China Display Optoelectronics Technology Holdings Limited Announces 2019 Annual Results

• Driven by Orders of First-tier Brand Customers
• Overall Sales Volume Increased by 83.5% YOY
• Revenue Increased to RMB5,456 million
• Presence Expanded in Medium-sized Market

 Financial Highlights (Audited)

CHINA – Media OutReach – 26 March 2020 – 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 annual results for the twelve months ended 31 December 2019 (the “Review Period”).

During the Review Period, the Group recorded a revenue of RMB5,456 million, representing a year-on-year increase of 3.3%. Driven by the orders from first-tier brand customers, the Group’s overall sales volume rose significantly by 83.5% year-on-year to 111 million units.

The Group launched the processing business in June 2019. During the Review Period, the sales volume of processing business accounted for 42.2% of the total sales volume, with its revenue reaching RMB508 million. As the processing business can reduce the Group’s procurement and inventory management costs, as well as mitigate the risks caused by fluctuations in raw material costs, it helps to stabilise the Group’s cost structure. With that in mind, the Group will gradually increase its proportion of processing business where practicable.

Among the non-processing products, the revenue of laminated LCD module products decreased by 3.4% year-on-year to RMB4,231 million and the revenue of non-laminated LCD module products decreased by 20.4% to RMB716 million. During the Review Period, the Group has successfully qualified as the supplier for the global top smartphone brands, including Samsung, Huawei, Xiaomi, OPPO and vivo.

The Group has actively devoted its efforts to the research and development of new products and new technologies to increase the sales proportion of mid-to high-end products. It has been striving to deepen its cooperation with TCL China Star Optoelectronics Technology Co., Ltd*, together with its subsidiaries, “TCL CSOT”) to develop various customised products, including a number of high-end full-screen module products, such as slim bezel modules, high-frame rate screens and 5G. During the Review Period, the Group’s full-screen products accounted for approximately 90% of the overall sales volume and the proportion of the sales volume of LTPS products increased from 64% for the same period last year to 87%.

In order to fully optimise production line efficiency and enhance management innovation and decision-making capabilities, the Group has gradually developed its smart factories. The production line renovation in Huizhou has been completed during the Review Period. The Group’s overall production capacity for smartphone increased by 38.7% year-on-year. Concurrently, the Group has actively expanded the production line of medium-sized display modules in line with the direction of industry developments.

The Group has also capitalised on high-growth market segments such as smart home, high-end laptop, electronic education and automotive to capture the development opportunity in these markets. The shipment volume of smart home-related products in the full year reached 4.5 million units, representing a year-on-year increase of 837%. In the automotive segment, the Group has launched interactive touch automotive display modules with slim bezel in small batches.

Looking ahead, the management of Ch Display Opt said, “Given the country and the world are in a state of high alert to combat and control the coronavirus (COVID-19) outbreak, the Group has adopted a series of measures to prevent and control the epidemic. At the same time, the Group has actively negotiated with strategic suppliers and logistics partners to find suitable solutions to reduce related risks. The Group will fully leverage its own advantages in order to reinforce its partnership with first-tier brand customers. In addition, the Group will continue to pay close attention to the medium-sized display markets to further expand its market share horizontally. On the other hand, the Group will also actively reduce costs and increase efficiency to maximise production efficacy and effectiveness. In the long run, the Group remains cautiously optimistic about the development prospects of the display module business and is confident that it will further enhance its competitiveness by improving the industrial value chain and enhancing its strengths in technology and scale.”

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