Sanan Optoelectronics has "sucked" financial subsidies of nearly 300 million yuan this year.

Sanan Optoelectronics announced on the evening of October 19 that the company's controlling subsidiary, Suncore PV, has received a special subsidy of RMB 30.8 million from Huainan (the same below). In fact, Sanan Optoelectronics received nearly 300 million yuan in financial subsidies this year. Some insiders said that under the background of the industry's haze, financial subsidies have gradually become the profit model of some enterprises.

Get huge subsidies

Recently, Sanan Optoelectronics announced that the company has frequently obtained high subsidies. On the evening of October 19, Sanan Optoelectronics announced that its holding subsidiary, Nikko Photovoltaic, received a subsidy of 30.8 million yuan from Huainan. On the evening of October 8, its wholly-owned subsidiary Anhui Sanan Optoelectronics received an investment subsidy from Wuhu City. 20 million yuan; on September 28, received Anxi financial subsidy funds of 60 million yuan; June 29 received subsidies of 60 million yuan; on March 30 received subsidies of 100 million yuan......

As of now, Sanan Optoelectronics has received relevant financial subsidies of nearly 300 million yuan. At the same time, relevant announcements show that last year, Sanan Optoelectronics has received relevant financial subsidies of hundreds of millions of yuan.

A well-known LED manufacturer in Xiamen revealed that individual companies like Sanan Optoelectronics have received relevant financial subsidies frequently, and the amount is so high that “it is very rare”.

Most of the profits come from subsidies

In the eyes of the outside world, Sanan Optoelectronics has received financial subsidies frequently. "The reason should be that the scale is large, the profit is high, and the development is smooth." However, according to people familiar with the matter, this is not the case.

“Because of the domestic investment boom in the LED industry, the price of LED's entire upstream and downstream industry chain has fallen sharply in 2011,” said one person familiar with the matter. The company found that Sanan Optoelectronics' 2011 annual report showed that the gross profit margin of the company's leading product chip sales fell sharply by 43.47% year-on-year. At the same time, according to Sanan Optoelectronics' 2012 quarterly report, its total profit is 270 million yuan, but 150 million yuan of it comes from non-operating income, most of which is financial subsidies.

It is worth noting that according to the announcement, Sanan Optoelectronics realized a net profit of 200 million yuan in the first quarter of this year, but “the net cash flow from operating activities” was only 130 million yuan. This means that the sale of the product is not accompanied by a return of full cash. In addition, according to the announcement, although the production capacity of Anhui Sanan Optoelectronics Co., Ltd. has been gradually put into production, the scale effect has not been clearly reflected.

“The industry has not been scattered, and financial subsidies have gradually become the profit model of some enterprises.” Some insiders pointed out that Sanan Optoelectronics used local governments to pursue the characteristics of economic growth, signed a cooperation agreement with them, and achieved local expansion subsidies.

How will the subsidy be lost?

A LED manufacturer in Xiamen said that the company's development cannot rely on government subsidies. Once the government subsidies are reduced or cancelled, the relevant companies may have a great impact.

According to the "Notice" of the Wuhu Municipal Government, the policy support for the LED industry is valid until December 31, 2012. In other words, Sanan Optoelectronics will no longer receive financial subsidies from the Wuhu Municipal Government after 2013.

"If the days of the LED industry continue to be difficult, Sanan Optoelectronics may not be able to protect itself." An industry source pointed out. In June of this year, Shenzhen-based LED company---Vision Jingguang Electronics Co., Ltd. declared bankruptcy due to the break of the capital chain. Previously, many well-known LED manufacturers such as Duo Duoli and Bolent have closed down. "This will also be a warning for Sanan Optoelectronics."

(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)

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