Hongli Zhihui Focuses on Main Business, Integrates to Improve Efficiency LED Automotive Lighting Business Revenue Increases Against the Trend

On the evening of 25 April, Hongli Zhihui (300219.SZ) released its 2022 annual report. The report shows that in 2022, the company achieved operating income of 3.636 billion yuan, and net profit attributable to owners of the parent company of 179 million yuan.
In 2022, affected by multiple internal and external factors, the semiconductor lighting industry demand is sluggish, costs are rising, the overall scale of the industry is on a downward trend, the market overall cold to the industry chain enterprises also caused an impact. Hongli Zhihui overcame the poor market situation, continued to deepen cooperation with large customers, and made efforts in high value-added market segments such as health lighting, automotive LED, UV LED, and intelligent home appliances, etc. During the reporting period, MiniLED, automotive LED, LED display, and other emerging market segments achieved a certain degree of growth.

Taking advantage of industry chain integration, LED automotive lighting business revenue grew 13.97% against the trend
Sub-business, LED encapsulation, 2022, the company camp business revenue of 2.805 billion yuan, accounting for 77.14% of total operating income, gross profit margin of 19.95%, product comprehensive yield rate of 98.59%; LED automotive lighting business, to achieve the main business income of 679 million yuan, accounting for the proportion of total operating income of 18.69%, an increase of 13.97%. Gross profit rate of 21.83%, product yield of 99.31%, with strong product quality control capabilities.
In recent years, Hongli Zhihui has been sticking to the strategic foundation of LED encapsulation business, seeking breakthroughs through Mini LED, and continuing to develop the LED lighting business, the company has realised the industrial chain layout from automotive LED encapsulation-module-lamps, and has established a good relationship with well-known automotive lighting equipment manufacturers such as HELLA, Linde, as well as a number of automotive enterprises such as Geely, Hedgel, BAIC, Great Wall, etc. As a leader in white light LED devices in China, Hongli is the leading manufacturer of white light LED devices in China, which is the largest in the world.
As a leading white light LED device company in China, Hongli Zhihui is committed to providing customers with the best quality and most competitive LED products in the market. The company always adheres to innovation-driven development, and has six provincial engineering technology research centres, covering semiconductor packaging, automotive lighting, general lighting, precision bracket and other research areas. During the reporting period, the company won the Guangzhou enterprise innovation TOP50, China LED industry intellectual property rights of the top 50 enterprises and other awards, participated in the drafting of the "GB/T41423-2022 LED packaging long-term luminous flux and radiant flux to maintain the rate of the derivation", "SJ/T11817-2022 Semiconductor Light SJ/T11817-2022 Semiconductor Light Emitting Diode Blank Specification for Filament Lamps" and other 7 national and industry standards were released successfully, and Liangyou Technology, a subsidiary of the company, was awarded the title of national speciality, speciality, speciality and new "Little Giant", which has further enhanced the status of the industry.

It is worth mentioning that, in terms of capacity building, Jiangxi Hongli Phase II project has been successfully put into production, the main production content for high luminous efficiency white light, high colour rendering/high colour gamut backlighting, flip-flop products, UV LED encapsulation, and intelligent modules. The project has introduced industry-leading full-chain automation and intelligent production lines, further consolidating the company's intelligent manufacturing development foundation and enhancing the scale advantage. In the future, as the company's production scale continues to increase, profitability is expected to improve.

Committed to product technology innovation Mini LED field has achieved large-scale mass production sales
The 2022 annual report shows that Hongli Zhihui has become one of the few enterprises that have really realised large-scale mass production and sales of Mini LED products worldwide, and the company has made obvious technological and production capacity breakthroughs in the fields of display, vehicle display, and meta-universe VR equipment.
Among them, in the field of direct display, the company has achieved full coverage of P0.7-P1.5 Mini LED direct display product specifications, which can fully match the indoor small-pitch scenario applications such as studio, command centre, commercial display, live broadcasting of events, high-end conference, etc., and has achieved a breakthrough in mass production during the reporting period; in the field of automotive display, it has set up a joint innovation laboratory with the world's leading automotive supplier, Marelli Automotive Electronics, which has effectively accelerated the progress of the certification of Mini LED automotive display products, and has made significant technological and production capacity breakthroughs. In the automotive field, the company established a joint innovation laboratory with Marelli Automotive Electronics, a leading global automotive supplier, which effectively accelerated the breakthrough of Mini LED in-vehicle display products in terms of certification, cost, standardisation, and mass production. In addition, the company successfully launched the P0.4 Micro LED display products based on glass-based (COG technology) and oxide TFT driver and other key technologies, representing the current LED display technology advanced manufacturing process level.
CITIC Securities believes that since 2022, Mini LED to pro-people, the global economy long-term recovery trend does not change the background, MiniLED to achieve the scale of commercial will bring growth opportunities. According to GGII estimates, by 2025 the global MiniLED market size will reach 5.3 billion U.S. dollars, compound annual growth rate of more than 85%. microLED market size in 2025 will exceed 3.5 billion U.S. dollars, 2027 is expected to exceed 10 billion U.S. dollars, the domestic manufacturers are expected to benefit from the Mini / MicroLED field will bring the development opportunities in the long term.
In the future, Hongli Zhihui will continue to focus on the "focus on the main industry, integration and efficiency" of the long-term development of the strategic objectives, and continue to carry out technological innovation, optimize the product range and configuration, and at the same time actively strengthen in-depth cooperation with important customers, digging into the potential of niche areas, to seize market share, as well as to promote the long-term mechanism of cost reduction and efficiency enhancement, and to further enhance the scale of profitability. Profitability.