you are a pioneer or a latecomer, this market has a lot of room for cultivation.

Domestic companies are actively deploying overseas rental screen products, including listed companies such as Unilumin Technology, Absen, Alto Electronics, and Lianjian Optoelectronics, as well as unlisted companies such as Shijue Guangxu, Lamp Video, Xinya Sheng, Guangxiang Technology, Xida Electronics, Jirun Optoelectronics, and Altai.

LED lighting: segmented fields + overseas markets become hot spots

Compared with the LED display industry, the performance of the LED lighting industry is somewhat unsatisfactory.

On the one hand, this is due to the high penetration rate of LED lighting, which has bottlenecked the future growth space, and the industry growth rate has slowed down year by year. On the other hand, due to the impact of the global economic downturn, the lighting market has entered the stage of corporate consolidation, and the overall lighting demand has been flat.

For example, Hengtai Lighting's profits have both dropped, Ocean King's net profit attributable to its parent company is expected to fall by 69.80%-77.71%, and Starlight, Qinshang, and Spacetime Technology are all expected to lose money. Although Jiuliang Shares estimates its net profit attributable to the parent company to be RMB 38 million to RMB 46 million, it also points out that the main reason for the change in performance is the company's sale of real estate in the current period, which affects the net profit amount to RMB 45 million to RMB 50 million.

In addition, LED driver chips are an important component of lighting fixtures, and the performance of related companies has also been affected. Among them, Jingfeng Mingyuan and Mingwei Electronics have released results and announced losses in 2023; in terms of driving power supplies, Inventronics has pre-empted losses, and although Songsheng Co., Ltd. is still profitable, its net profit attributable to the parent company is expected to drop by 65.36%-73.06%.

On the other hand, the layout of enterprises in subdivided areas drives the revenue of relevant operators.

Debon Lighting will achieve operating income of 4.697 billion yuan in 2023, a year-on-year increase of 0.86%. Among them, the vehicle business achieved revenue of 624 million yuan, a year-on-year increase of 43.74%.

Sanxiong Aurora will achieve operating income of 2.353 billion yuan in 2023, a year-on-year increase of 3.95%. It has not yet announced the revenue of each business segment, but in the first half of 2023, Sanxiong Jiguang pointed out that in the commercial lighting segment, project departments such as municipal transportation, hotel lighting, and intelligent lighting grew rapidly year-on-year. At the same time, Sanxiong Aurora is increasing its investment in research and development of intelligent technologies and products to further enhance the intelligence level and competitiveness of the company's products.

Overseas markets are also an important driving force for corporate performance.

For example, Mulinsen expects to achieve a net profit attributable to its parent company of 427-506 million yuan in 2023, a year-on-year increase of approximately 120.20%-160.94%. The reason is that in addition to the rapid growth of the Mini LED packaging business, it is also inseparable from the help of LEDVANCE.

It is reported that "LEDVANCE" has been deeply involved in the European and American lighting markets for many years, and its products cover four major sectors: home and office lighting, industrial lighting and industrial lighting systems, smart home business and health lighting. In the first half of 2023, LEDVANCE achieved revenue of 5.283 billion, with its revenue proportion increasing from 58.94% in the first half of 2022 to 63.54%. The current business situation of LEDVANCE remains stable.

In fact, more and more Chinese LED lighting companies have begun to set their sights on vast overseas markets and tap overseas market demand. According to statistics from the General Administration of Customs, China's lighting product exports totaled US$58.2 billion in 2023. Among them, the export value of LED lighting products was US$43.3 billion, accounting for 74% of the overall export value.

The problems of LED companies going overseas need to be solved

It can be seen that whether the display industry is developing more market space due to the blooming of multiple subdivisions, or the lighting industry is looking for another way out due to performance pressure in the market downturn, "going overseas" has become the consensus of the industry.

However, from a macro perspective, the recovery of the global economy still faces continued challenges, and the prevalence of trade protectionism and intensified geopolitical conflicts will continue to restrict the development of Chinese enterprises for a long time to come. From a micro perspective, each market has its own unique consumer culture, different products have different survival soils, and different markets have different marketing models. These are all problems that companies must face when "going overseas".

LEDinside takes the pulse of the international market and makes the following judgment on the current market:

In terms of display, the North American market continues to maintain a growth trend, and outdoor display, retail and exhibition, and virtual shooting are the main driving forces for market demand growth; in Europe, affected by factors such as geopolitical conflicts and inflation, market demand growth has slowed down; after emerging markets such as Asia, Africa, and Latin America experience rapid growth in 2022, their demand will continue.

In terms of lighting, in 2024, 5.788 billion LED light sources and lamps will gradually reach the limit of their service life and be retired, which will bring considerable demand for secondary replacement, making the LED lighting market expected to reverse its decline; at the same time, the effective demand for high-quality lighting, human-centered lighting and smart lighting will also enter a stage of rapid development; in addition, the LED agricultural lighting market will continue to penetrate, and future growth is expected.

Crisis and opportunity coexist in overseas markets. For enterprises, a professional promotion platform that is deeply involved in the local market and has high recognition and acceptance in the local market will provide great convenience for enterprises to "go overseas".

LEDinside’s marketing and promotion network spans the world, with the professional website LEDinside English website, as well as social media platforms such as Facebook, LinkedIn and X, which can comprehensively help Chinese companies expand overseas business in the international market.

Among them, the LEDinside English website focuses on the international market trends of the LED industry and at the same time pushes the dynamics of domestic LED companies to all parts of the world. According to statistics in the fourth quarter of 2023, LEDinside's English-language website has a total average monthly visitor count of 540,000, with more than 3 million pageviews accumulated, with its main audiences located in the Americas, Europe, Asia-Pacific and other regions.

Specifically, LEDinside can provide professional one-stop services, from providing localized professional market analysis, to assisting in establishing localized service systems, channels and brand influence, to formulating differentiated marketing strategies based on different markets and cultures.

In the current context of global economic integration, the globalization strategy of Chinese enterprises has become an important path for enterprise development. Adhering to a global mindset, LEDinside will continue to focus on the LED industry, continue to optimize and innovate, and empower Chinese LED companies to go overseas and make money.