OLED is still difficult to make a profit, Visionox suffered a loss of more than 1 billion yuan in the first three quarters 17th,Nov,2021

                                                After losing high government subsidies this year, Visionox (8.380, -0.26, -3.01%) (002387.SZ)'s autonomous hematopoietic ability is facing a great test. According to Visionox's latest performance forecast, after the semi-annual performance loss, the company's loss in the third quarter report further expanded, reaching more than 1.08 billion yuan.

However, a reporter from the Financial Association found that from 2018 to 2020, Visionox's government subsidy data were 2.031 billion yuan, 1.056 billion yuan, and 1.144 billion yuan. If it were not for "filling the hole" with government subsidies, Visionox's capital chain has been unable to make ends meet in the past few years and will be in a state of serious losses.

The fact is indeed the case. Visionox received only 150 million yuan in government subsidies in the first half of this year, which directly led to the only major loss of Visionox among the display panel listed companies that have issued third-quarter performance forecasts. An industry insider told the Cailian News that compared with leading companies, Visionox lacks scale and capital advantages, and lacks control over the upstream supply chain. As industry competition returns to marketization, the adverse effects of these weaknesses will be magnified. .

Relying on subsidies for development is difficult to sustain

According to Visionox’s latest performance forecast, the company’s operating income for the first three quarters of 2021 will be between 2.70 billion yuan and 2.85 billion yuan, while the net profit attributable to shareholders of listed companies will be a loss of 1.08 billion yuan to 1.180 billion yuan, of which the third quarter The quarterly loss was 330 million yuan to 430 million yuan.

A reporter from the Financial Association noticed that Visionox’s net profit in the first three quarters of last year was a loss of 26.763 million yuan. This year’s loss has increased by more than 39 times year-on-year. Income: First, the contribution of non-recurring gains and losses to net profit this year decreased by about 550 million yuan from the same period last year, mainly due to the impact of changes in government subsidies; secondly, last year, it provided patented technology for the shareholding company Hefei Visionox Technology Co., Ltd. The impact of licensing, consulting and management services on the performance of the first three quarters was 559 million yuan, which did not occur in the current period.

The highlight of this issue is that Visionox's OLED product sales revenue was 2.60 billion yuan to 2.75 billion yuan, an increase of 93% to 104% over the same period last year. The shipment volume of the 5.5th generation AMOLED panel production line in Kunshan increased by about 85% compared with the same period last year, and the shipment volume of the 6th generation AMOLED panel production line in Gu'an increased by about 135% compared with the same period last year, which had a positive impact on the company's current operating income.

In this regard, display industry analyst Lin Zhi told the Cailian News that Visionox’s OLED products have been adopted by brands such as Huawei, Honor, ZTE, and Nubia. Last year’s shipment ranking was second only to BOE in China and was developed for the first time. The OLED screen camera solution is released and applied to ZTE mobile phones, so it still has certain advantages in China's OLED panel industry.

However, he also pointed out that Visionox's OLED production line investment is as high as 30 billion yuan, which involves a large amount of amortization after mass production; the initial yield is not high, and the initial input and output is relatively low; and the supply of brand customers is limited. , Shipments mainly depend on the maintenance market, which has affected the company’s profit margin and dragged down this year’s performance.

Regarding the sharp reduction in government subsidies received by Visionox, a panel industry person told the Cailian Press that in the past few years, in order to support the OLED industry in my country, governments at all levels have spared no effort in supporting panel companies, which is mainly reflected in the encouragement. Enterprises are expanding OLED production capacity. However, as local governments are working hard to reduce debt ratios, the past aggressive investment trends have stalled; and after the black swan suffered from the new crown epidemic, the government chose to expand subsidies to people's livelihoods and reduce subsidies to the panel industry.

Although it is a blow to OLED companies, the industry insiders said that this will bring industry competition back to marketization. "It is unsustainable to rely on subsidies to support development. Companies need to consolidate follow-up investment and research and development progress, and accelerate technological innovation and industrial application. In addition, the advantage of scale will quickly become a key point for manufacturers to achieve profitability, and smaller manufacturers like Visionox may be at a disadvantage."

Insufficient ability of single production line to resist risks

As of October 15th, among the listed A-share display panel companies, two leading companies BOE (000725.SZ) and TCL Technology (6.330, -0.09, -1.40%) (000100.SZ) also released their third-quarter results. The forecast, unlike Visionox, has achieved a large-scale increase in profitability.

Among them, BOE A (5.090, -0.04, -0.78%) expects the net profit attributable to shareholders of listed companies in the first three quarters of this year to be 19.862 billion yuan to 20.06 billion yuan, a year-on-year increase of 702%-710%. TCL Technology expects that the net profit attributable to shareholders of listed companies in the first three quarters of this year is expected to reach 9.030-9.180 billion yuan, a year-on-year increase of 346%-353%.

In the performance forecast, both companies pointed out that the overall prosperity of the semiconductor display industry in the first three quarters was higher than that of the same period last year, and the area of ​​product shipments generally increased compared with last year; and the supply continued due to the continued strong demand and the shortage of raw materials such as driver ICs. Tensions, the prices of various products such as IT and TV have risen to varying degrees.

However, some panel analysts told the Cailian News Agency that in fact, if you only look at the OLED production line, BOE and TCL Technology will not be profitable. The main reason is that domestic manufacturers’ OLED production costs are much higher than those of international leading companies such as Samsung, and there is a large gap in product yield. In addition, due to government subsidies in the past few years, domestic panel manufacturers have expanded a large number of production capacity, and competition has intensified. The price of OLED products has been pulled down, and companies are in a situation of increasing revenue but not profit.

According to the source, Visionox's predecessor was the OLED project team of Tsinghua University, with almost only the flexible OLED panel business. It cannot use the profits of the LCD panel business to feed back the OLED business like BOE, TCL Technology, Shenzhen Tianma and other manufacturers. For example, BOE has a diversified layout of LCD+OLED+MLED. Compared with the above-mentioned mainstream suppliers, Visionox's revenue and profit are relatively low, but it has also obtained some technical accumulation and customer resources. It remains to be seen whether it can break through in the future.

Some industry chain practitioners told the Cailian News Agency that the bottleneck in the domestic OLED industry is related to manufacturing equipment and upstream materials. At present, the level of local support for the domestic OLED industry group is still relatively low, and some key raw materials still need to be imported. There are differences in the bargaining power of raw material procurement. “Because Visionox does not have an advantage in scale and has insufficient control of the upstream, under the background of the sharp increase in raw material prices, operations face greater risks.”