As radiant lights brighten millions of households, few consider the industry challenges hidden behind this brilliance. In 2025, two lighting industry leaders—Sanan Optoelectronics and MLS Co.—issued profit warnings that sounded alarms across the sector. With potential losses looming, investors must reassess their strategies and reevaluate the investment landscape of the lighting industry.
Sanan Optoelectronics: Transformation Pains and Global Expansion Strategies
Sanan Optoelectronics (SH600703), once the dominant LED chip manufacturer, anticipates its first annual loss since going public through a backdoor listing. The company projects net profits attributable to shareholders between -200 million to -400 million yuan for 2025, with non-GAAP net losses reaching -750 million to -850 million yuan. This starkly contrasts with 2024's performance, which showed total profits of 358 million yuan and net profits of 253 million yuan.
The primary culprit behind these losses appears to be inventory depreciation provisions. By Q3 2025, Sanan's inventory balance had ballooned to 6.349 billion yuan, indicating significant product value erosion due to shifting market demands. Quarterly data reveals this downward trend began in Q3, where revenue growth couldn't prevent substantial profit declines.
Rather than accepting defeat, Sanan has aggressively pursued transformation through global expansion. In August 2025, the company announced a joint acquisition with foreign investors of Dutch LED firm Lumileds Holding B.V., aiming to penetrate premium international markets and strengthen its position in automotive and specialty lighting sectors. Market observers will closely monitor whether this strategic move can reverse Sanan's fortunes.
MLS Co.: Domestic Slump and Competitive Pressures
MLS Co. (300625), a leading lighting fixtures manufacturer, faces similar challenges. The company expects 2025 net losses between 35-45 million yuan, a dramatic reversal from 2024's 48.09 million yuan profit. This downturn stems from weakening domestic demand and intensifying industry competition.
Financial reports show MLS's 2025 revenues declined approximately 13% year-over-year, with gross margins contracting by 3.6 percentage points. These figures reveal not just shrinking sales but deteriorating profitability—a dual crisis forcing the company to reexamine its competitive advantages and identify new growth opportunities.
Investment Outlook: Navigating Risks and Opportunities
The profit warnings from these industry leaders highlight broader challenges facing the lighting sector. However, challenges often create opportunities. Investors must exercise heightened diligence when evaluating lighting stocks—scrutinizing financial health (particularly inventory risks) while assessing corporate transformation strategies and global expansion plans.
The lighting industry undergoes profound transformation, shaped by technological innovation, evolving consumer demands, and competitive realignment. Only by understanding these dynamics can investors make informed decisions. Continuous monitoring of industry trends and fundamental analysis will prove essential for navigating this risk-opportunity landscape.
The financial warnings from Sanan Optoelectronics and MLS Co. serve as critical reminders of the lighting industry's current challenges. Investors must adopt more cautious evaluation methods, focusing on high-quality targets with viable transformation strategies and international growth potential. Comprehensive industry knowledge remains the key to successful investing in this complex environment.