Following a 9.02% drop in the previous trading day, Sanan Optoelectronics (600703) closed at 11.31 yuan on December 28, falling 7.30% again. In terms of volume, the two-day turnover was 853 million yuan and 1.028 billion yuan respectively, which could be doubled compared with the previous average volume. It is not excluded that there was an institutional escape.——LED Bulb Light
At the close of December 26, Sanan Optoelectronics still had a market value of 54.686 billion yuan. After two trading days'sharp decline, as of December 28, the market value of Sanan Optoelectronics was only 46.127 billion yuan, and evaporated 8.559 billion yuan in two trading days.——LED Bulb Light
The chairman of Sanan Optoelectronics is Lin Zhiqiang, whose father, Lin Xiucheng, is the real controller of Sanan Optoelectronics and the richest man in Xiamen. Therefore, Lin Zhiqiang is also known to the outside world by virtue of "the richest second generation in Xiamen". In July 2017, Lin Zhiqiang's stepfather succeeded Lin Xiucheng as chairman of Sanan Optoelectronic Company. Since it took over Sanan Optoelectronics, the stock price of listed companies has fallen by nearly 40%. Faced with the sharp fall of listed companies, how to restructure the flag has become a difficult problem for the second generation of rich Lin Zhiqiang.——LED Bulb Light
Looking back on 2018, as the leading enterprise in the LED industry, the white horse stocks recognized by the market, the trend of Sanan Optoelectronics this year is quite different from its traditional image, with a cumulative decline of 55% throughout the year.——LED Bulb Light
From the performance point of view, in the third quarter of this year, the company realized 6.393 billion yuan in total operating income, an increase of 1.76% over the previous year, and a net profit of 2.594 billion yuan, an increase of 9.09% over the previous year. Although the overall impact of the industry, the growth rate slowed down, but its revenue and net profit in the industry is still far ahead, the leading position is difficult to shake. What caused the crash?——LED Bulb Light
Repurchase is hard to stop the stock price from slashing
In fact, if we look at the third quarter's performance separately, its downward trend has begun to highlight. In the third quarter of the year, the company realized income of 2.22 billion yuan, an increase of 0.19%, a decrease of 0.37% annually, a net return of 741 million yuan, a decrease of 14.14% and a decrease of 16.27% annually.——LED Bulb Light
Strangely, just one week before the announcement of the three-quarter report, there were three major transactions in Sanan Optoelectronics. The total turnover was close to 150 million yuan, and the discount rate ranged from 3.03% to 8.61%.——LED Bulb Light
Among them, in two large transactions totaling more than 140 million on October 23 and 26, the sales department is the same, both of which are the Lianyue Road Securities Business Department of China International Finance Co., Ltd. Xiamen, and the location of Sanan Optoelectronics is Xiamen.——LED Bulb Light
With the stock price falling all the way, Sanan Optoelectronics is not alone. In December, the media questioned the company's far higher net sales profit than its peers, and cited a large number of evidence suggesting that there might be a hidden relationship between Sanan Optoelectronics and its big customers, and found that the company had a purchase gap of more than 3.1 billion yuan. In this regard, Sanan Optoelectronics only said that the difference was "due to the disclosures of different calibres".——LED Bulb Light
After that, the company's share price started a new round of decline, falling more than 20% in December, which is the biggest monthly decline in the whole year.
The continued depressed stock price also makes the repurchase of Sanan Optoelectronics look pale and powerless. On October 12, the Company repurchased its shares for the first time through centralized bidding. As of December 7, the company had repurchased 24,494,328 shares through centralized bidding. The highest transaction price was 1481 yuan/share, the lowest transaction price was 1345 yuan/share, and the total payment amount was 350 million yuan.——LED Bulb Light
It is reported that the share repurchase plan is used in the company's employee stock ownership plan or equity incentive plan. If the company fails to implement the employee stock ownership plan or equity incentive plan, the company will cancel the repurchased shares according to law.——LED Bulb Light
Inventory impairment risk overhanging?
Over the past decade, the inventory of Sanan Optoelectronic has been increasing year by year. Compared with the stable performance in 2011 and 2016, the inventory in the first three quarters of 2017 and 2018 has increased sharply.——LED Bulb Light
In terms of inventory turnover, the turnover rate in 2018 is lower than that in 2017.
Influenced by macro-economy, LED chips are in a situation of oversupply this year. With the intensification of price competition, product prices have been falling all the way, resulting in high inventory and facing the pressure of de-inventory.——LED Bulb Light
Recently, CICC downgraded Sanan Optoelectronics to neutral, lowering its target price by 40% to 12.00 yuan (the current stock price is 11.31 yuan), and lowering its annual net profit to 3.4 billion yuan. The analysis shows that due to the slowdown of downstream demand for real estate, automobiles, consumer electronics and the reduction of local government subsidies, the demand for LED-related terminals will continue to deteriorate next year, and the pressure on upstream LED chip manufacturers to make profits will increase.——LED Bulb Light
According to the third quarter results, the stock and turnover days of Sanan Optoelectronics reached 2.6 billion yuan and 189 days respectively. In the future, if demand does not rebound substantially, the company may face problems such as inventory impairment leading to a decline in profits.——LED Bulb Light
However, on the issue of impairment of inventory mentioned in the Research Report of CICC, Sanan Photoelectric said that the company's products from raw materials to finished products have a longer production cycle. With the expansion of production capacity, raw materials, semi-finished products and products will increase correspondingly. It is normal to have reasonable inventory. The accounting treatment of the company shall be strictly carried out in accordance with the accounting standards and relevant laws and regulations.——LED Bulb Light
How to deal with the richest "rich second generation" in Xiamen?
In fact, the so-called "inventory crisis" is not a new thing for Sanan Optoelectronics. In the third quarter of 2011, Sanan Optoelectronics realized a double increase in revenue and net profit, but inventories also soared, from 310 million in the fourth quarter of 2010 to 933 million in the third quarter of 2011.——LED Bulb Light
In November of the same year, Sanan Optoelectronics announced that for personal reasons, Lin Kechuang applied to resign from the company's directors, general managers and the related positions of the board of directors'committees. Lin Zhiqiang was also the general manager, and replaced Lin Kechuang as the relevant positions of the board of directors' committees.——LED Bulb Light
According to the public information, the real-time controller of Sanan Optoelectronic Company is Lin Xiucheng and the founder of the company. He has two sons, brother Lin Zhiqiang and brother Lin Zhidong. Lin Kechuang is Lin Xiucheng's son-in-law and brother-in-law of Lin Zhiqiang. Since the backdoor listing in November 2007, Lin Kechuang has been the director and general manager of the company. He is young and promising, has obtained MBA and is an important member of Lin Xiucheng's family.——LED Bulb Light
The eldest son, Lin Zhiqiang, has held an important position in Sanan since 1996. Before that, he also held a certain share in Sanan Group. Later, he became the general manager of Sanan Group. It is generally believed that Lin Zhiqiang's succession is Lin Xiucheng's intention. From the stock ownership situation of Sanan Group, Lin Xiucheng's 76.79% and Lin Zhiqiang's 15.64%, there are no other individual shareholders, which shows that Lin Xiucheng attaches importance to it.——LED Bulb Light
But Sanan Optoelectronics is facing not only high inventory, but also sales difficulties. However, Lin Zhiqiang did well. In 2012, the company's net profit declined, and then returned to the upward track.——LED Bulb Light
In July 2017, Lin Zhiqiang assumed the position of chairman of the ninth board of directors of the company, which means that former chairman Lin Xiucheng will no longer assume the position of chairman of Sanan Optoelectronic Company.——LED Bulb Light
According to public data, Lin Zhiqiang ranked 23rd on the "2012 Young Rich List" with a wealth of 2.1 billion yuan, becoming the richest "second generation" in Xiamen. In 2016, Lin Xiucheng and Lin Zhiqiang ranked 77th with 24 billion yuan in wealth. In October 2018, Lin Xiucheng and Lin Zhiqiang's father and son ranked 79th on Hurun's list of 100 richest people in 2018 with a wealth of 33 billion yuan.——LED Bulb Light
Facing the increasingly cruel competitive environment of LED, Sanan Optoelectronics is beginning to move towards compound semiconductor. In May 2014, Sanan optoelectronic invested 3 billion yuan to set up Sanan Integration, mainly engaged in compound semiconductor integrated circuit business. It has completed 6-inch GaAs and GaN production lines. Now it has become the leader of compound semiconductor.——LED Bulb Light
However, for the development of new modules based on compound semiconductors, Linke said: in the future, the scale of these three modules can be doubled casually, but the development of compound semiconductors is still in its infancy, and the revenue share is very small.——LED Bulb Light
Data show that in the first half of 2018, Sanan Optoelectronic Compound Semiconductor Integrated Circuit Company realized a revenue scale of only 0.67 billion yuan.——LED Bulb Light
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