On September 26, Huacan Optoelectronics (300323) released a record of its recent investor relations activities. Mr. Han Jidong, the company’s director, presented an overview of the company's development history, product lines, and production status to visiting investors through promotional videos and PPT presentations. This session aimed to provide a transparent view of the company’s operations and future direction.
Following this, President Liu Wei shared more details about the company's background. He explained that Huacan was founded by a team focused on LED chip development and production. In late 2007, the company received support from IDG Wind Investment, allowing it to scale up its operations. Over the past 12 years, as the global LED industry shifted toward mainland China, Huacan has evolved significantly. Initially, its products were lagging behind international competitors, but with continuous investment in advanced equipment and technology accumulation, the company has now reached global standards in both production scale and product performance.
Despite these achievements, Huacan still faces new challenges. Rapid growth has put pressure on internal management, and in the next two to three years, the company will need more skilled management and technical talents to ensure the success of ongoing investments.
The global LED industry transfer is now reaching its final stage, with developed markets increasingly accepting Chinese LED chip products. China is no longer limited to low-end products, and its offerings are now internationally recognized. Leading domestic companies like Huacan are expected to make significant strides in production scale and performance, aiming to secure a top-five position in the global LED industry.
This strategic positioning is driven not only by external factors but also by the company’s strong internal foundation. As a privately-owned venture capital enterprise led by a technology-driven team, Huacan is known for its aggressive and professional approach. This entrepreneurial spirit has allowed the company to overcome challenges and seize opportunities. For example, during the 2012 decision to invest in the Zhangjiagang plant, when the industry was at a low point, the company expanded its production and retained talent. When the market rebounded in 2016, the scale effect paid off, with sales rising from 900 million to nearly 1.6 billion yuan. The company further accelerated its expansion in 2016 with a 6 billion yuan investment in Yiwu, doubling the scale of Zhangjiagang and completing the project ahead of schedule.
Huacan’s dynamic leadership and innovative culture have enabled rapid growth. Looking ahead, the company aims to solidify its global position, targeting around 20% of the global market share by 2020.
During the Q&A session, investors asked about the gap between Huacan and Sanan in terms of management and technology. Liu Wei emphasized that while Sanan has a longer history and more R&D resources, Huacan’s self-driven R&D system is strong, and the performance of some of its products has already reached international standards. The company expects most of its products to be at the leading level next year.
Another question focused on whether Huacan would follow the trend of moving upstream into packaging, like some Taiwanese manufacturers. Liu Wei clarified that while the company has considered such strategies, its core strength lies in LED chips. It prefers to collaborate with specialized packaging factories rather than entering the downstream sector itself.
Regarding concerns about overcapacity due to expansion, Liu Wei acknowledged the risk but stressed that Huacan’s strong market position and cost-effectiveness give it an edge over smaller competitors. The company is confident in maintaining stable gross margins through technological innovation and strategic market positioning.
In response to questions about state subsidies, Liu Wei noted that the government now focuses on supporting competitive companies, making it harder for less efficient players to survive. Additionally, he mentioned that the company plans to refinance in the capital market next year, leveraging its good valuation.
Finally, Liu Wei discussed the progress of the Meixin Semiconductor acquisition, noting that CFIUS approval was obtained in May, and the CSRC has accepted the application, though updated materials are being prepared. The process is expected to continue, with a new submission likely soon.
Overall, Huacan Optoelectronics continues to demonstrate strong growth potential, driven by its innovative culture, strategic investments, and ability to adapt to market changes.
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