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LED display screen industry is about to enter the darkest moment. Only by living can we see the future

Recently, the impact of the novel coronavirus epidemic on the LED display industry has caused widespread discussion.Some people think that after the COVID-19, the market will retaliatory rebound.Some people think that the overall price increase of the industry is imperative, many more believe that the impact of the epidemic on the industry is limited to a short period of 2-3 months. According to long-term observation and follow-up research on the industry, as early as January 28, an article "The impact of the epidemic epidemic on the LED display industry should not be underestimated has sounded the alarm for the industry. We believe that the LED display industry is about to enter the darkest moment. Enterprises should adjust their strategies in a timely manner and persist in life to have a future.

LED display screen industry is about to enter the darkest moment

I. Basic analysis of the novel coronavirus pneumonia epidemic

Development Trend of the epidemic outbreak in China. Since the outbreak in January, China has imposed the strictest closure and restriction bans ever, and has so far yielded results. With the exception of Hubei, most provinces and cities across the country have shown zero newly diagnosed cases for several consecutive days. However, as local enterprises gradually resume production, the epidemic situation may also experience some fluctuations. Especially the outbreak of overseas epidemics, preventing cases from entering China from other countries has become a new focus of the epidemic prevention. On the one hand, the government has effectively implemented various stringent prevention and control measures. We are optimistic that by the end of April, although the epidemic situation may not completely disappear, it will be effectively controlled. On the one hand, the government has effectively implemented various stringent prevention and control measures. We are optimistic that by the end of April, although the epidemic situation may not completely disappear, it will be effectively controlled. On the other hand, we believe that as the focus of epidemic prevention work has shifted to preventing foreign imports, China's epidemic prevention work will also be normalized before comprehensive and effective control of global epidemics.

Outbreaks outside China are a foregone conclusion

At present, the number of newly diagnosed cases overseas has far exceeded that of China. None of the five continents has been spared. It has affected 105 countries and has accumulated more than 29,000 cases (data on March 9). Therefore, with the exception of China, outbreaks around the world are a foregone conclusion, and the risk of triggering a global economic downturn cannot be ruled out.

The political systems, economic strength, and cultural practices of overseas countries are quite different. Except for China, the difficulty and intensity of epidemic control are more difficult. Compared with China, the duration of the disease may be much longer than China. To date, there is no evidence that summer will make the COVID-19 disappear. The weather in Singapore, Thailand, and other countries is now the same as in summer (the highest temperature in Thailand has reached 37 degrees in recent days), but confirmed cases are still many. Therefore, it is not very optimistic about how the overseas epidemic will develop and when it will end, unless it is a miracle. Otherwise, we have reason to believe that in an additional period of time, in the next three months to six months or even longer, epidemic prevention will become the new normal for countries other than China.

II. Impact of COVID-19 on the industry

We believe that the impact of the COVID-19 on the industry is not only two to three months. The biggest damage is the disruption of the industrial chain and the suppression of terminal demand, delay or transfer. Judging from the current situation, the normal operation of the upstream and downstream of the industrial chain needs time to resume, and it is expected that it will not be restored to the outbreak pre-epidemic level until the end of April or early May. During this period, some raw materials will be out of stock, which may cause prices to rise.
However, when we return to the nature of the industry, the basic situation of the overall overcapacity in the LED display industry has not changed. After the industrial chain ecology is restored, it will retaliate to grab the sluggish terminal consumer demand, and a more violent price war is inevitable.

1. Revenge consumption does not happen immediately

As far as the Chinese market is concerned, the so-called retaliatory consumption after the epidemic will not occur in the LED display industry.
Commercial display markets that are severely affected by the epidemic, such as catering, retail, tourism, movie theaters, hotels, and transportation, are the first choice after COVID-19. They should find ways to restore physical strength, make up for losses and invest limited funds when needed. For them, LED display is not "must", not even "urgently needed". It is likely that students will not be able to return to school by April. The first priority after returning to school remains epidemic prevention. The college entrance examination, enrollment, and equipment procurement will be ushered in. Unless "urgently needed", it will pave the way for epidemic prevention. The medical industry will face long-term pressure on prevention and control and post-epidemic recuperation. Except for emergency projects, large-scale project construction will not be launched soon. Government departments must not only face the long-term pressure of normalization of epidemic prevention and control, but also the heavy pressure of economic recovery and economic growth. General projects are likely to be delayed or cancelled. Therefore, during the economic downturn, the first thing people cancel is unnecessary spending, most of our LED display applications fall into this category.
Therefore, retaliatory consumption after the epidemic does not exist in our display industry. Moreover, because of this non-essential, the probability of the project being delayed or even cancelled is very high.

 

LED display screen industry is about to enter the darkest moment

 

2. The total investment in infrastructure exceeds RMB 47 trillion, and only 15.6% will be implemented this year.

As of March 8th, a total of 23 provinces and cities across China have issued over 47 trillion investment plans for key projects, and everyone has high expectations. However, a closer study will reveal that only 15.6% of these infrastructure projects will be implemented in 2020. The aggregate plans of 11 provinces and cities including Yunnan, Sichuan, and Fujian are RMB 50 billion less than last year.

Moreover, these large-scale infrastructure investments have a relatively long construction period. Even if there is a demand for LED display, they are all in the end of the project.

3. Leasing market is the hardest hit area

The rental market will be in trouble throughout the year. Almost all major events in the Chinese domestic market were cancelled in the first half of the year. Affected by the normalization of epidemic resistance in the second half of the year, it may still face great uncertainty. Outside China, affected by the COVID-19, facing the same situation as in China, a large number of gathering activities may be cancelled or postponed. Therefore, the leasing market will be the most direct victim of this epidemic and become the hardest hit area. Leasing products account for more than 40% of sales in overseas markets. Leasing has been hit hard, which will cause a severe blow to the entire LED display overseas market.

4.Overseas export markets are likely to be hit hard

More than 40% of China's total LED display screens are sold to overseas markets.The COVID-19 broke out all over the world, the Chinese could not go out, the foreigners could not enter, the efficiency of logistics, customs declaration, etc. was greatly reduced or blocked, and related overseas exhibitions and large-scale events will also face delays or cancellations, which will inevitably have a serious impact on overseas markets.On the other hand, the global economy itself is in a downward cycle. The outbreak of the global COVID-19 will undoubtedly worsen, and will increase the fiscal burden and expenditure of various countries, allow more governments and businesses to protect their wallets, and severely curb, delay or shift market demand.

At the same time, the obstruction of overseas markets will force a large number of companies exporting overseas to attack the domestic market, vying for the already limited domestic demand and further intensifying competition in the domestic market.

5.Conference market is not an antidote

The physical isolation between people caused by the outbreak has stimulated the explosive growth of the online remote office and conference market.Therefore, the video conference market will benefit from this.However, in this market, the competitive relationship between LED displays and LCD displays has not changed.Demand for more than 100 inches is the market for LED displays.Application scenarios that require more than 100 inches will not be "small" places, but "large" places, but these places cannot be opened because this will lead to a large-scale gathering of personnel.Therefore, it is expected that the conference market will not bring outbreak opportunities for LED displays and will eventually disappoint practitioners.LED conference displays are not our antidote.

6.The emergency command and security surveillance market is relatively less affected.

The commercial display market and display rental market have been severely affected by the epidemic, and it is difficult to recover in a short time; The market is already depressed, and the epidemic will only worsen; Conference market growth is limited. We believe that compared with other industry applications, only the professional display market such as command centers and security monitoring is relatively least affected. Moreover, some medical and emergency command and dispatch centers may have a small upsurge after the epidemic. However, after all, the time for construction in 2020 is limited, and if the overall project implementation volume can be kept the same as last year, it is already a very optimistic forecast. Moreover, such projects are mostly monopolized by some large manufacturers or integrators, and the degree of project concentration is high, and it is difficult for small and medium-sized enterprises to share them.

7. Health is the last word for survival

Based on the above analysis, we believe that the LED display market in 2020 will usher in the darkest moment ever.The growth of the industry will be contained, and even decline.The contradiction between insufficient market demand and excess production capacity will only become more and more intense under the stimulation of the epidemic.

The fight against the noval coronavirus pneumonia mainly relies on the human body's own immunity, and the healthier the human body will be more resistant to the disease.The same is true of the survival of enterprises. In a severe competitive environment, companies with good health will be better able to cope with risks.The most important criterion for a healthy company is whether it has strong profitability and sufficient cash flow. In fact, it has no direct relationship with the size of the company.

 

LED display screen industry is about to enter the darkest moment

8.How to survive?

Cash has always been a big problem that plagued the LED display industry. Under the epidemic, cash flow has become the biggest challenge for companies.According to Peking University research institutions, more than 60% of China's small and medium-sized enterprises cannot support their cash flow for three months.Our LED display industry specific situation will not be better than this data.So, in this darkest moment, how to get through the difficulties of an enterprise, the first thing to solve is the issue of funding.All available measures must be taken to ensure that the company's cash flow cannot be broken, including measures such as corporate financing, dunning from customers, and reducing corporate expenses.At the same time, while increasing market development efforts and expected orders, try to avoid undertaking projects that are risky and adverse to the company's cash flow.The renewal and iteration of the enterprise are connected with the laws of nature.Enterprises need to actively adjust their strategies to adapt to the darkest period to come, and work hard to survive the spring of the coming year.

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