Demand growth slows down, Songsheng shares’ Q1 plant lighting business revenue is 72.19 million yuan

On July 19, Songsheng Co., Ltd. released an investor relations activity record sheet, revealing the company’s plant lighting business status in the first half of the year.

Songsheng Co., Ltd. is deeply involved in the three major LED drive power application fields: plant lighting, outdoor lighting, and industrial lighting. Among them, plant lighting LED drive power is the largest business segment of Songsheng Co., Ltd.

In 2021, plant lighting LED drive power achieved operating income of 446 million yuan, accounting for 40.51% of total revenue; in the first quarter of 2022, plant lighting LED drive power achieved revenue of 72.1916 million yuan, accounting for 38.23% of total revenue.

Songsheng Shares pointed out that due to factors such as market demand fluctuations, repeated domestic epidemics, and the relatively tight supply of raw materials such as upstream chips, the market demand growth for LED plant lighting applications has slowed down from January to May 2022, and the overall market demand scale and customer orders have shown a certain downward trend compared with the same period in 2021.

Despite the recent decline in demand, Songsheng shares are still optimistic about the development prospects of LED plant lighting. Songsheng shares stated that LED plant lighting, as an innovative application of LED lighting in agricultural technology, photobiotechnology and other fields, represents an important development direction of advanced modern agricultural technology to a certain extent and is of great significance in promoting solutions to food crises, food safety, epidemic prevention medicinal materials, etc.

In addition, the company believes that in the first half of the year, as the U.S. House of Representatives passed the Cannabis Legalization Act and the Thai Cannabis Legalization Act officially came into effect, the gradual legalization of foreign industrial hemp will be conducive to the investment and layout of the industrial hemp industry in the short term, which will in turn be conducive to the promotion and application of plant lighting in the field of industrial hemp.

Therefore, Songsheng did not stop its plant lighting business layout in the first half of the year due to declining market demand. Instead, it accelerated the research of key technologies and the expansion of production capacity through corporate cooperation and fundraising.

In terms of cooperation, in May, Songsheng Technology reached a strategic cooperation with the Institute of Urban Agriculture, Chinese Academy of Agricultural Sciences. The two parties cooperated in industry-university-research cooperation, scientific and technological achievements transformation, etc. to help solve the pain points of industrial development and actively incubate key plant lighting technologies.

In terms of fundraising, in February, Songsheng's project to raise funds by issuing convertible corporate bonds to unspecified objects was accepted by the Shenzhen Stock Exchange. The project raised 294 million yuan. The main research and development directions of the project are two emerging application areas: LED plant lighting and smart city 5G smart light pole lighting. In June, the project was approved by the Shenzhen Stock Exchange.

It is also worth noting that Songsheng Co., Ltd. is about to complete the expansion of new production capacity. The Zhongshan high-power LED power supply project with a total investment of 399 million yuan has now entered the completion acceptance stage, and the project is expected to be completed in July. The project will build 10 new automated high-power LED drive power supply production lines. After completion and reaching capacity, the new high-power LED drive power supply production capacity will be 12.15 million pieces per year. The project will help the company achieve a comprehensive upgrade of production capacity and an overall improvement of production efficiency.