China Display Optoelectronics Technology Holdings Limited Announces 2019 Interim Results

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

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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.* ??????????????? , 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.*, ???????????? ) 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

About China Display Optoelectronics Technology (334.HK)

Headquartered
in China, China Display Optoelectronics Technology Holdings Limited (HKSE stock
code: 334) is one of the major providers of small-to-medium-sized display
modules in the region. Ch Display Opt engages primarily in the research and
development, manufacturing, sales and distribution of LCD modules mainly for
devices on an ODM basis. Smartphone LCD module products of Ch Display Opt are
welcomed by domestic and overseas manufacturers?according to IHS MARKIT data, the company ranked No.5 in terms of handset products’ revenue among
Chinese display module makers during first half of 2019.

 

For more information, please visit its website at www.cdoth8.com.

 

Issued by Cornerstones Communications Ltd. on behalf of China Display Optoelectronics Technology
Holdings Limited.