Revenue Increased by 178.3% YOY to RMB3.52 billion; Expanding the annual production capacity of Wuhan CDOT to 120mn units in 2020

Financial Highlights (Unaudited)

 

Six months ended 30 June

(RMB '000)

2019

2018

Change (%)

Revenue

3,516,593

1,263,756

+178.3

Gross profit

76,981

24,093

+219.5

Profit/(Loss) attributable to owners of the parent

13,122

(11,896)

N/A

Basic earnings/(losses) per share (RMB cents)

0.63

(0.58)

N/A








HONG KONG, CHINA -  Media OutReach  -  12 August 2019 - China Display Optoelectronics Technology Holdings Limited ("Ch Display Opt" or the "Company", together with its subsidiaries, the "Group"; HKSE stock code: 334) today announced its interim results for the six months ended 30 June 2019 (the " Review Period").

 

During the Review Period, the Group recorded a revenue of RMB3.52 billion, representing a year-on-year increase of 178.3%;of which the revenue of laminated LCD module products (excluding processing LCD module) recorded a rise by 206.4% year-on-year to RMB2.9 billion, revenue of non-laminated LCD module products was RMB598 million, representing an increase of 88.4% year-on-year. The Group's sales volume increased by 182.3% year-on-year to 49.6 million units, driven by the increasing orders from major customers. During the Review Period, the raw materials of certain products were provided by customers directly and thus the cost of such raw materials was not reflected in the selling price for the relevant products which resulted in a lower selling price. However, the overall average selling price increased by 2.1% year-on-year to RMB73.4 (excluding processing LCD modules), due to the improvement of the product mix.

 

As benefited from the growth in sales volume, the Group's gross profit during the Review Period was RMB77.0 million, increasing by 219.5% year-on-year. The gross profit margin increased by 0.3 percentage point year-on-year to 2.2%. The improvement in gross profit margin was not considerable because: 1) the Group had adopted a relatively aggressive pricing strategy in order to actively seize the market share, increase the scale of the sales, and establish long-term and stable relationships with customers; 2) raw material costs remained high. During the Review Period, the Group's profit attributable to owners of the parent was RMB13.1 million.

 

The Group started providing processing service in June 2019. The new business model enabled the Group to drive down procurement costs and inventory management costs, resulting in a higher gross profit margin as compared to that of selling LCD modules manufactured by the Group, as well as reducing the risk of cost fluctuation of raw materials. During the Review Period, the income from the processing service amounted to RMB20 million and accounted for 4.0% of the total sales volume.

 

The Group has been striving to deepen its cooperation with Shenzhen China Star Optoelectronics Technology Co., Ltd.* (深圳市華星光電技術有限公司) , the parent company of the Group, and its subsidiaries (collectively "CSOT"), so as to win first-tier brand customers through the one-stop business model that combines panel and module from both parties. Following the Group's entry into the supply chain of China's first-tier brands with CSOT in 2017, the Group has been able to establish partnerships with a number of international first-tier brand customers, which is expected to assist in the formation of a solid and strong customer base in the long run. As the Group took on more order form first-tier brands as customers through co-operating with CSOT, the proportion of high-end products in the Group's overall sales volume consistently increased. The sales volume of LTPS products increased from 38% for the same period last year to 88%; while the sales volume of full-screen products went up to 90%.

 

Meanwhile, in order to fulfill the growing demand from first-tier brand customers, Wuhan China Display Optoelectronics Technology Co., Ltd., ("Wuhan CDOT" the joint venture between the Group and Wuhan China Star Optoelectronics Technology Co., Ltd.*, 武漢華星光電技術有限公司 ) has been remodeling the equipment and production line of its manufacturing plant since the second half of 2018. The expanded production line will have an annual production capacity of approximately 60 million and 120 million units in 2019 and 2020 respectively. With the capacity expansion, the Group will be able to accept more processing orders from customers, which will in turn propel the Group's business as an original design manufacturer and enhance the effective utilization of resources.

 

Looking ahead, the management of Ch D isplay Opt said, "The global display industry is experiencing downward pressure. The imbalance between supply and demand in the semiconductor industry will result in intensifed market competition, before the commercialization of 5G technology and the foldable AMOLED end products gaining wide acceptance. By capitalizing on the existing partnerships, the Group will continue to strengthen its customer base and increase its market share. At the same time, the Group will elevate its research and development capabilities to enhance and prepare for advanced display technology, including in-display fingerprint and AMOLED technologies, so as to lay a solid foundation for future operation. Meanwhile, the Group is also increasing its presence in the smart home and automotive display markets to capture the immense opportunities therein, as well as expanding its business horizontally, so as to create greater value for the Group and its shareholders."

 

The Group's revenue and sales volume by product segment and respective year-on-year change during the Review Period were as follows:

 

 

Six months ended 30 June

(Unaudited)

2019

2018

Change (%)

Revenue (RMB'000)

Sale of TFT LCD module

        - Non-laminated modules

598,222

317,604

+88.4

        - Laminated modules

2,898,624

946,152

+206.4

Processing TFT LCD module

        - Laminated modules

19,747

-

N/A

Total

3,516,593

1,263,756

+178.3

 

Sales volume ('000 units)

Sale of TFT LCD module

        - Non-laminated modules

13,859

7,257

+91.0

        - Laminated modules

33,775

10,315

+227.4

Processing TFT LCD module

        - Laminated modules

1,975

-

N/A

Total

49,609

17,572

+182.3


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