Lianchuang Optoelectronics: The main business pushes the LED industry to seize the market segment

Lianchuang Optoelectronics (600363) has been in the optoelectronic industry chain for 12 years and has achieved certain results. However, in recent years, the listed companies in the LED sector have risen rapidly and their performance has surpassed Lianchuang Optoelectronics. Jiang Guozhong, president of the company, accepted an interview with the Securities Times reporter. In the past, the company's business development front was too long. In the future, it will focus more on areas with technological advantages and strive to become the market leader.

Securities Times reporter: As a veteran optoelectronic device listed company, Lianchuang Optoelectronics seems to be weak in recent years, and many up-and-coming talents have exceeded the company's turnover. What is the reason?

Jiang Guozhong: Lianchuang Optoelectronics, as the first listed company named after optoelectronics, has a wide industrial layout at the beginning of the listing, including cable and other businesses. In recent years, it has gradually contracted its main business to the LED industry. In the past few years, because the front line has been pulled too long, it has not done a good job in the middle of the entire industrial chain. Instead, some industry latecomers have surpassed it. We have been reflecting and summing up.

In the past few years, other peers have developed so fast. I believe that under the impetus of government investment and energy conservation and emission reduction policies, they have seized the good opportunity of industry development, seized the opportunity of market segmentation, and took advantage of it. Several LED listed companies in Shenzhen have grown stronger at this stage.

We have been thinking about why we are likely to grow bigger in every aspect of the industry, but we have not done it. I don't think there is any focus on doing one thing. After reflection and repositioning, we are now paying more attention to products that have relative technological advantages, seize market segments, and grasp products with differentiated competitiveness, instead of pursuing full bloom.

Securities Times reporter: At present, the LED industry situation is not optimistic, in what areas will Lianchuang Optoelectronics seek breakthroughs?

Jiang Guozhong: From the perspective of the entire industrial chain, the current industry situation is indeed not optimistic, from upstream epitaxial chip manufacturers to downstream packaging manufacturers, are very painful.

But aside from the visible LED market, I think the invisible market is still a blue ocean. For example, long-wavelength LED products such as infrared monitoring and infrared communication do not have technical advantages at present. High-end products are almost imported from abroad; for example, short-wavelength LED products such as violet and ultraviolet for printing and violet disinfection are also in this way. Therefore, LED products other than visible light are very marketable.

At present, Lianchuang Optoelectronics basically does not make blue-green LED chips. We are now focusing on red light and infrared, and strive for a relatively differentiated market. Even if the technology can not reach the highest level in the world, we must also have certain Market share.

Securities Times reporter: ST Hongfa (600885) listed on the backdoor this year, Lianchuang Optoelectronics in the past to reduce the holding of ST Hongfa for what purpose?

Jiang Guozhong: It is undeniable that for more than a decade since its listing, a large share of Lianchuang’s revenue has come from Hongfa. Hongfa Company made a great contribution to Lianchuang's listing that year, but because we are a state-owned enterprise background, we can't solve some of the personal appeals of Hongfa's management. So in 2004 we made some strategic considerations.

The development of Lianchuang has relied on the investment income of Hongfa for quite some time, but if it does not give Hongfa more free development, the two sides will certainly not last long. We are constantly reducing our shareholding in Hongfa, and then investing the recovered funds in our optimistic investment areas. Now, this thing is also a win-win situation, because our share of equity has decreased, and now Hongfa has been successfully listed.

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