Original title: Electronic paper is rising against the trend, and the industry is ushering in an explosive period? Qingyue Technology on the eve of the IPO: The main products are under pressure to be replaced, and the increase in revenue and profit of e-paper business
is struggling to survive in the cracks of a highly monopoly industry.
Author | Tashan
Edit | Xiaobai
Speaking of e-books, everyone may be familiar with it: in June this year, Amazon said that the operation of Kindle China e-book store will be stopped a year later on June 30, 2023, which has attracted widespread attention from the market.
(Source: Amazon Kindle official account)
E-books have generally not been popular in recent years, and Kindle has been ridiculed as a "cover artifact".
However, the electronic paper industry has become more and more advanced. Whether the
business is good? The stock price explains: With the breakthroughs in technologies such as full-color electronic paper, the global leading electronic paper manufacturer Yuantai Technology (8069.TWO), has risen by about 8 times since 2020, and has set a record high.
(Source: Yingwei Finance) The logic behind
is mainly:
(1) Full-color electronic paper technology breakthrough, new technologies and new products are constantly being launched;
(2) The cost of 2-inch electronic paper price tags has dropped from the original $10 to less than $2;
(3) The global electronic price tag market shipments continue to maintain rapid growth;
(4) The application scenarios represented by price tags are gradually increasing, and it is expected to replace traditional paper in some fields.
In layman's terms, the industry structure has been opened.
(Source: Internet)
According to data from Luotu Technology (RUNTO), the global e-paper price check-in shipments in the first quarter of 2022 were about 72 million pieces, and increased by nearly 95% year-on-year; in the first half of 2022, the global e-paper module shipments reached 120 million pieces, an increase of 25% year-on-year.
In April 2022, Yuantai Technology announced that it will join hands with 6 e-paper module partners, including BOE A, DKE Oriental Kemai, Helitai (002217.SZ) subsidiary Xingtai Technology, Qunchuang Optoelectronics , Qingyue Technology, and Yashi Optoelectronics, to jointly promote the application of E Ink Gallery™ Palette and E Ink Gallery™ Plus color electronic paper.
On August 29, 2022, the results of the 72nd review meeting of the 2022 of the Listing Committee of Science and Technology Innovation Board Listing Committee showed that Suzhou Qingyue Optoelectronics Technology Co., Ltd. (hereinafter referred to as Qingyue Technology or Company) Science and Technology Innovation Board IPO passed the review.
(Source: Market value storm APP)
The electronic paper industry cannot avoid: Yuantai Technology
The electronic papers seen on the market now are mostly electronic ink screens (E-Ink screens), and many people mistakenly think that electronic paper is equal to electronic ink screens.
In fact, they are completely different concepts.
At present, electronic paper technology mainly has the following technical solutions:
(1) Electrophoretic display technology (EPD)
(2) Cholesterol Liquid crystal display technology (Ch-LCD)
(3) Bistable nematic liquid crystal technology (Bi-TNLCD)
(4) Electromotor display technology (EWD)
(5) Electric fluid display technology (EFD)
(6) Interference modulation technology (iMod)
And the electronic ink technology (E-ink technology) uses electrophoretic display technology, that is, electronic ink screen is just a type of electronic paper. At this stage, the mainstream electronic paper in the market and the electronic paper mentioned below refer to electronic ink screens.
electronic paper has the characteristics of ultra-thin, rewritable, easy to carry, and can maintain display when power is off.
Electronic ink technology and electronic ink screen are unique technologies and products of Yuantai Technology, with unique patents and trademarks.
(Source: Shiyinguang Chain)
Yuantai Technology was founded in 1992 and is a pioneer of TFT-LCD panel factory in Taiwan, China.
(Source: Yuantai Technology Official Website)
In 2009, Yuantai Technology acquired the American E Ink company specializing in electronic ink technology and electronic paper research and development and mass production. Since then, Yuantai Technology has completed the layout and integration of the midstream industrial chain on electronic paper and marketed it globally under the E Ink brand.
At the end of 2016, Yuantai Technology officially faded out of its LCD business, focusing on the production, design and sales of films and modules of electronic paper.
At present, Yuantai Technology has become one of the few manufacturing companies in the industry that has upstream electronic ink technology and midstream electronic paper manufacturing technology, and has mass production capacity and capacity scale. Basically, about 90% of e-paper readers on the market currently use E-Ink e-paper, and the global electronic ink screens are dominant.
(Source: Internet)
According to the annual report data, in the past five years, Yuantai Technology's average R&D expenses accounted for 15% of its revenue, and the cumulative global patents exceeded 5,000.
(foldable electronic ink screen. Source: Yuantai Technology official website)
In the first 8 months of 2022, Yuantai Technology's consolidated revenue was 18.57 billion New Taiwan dollars (about RMB 4.2 billion), a year-on-year increase of 68.4%.
has a double-layer moat of technology and core materials, which makes the upstream of the industrial chain lack full competition, which also makes the industry giant Yuantai Technology insufficient driving force for self-innovation, further making it difficult for the e-paper industry to have disruptive innovation.
Due to the blockade of upstream core technologies, the authorized procurement system of core materials (prepayment payment required) and the exclusive supply of membrane material , domestic companies want to make breakthroughs, either conduct disruptive innovations or bypass patent restrictions laid out by industry giants for decades, which is undoubtedly very difficult.
However, the current situation seems to have changed, which is mentioned at the beginning: In April 2022, Yuantai Technology announced that it would work with 6 e-paper module partners to fully promote the application of color electronic paper.
This undoubtedly helps to break the bottleneck of application of e-paper in some fields and further expand the e-paper industry cake.
Traditional business is under pressure, and emerging business profitability is weak
As one of Yuantai Technology's six e-paper module partners, it includes Qingyue Technology.
's main business is the research and development, production and sales of small and medium-sized display panels. It has formed a product architecture and business structure with PMOLED business as the main business and electronic paper modules and silicon-based OLED businesses as the auxiliary business.
It is worth noting that Qingyue Technology has been closely related to the listed company VISINO : Qingyue Technology was formerly Kunshan VISINO Technology Co., Ltd. (hereinafter referred to as Kunshan VISINO). As a subsidiary of Visionox, Kunshan VISINO mainly focuses on PMOLED business.
In August 2018, Visionox carried out asset restructuring and transferred 40.96% of Kunshan Visionox to Kunshan and Gao. After the reorganization is completed, Visionox will focus on AMOLED business, and Kunshan Visionox will be divested, and its controller will be changed to Gao Yudi .
(Source: Prospectus)
Gao Yudi indirectly controls the voting rights of 47.3852% of the company's shares through Kunshan and Gao, and indirectly controls the voting rights of 5.5232% of the company's shares through Hezhi Gongchuang, and controls the voting rights of 52.9084% of the company's shares in total.
At present, the company has mastered key core technologies such as "display and touch integrated high-performance OLED display screen technology", "silicon-based OLED display technology", and "e-paper module manufacturing technology". It is a national-level specialized and new small giant enterprise and has been selected into the sixth batch of single-challenge products recognized by the Ministry of Industry and Information Technology.In terms of revenue, before 2022, revenue mainly came from PMOLED business. In the first half of 2022, the electronic paper module business contributed the main revenue, accounting for 64.2%, and the revenue structure has undergone significant changes.
01 Traditional business PMOLED faces replacement pressure
The company belongs to the new flat panel display industry. At present, the flat panel display technology route mainly includes OLED, LCD, LED, etc. Among them, OLED can be divided into PMOLED, AMOLED and silicon-based OLED, etc. The company is mainly engaged in PMOLED.
(Source: Prospectus)
PMOLED, the company has independently mastered the key core technologies of the PMOLED chain, and does not rely on third-party patented technology authorization. It currently owns the first large-scale production line of PMOLED display panels in mainland China.
PMOLED shipments have continued to remain at the forefront of the world in recent years. They have the second largest shipment in the world in 2018 and the first largest shipment in 2019 and 2020. According to data from CINNO Research, the company's global market share in PMOLED products in 2020 has reached 39.13%.
In addition, based on the accumulation of PMOLED product technology, the company further developed silicon-based OLED products.
(Source: Prospectus)
However, the silicon-based OLED display production line is still in the stage of continuous optimization of technology and product trial production, and the revenue is 60,000 yuan in 2021, which will take a long time before large-scale mass production. In terms of
AMOLED, the company has the ability to engage in AMOLED module business and has undertaken part of AMOLED module foundry business, but it does not yet have the ability to produce AMOLED panels.
PMOLED products and AMOLED products are as follows:
(Source: Prospectus)
In layman's terms, compared with AMOLED, PMOLED has a simple structure and a low technical threshold, which can effectively reduce manufacturing costs. However, due to the high driving voltage, PMOLED is not suitable for the development of large-size and high-resolution panels.
is also because of this. At the moment when large-size full-screen screens are popular, it is difficult for us to see PMOLED in mainstream smartphones.
. On the other hand, AMOLED has the characteristics of low driving voltage and long life of light-emitting components. It has a fast reaction speed and is more suitable for displaying dynamic images. However, this also makes AMOLED relatively power-consuming.
Currently, PMOLED products are mainly used in small and medium-sized display fields below 3 inches, focusing on small batches and diversification. Customers are widely distributed in medical and healthcare, home applications, vehicle industrial control, consumer electronics, security products, wearable products and other fields. Due to size limitations, the downstream market space is relatively limited.
In recent years, downstream customers have adopted AMOLED products in some wearable products such as smart watch and bracelets.
From the performance perspective, the revenue growth rate of PMOLED business has slowed down in recent years, with a significant decline in the first half of 2022. Due to the epidemic in the first half of 2022, the overall supply chain was greatly impacted, and the overall demand of the industry was also affected.
. Visionox, which mainly engages in AMOLED displays, has seen a significant increase in revenue growth in AMOLED products in recent years. Compared with 2021, Visionox's AMOLED product revenue has achieved a significant increase, while the company's PMOLED product revenue has declined.
(Revenue growth rate. Source: Tonghuashun iFinD)
From the customer perspective, the second largest customer in 2019 was Xiaomi ecological chain enterprise Huami Technology (NYSE:ZEPP), and the product supplied was wearable products, but Huami Technology has not appeared among the five major customers in the following few years.
At the recent launch of Huami Technology’s new product, Amazfit GTS used a 1.65-inch AMOLED super retinal resolution screen. Previously, the products also mostly used AMOLED screens. It can be judged that Huami Technology’s withdrawal from the top five customers was mainly due to the replacement of the wearable screen from PMOLED to AMOLED.
(Source: Prospectus)
The largest customer in 2020 is Chaosi Electronics . In 2021, the sales amount to it was reduced to about half, and the products supplied are medical and health products.
(Source: Prospectus)
Combined with the revenue growth rate of PMOLED business and the changes in the top five customers, The company's PMOLED products may face pressure of substitution .
Although there is little risk of PMOLED being completely replaced by AMOLED within the next 5-10 years, it is not ruled out that other downstream areas of PMOLED products are gradually eroded by AMOLED, which will affect the company's revenue performance.
In addition, the profitability of PMOLED business is also facing certain pressure. The gross profit margin of PMOLED has declined in the past two years, mainly affected by the increase in cost-end prices, but it also indirectly shows that its bargaining power is limited.
cost side, taking PMOLED driver chip as an example, the average cost in the first half of 2022 was 1.84 yuan per chip, an increase of 28% compared with the same period last year.
(Source: Prospectus)
02 e-paper business has grown rapidly, relying on a single customer and supplier
Relying on the technical accumulation of PMOLED, the company further developed e-paper-related products. After years of research and development, it has successfully launched an electronic paper module series with ultra-low power consumption and quickly entered the field of new retail electronic price tags.
(Source: Prospectus)
Company has obtained a number of key core technologies in electronic paper module technology. The specific situation is as follows:
(Source: Prospectus)
In terms of the industrial chain, upstream enterprises include substrates, electronic paper diaphragms (electronic ink films), display driver ICs, circuit boards and other material suppliers, among which the core raw material is electronic paper diaphragms.
(Source: Internet)
e-paper module basically belongs to the midstream of the electronic paper industry chain, and the downstream is an electronic paper display product integrator, which mainly applies electronic paper display modules to terminal products.
(Source: epaper insight)
Currently, there are only two companies in the world that can mass-produce electronic paper diaphragms, namely Yuantai Technology and Guangzhou Aoyi Electronic Technology Co., Ltd. Among them, Yuantai Technology is the world's largest supplier of electronic paper diaphragms, basically occupying the vast majority of the market share.
Company is a new entrant in the field of electronic paper modules, and its competitors include manufacturers such as Helitai, Oriental Kemai, Longting New Technology, Wuxi Weifeng, Chongqing BOE, etc.
(Source: Luotu Technology)
The company started construction of the electronic paper module production line in April 2020, quickly achieved mass production in July 2020, and entered the field of electronic paper display. In 2021, it continued to expand its production and sales scale, achieving revenue of 269 million yuan that year.
In the first half of 2022, despite the repeated impact of the new crown epidemic, electronic paper module products still achieved revenue of 304 million yuan, a year-on-year increase of 215.4%, mainly due to the strong demand for downstream electronic price tag market. Compared with the PMOLED business mentioned above, it is obvious that the electronic paper module business has become the main source of growth, but behind the high growth, there are still hidden worries.
First of all, in the upstream aspect, the supply of main raw materials electronic paper diaphragms basically comes from Yuantai Technology. In 2021, Yuantai Technology is the company's largest supplier, with a purchase proportion of 18.36%.
(Source: Prospectus)
In addition, in order to ensure the supply of production capacity, in 2021, the company's wholly-owned subsidiary Yiwu Qingyue and Yuantai Technology signed the "Capacity Guarantee Agreement" for 2022. Yuantai Technology ensures that it provides no less than 600,000 blockbusters of electronic paper films to the issuer in 2022, and the company needs to pay a 30% advance payment.
Of course, the suppliers of electronic paper diaphragms also include Shenzhen Aishunjia Optoelectronics Co., Ltd., which is also the company's main customer, but there is no doubt that the upstream pricing power is in the hands of Yuantai Technology.
(Source: Prospectus)
Secondly, in the downstream aspect, there is a great dependence on the customer Hanshow. As a digital store solution provider, Hanshow mainly serves traditional retail, new retail, department store fashion and other fields. Its customers include Dutch retail group Ahold Delhaize, French Auchan, Wumart, CR Vanguard , Convenience Bee, etc.
Hanshuo Technology's sales accounted for 37.19% in 2021, making it the largest customer and the second largest customer in 2020.
In terms of electronic paper module product sales, Hanshuo Technology has been the largest customer in the past two years and has contributed most of its revenue.
(Source: Prospectus)
Currently, the electronic paper module business is still in the stage of capacity improvement, and the overall capacity utilization rate is low. From 2020 to 2021, the capacity utilization rate was 29.42% and 34.34% respectively.
(Source: Prospectus)
In addition, due to factors such as insufficient customer base, insufficient supply chain integration efforts, and still climbing production capacity, the gross profit margin of this business is low.
03 debt ratio has risen, and on the eve of the IPO IPO, it has paid a lot of dividends
Overall, the current revenue growth rate of traditional business PMOLED is declining, and it may face pressure of product replacement. Among the new businesses developed, silicon-based OLED is still in the investment period, which is too early to be mass-produced. Electronic paper modules have entered a high growth stage, but the capacity utilization rate is low, and the gross profit margin is still at a low level.
On the one hand, developing new businesses requires R&D investment. In the past three years, the company's R&D expense ratio has been around 10%, and R&D investment is relatively high.
On the other hand, the gross profit margin of the electronic paper module business is currently low, which directly drags down the overall gross profit margin performance. It can be seen that the gross profit margin has declined significantly in 2021.
profitability declined, but revenue growth was significant, which led to overall revenue increase but profit increase.
In addition, part of the company's profit comes from government subsidies, which is reflected in other income accounts. The proportion of government subsidies to the total profit in the current period in 2021 is 59.22%.
Before 2020, the company's net cash flow was basically positive. After 2020, the electronic paper module business developed rapidly. Most of its core customer Hanshuo Technology settled through bank acceptance bills, while raw materials such as electronic paper films need to be prepaid and stocked, which led to a large net outflow of cash flow in the net.
In addition, silicon-based OLED and electronic paper module businesses have large capital expenditures in the past two years, and free cash flow performed poorly. Corresponding to
, the debt-to-asset ratio has continued to rise in the past two years, among which interest-bearing liabilities have increased significantly.
Debt repayment ability has declined significantly in the past two years, especially the cash coverage of interest-bearing liabilities is not good.
However, while undertaking debt pressure, dividends have been in progress in recent years:
Since the company divested the Visionox system and completed the change of its actual controller, it has accumulated dividends of 265 million yuan, most of which belong to Gao Yudi personally.
Overall, the e-paper industry has shown a clear positive trend, and the industry is in a relatively high prosperity.
From the perspective of the industrial chain, the upstream core raw material electronic paper diaphragm is basically controlled by Yuantai Technology, the dominant one. In terms of raw material supply, it has a strong voice. Electronic paper modules are located in the middle of the industrial chain, and their bargaining power is difficult to be optimistic.
Qingyue Technology, as one of the six e-paper module partners of Yuantai Technology, was previously the traditional main business of PMOLED business. The performance growth rate has declined in the past two years and is facing pressure of product replacement; the new business e-paper module has grown significantly in the past two years, becoming the largest source of revenue in the first half of 2022. Changes in the revenue structure still need to be observed.
At this stage, the electronic paper module business is still in the early stage of development. Although the revenue growth rate is high, it relies heavily on a single customer Hanshuo Technology. As the largest supplier, Yuantai Technology firmly grasps the upstream pricing power. Under the influence of factors such as single customers, low capacity utilization, and upstream boredom, the gross profit margin has increased, but it is still at a low level overall.
Overall, the company's traditional business growth rate has declined, and the current increase in revenue and profits in new businesses. In addition, silicon-based OLED and electronic paper modules have invested heavily in the past two years, resulting in the deterioration of 's cash flow . The interest-bearing debt ratio has increased significantly in the past two years, and the debt repayment ability has declined significantly.
At the same time, dividends have been underway in recent years. Since 2019, a total dividend of 265 million yuan has been distributed.
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