Uptick in China’s LED street lighting demand

Piper Jaffray’s Ahmar Zamar is making a positive call on Cree (NASDAQ:CREE) after their checks uncovered a surprising December uptick in China’s LED street lighting demand.

– Piper’s proprietary checks with downstream LED lighting companies in China suggest Cree’s customers likely saw rush orders in December ahead of an earlier Chinese New Year holiday. They met with international and domestic lighting players including TC Interconnect, Neo Neon, Phillips, and Osram over the last few weeks. Firm’s checks also revealed that Chinese LED street lighting demand has recovered, and is growing at 30% y/y. Furthermore, competition is limited to leading chip suppliers Cree, Lumileds, and Osram. They view these checks as positive for Cree given 40% revenue exposure to China.

Firm reiterates Overweight and $50 price target on CREE

Note: Piper highlights Lumileds (NASDAQ:LEDS) as a leading chip supplier in addition to CREE. Should the China LED story find legs, LEDS could work well. Just take a look at the 40%+ move on Nov 4, 2011 following the news China had started incandescent bulb phase out. CREE was up 10% on that day.

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