Up to 80% of the Chinese companies listed on the Over-the-Counter Bulletin board (OTCBB) reported significant revenue growth as of Aug. 3, 2015, according to LEDinside observations.
Four LED companies listed on the OTCBB reported an accumulated revenue of RMB 258 million, and a net profit of RMB 23.35 million during first half of 2015, according to LEDinside’s partial statistics on 45 OTCBB companies. Average profitability of the four companies was RMB 5.84 million.
Notably, the four OTCBB companies are LED manufacturers that have benefited from government subsidies. Excluding Shanghai Toplite Technology, which has not publicized the amount of subsidies it received, the accumulated subsidies for the three other companies was RMB 3.40 million. Subsidies amounted to at least 14.5% of these companies total net profit of RMB 23.35 million.
Although, LED Top Light did not publish its subsidy statistics, its financial statement stated the company was eligible for many government financial subsidies, and projected it would receive some of the subsidies it applied for. Additionally, the company will be confirm at a later date the subsidies it has received for the year.
Kamtatlighting, the only LED lighting manufacturer out of the four LED companies, received a mediocre subsidy of RMB 3,000. However, the company posted a net profit of more than RMB 7.50 million for the first half of 2015. In contrast, LED package manufacturer Pengyuan Optoelectronics RMB 3 million subsidy amounted to about half of the company’s net profits during the same period.
Chinese government subsidies is not exclusive to the LED industry, but encompasses all companies listed on the OCTBB. About 130 out of 200 companies listed on the OCTBB have received subsidies, with total subsidies amounting to RMB 230 million, based on statistics compiled by Hithink Royal Flush Information Network. Subsidies comprise about 13.5% of these companies total net profits of RMB 1.7 billion. However, these numbers amounted to less than 10% of subsidies on the A shares market.
Government subsidies have benefited companies that are preparing to becoming listed on the OCTBB. Yet, from a long term perspective these subsidies will be canceled someday. In the meantime, the function of these Chinese government subsidies is mostly to support manufacturers and help put them under the spot light.
