On November 6, after two rounds of inquiries in six months, Beijing 800m Spacetime LCD Technology Co., Ltd.’s listing on the Science and Technology Innovation Board has reached the "submission of registration" stage, and it is far away from completing the application. The process is just one step away.
As one of the three major liquid crystal material companies in my country that masters the core technology of TFT hybrid liquid crystal, has independent intellectual property rights and has successfully achieved industrialization, there will be more opportunities for the 800 million space-time science and technology innovation board that has successfully submitted for registration. Variable?
Founded in 2004, 800 million Spacetime is a high-tech enterprise specializing in the R&D, production and sales of TFT, PDLC, STN, TN-type liquid crystal display materials and special-purpose liquid crystal materials. In 2015, it became a BOE Strategic supplier of domestic liquid crystal materials.
For a long time, patents related to liquid crystal materials have been monopolized by a handful of foreign companies. The hybrid liquid crystal material market that has been deeply cultivated by 800 million time and space is basically controlled by three companies: MERCK of Germany, JNC of Japan, and DIC. According to 800 million Spacetime’s response to the inquiry letter, although its technical strength still lags behind the three leading companies, it is already the leader in the country and has the fastest growth rate.
From 2016 to 2018, the performance of 800 million Spacetime is amazing-the operating income was 132.5087 million yuan, 230.7539 million yuan, 394.0324 million yuan, and the net profits were respectively 16.8083 million yuan, 53.3439 million yuan, and 114.4891 million yuan. The compound growth rates of revenue and net profit are as high as 72.44 and 160.99 respectively.
The rapid growth is inseparable from 800 million Spacetime’s own R&D results and production capacity expansion, as well as the rise of downstream Chinese LCD screen manufacturers. As the largest customer of 800 Million Space, the revenue contributed by BOE has also increased year by year. From 2016 to 2018, 800 Million Space had revenue of 38.09, 69.30 and 75.51 respectively from BOE. In the first half of 2019, this ratio further increased to 77.52.
The high dependence on BOE has undoubtedly become the focus of inquiries. In the 302-page response to the first inquiry, the word "BOE" appeared *** 350 times. 800 Million Space used nearly 20 pages to explain the cooperative relationship with BOE. In addition to proving the stability of the cooperative relationship In addition to sex, it is also trying to prove that the ecosystem created by BOE will leave enough room for upstream partners to survive.
From the perspective of market capacity, the market demand for hybrid LCD is closely related to the production of LCD panels. According to the production progress of each production line, domestic mixed LCD demand is expected to be 410 tons, 510 tons and 590 tons from 2019 to 2021, with an average annual growth rate of 20.03, indicating a large market space. Currently, 800 million Spacetime has a production capacity of 50 tons, and it hopes to complete its plan to expand production capacity to 100 tons through listing financing.
However, the data of 800 Million Spacetime in the first half of 2019 is not very optimistic. The prospectus shows that from January to June 2019, 800 million Spacetime’s operating income was 205.1966 million yuan, a year-on-year increase of only 1.56, but non-net profit dropped by nearly 20% year-on-year.
The variable in the growth of 800 million Spacetime's revenue is not the cooperation with BOE, nor whether 800 million Spacetime's technology is leading, but the decline of the entire LCD panel market. Since 2016, Japanese and Korean panel manufacturers, represented by Samsung and LG Display, have begun to increase their focus on OLED panels, and the LCD market has given great opportunities to latecomers. Chinese manufacturers such as BOE and CSOT are taking advantage of the situation to expand production capacity. Chinese manufacturers accounted for three of the top five positions in global LCD TV panel shipments in 2018.
However, this "barbaric" growth is unsustainable today three years later. The production capacity of LCD panels has become overcapacity, and latecomers OLED have begun to encroach on the panel market from small-size screens.
Although the overall demand has not tightened significantly, the price of panels continues to drop, and profits are getting thinner.
The drastic changes in market trends will first impact those panel manufacturers that have reduced LCD production capacity but failed to gain a foothold in the OLED market. Sharp's own mobile phone sales are too low and it has been unable to find buyers for its OLED panels. It officially withdrew from the mobile phone OLED market in the middle of the year. LG Display, the only company on the market that can provide large-size OLED panels, was unable to ramp up its OLED production capacity. While announcing a huge loss in the third quarter, it also cut costs by dismissing senior executives and other methods.
Chinese panel manufacturers can still find room for survival through price wars. In June 2018, Korean media claimed that BOE cut the price of 65-inch LCD panels by 20% to compress the living space of other manufacturers. Although this direct and effective strategy can help BOE maintain its market position, in the long run it will undoubtedly quench thirst.
In addition, BOE is also actively deploying smart IoT and smart medical engineering, but its business scale is far from becoming a new engine to maintain growth. Based on BOE's third quarter financial report, although revenue increased by 23.4%, net profit fell by 45.18% year-on-year. In the third quarter, the loss after non-net profit was as high as 840 million yuan.
Where will 800 million Spacetime, which is in the upper reaches of the industry and highly dependent on BOE, go? Although the prospectus believes that if the company's product R&D innovation cannot keep up with market changes, it will restrict the company's development, it still states that in the short term, the maturity of OLED technology cannot compete with TFT LCD flat panels, and Micro LED production costs and efficiency The conclusion is that it is difficult to meet commercialization needs. In terms of research and development, can 800 Million Spacetime really sit back and relax?
From a research and development perspective, the research and development expenses of 800 Million Spacetime during the reporting period were 10.7419 million yuan, 13.0001 million yuan, 18.0992 million yuan and 10.1022 million yuan respectively, accounting for 8.11 and 5.63 of the operating income in the same period respectively. , 4.59 and 4.92. The average R&D expense rates of comparable companies in the same industry during the same period were 5.07, 5.20, 5.76 and 5.54 respectively, which are relatively low.
In the LCD panel market, where the market environment is undergoing drastic changes, 800 million Spacetime, as a link in the upstream and downstream of the industry, has extremely limited impact on the industry. The initiative to succeed or fail in registration does not lie with 800 Million Time and Space itself.
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