For Immediate Release
China Display Optoelectronics Technology Holdings Limited
Announces 2017 Interim Results
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Revenue Continued to Rise, Gross Profit Increased by Over 15 Times
To Optimise Product Portfolio, Unleash the Synergistic Benefits of Joint Venture,
Capture High-end Market Share
(27 July 2017, Hong Kong) China Display Optoelectronics Technology Holdings Limited ("Ch Display Opt" or the "Company", together with its subsidiaries, the "Group"; HKSE stock code: 334) today announces its results for the six months ended 30 June 2017 (the "Review Period").
During the Review Period, the Group recorded a revenue of approximately RMB 1.50 billion, representing an increase of 3.3% year-on-year, which mainly benefitted from the increase in average selling price of products as a result of the product mix adjustment. The Group recorded sales volume of LCD module products of 21.3 million units, representing a decrease of 35.8% year-on-year as a result of the destocking and adjustment of product strategy by some of the Group's end customers, as well as the promotion of full-screen devices. As the cost of raw material panels and upstream components has decreased, coupled with the increasingly optimised product mix of the Group, during the Review Period, the Group reported gross profit of approximately RMB 143 million, representing 2.2 times increase year-on-year. Gross profit margin was 9.5%; and net profit amounted to RMB 67.2 million, representing 15.8 times increase year-on-year.
The downstream end-user manufacturers' adjustment of product mix brought an impact to the overall sales volume of the Group. However, demand for high-end LTPS products drove the revenue of non-laminated modules to break through. During the Review Period, the revenue and sales volume of the Group's LCD module products accounted for RMB 860 million and 8.7 million units, representing a decrease of 13.9% and 32.8% over the same period last year, respectively; the revenue and sales volume of non-laminated module products amounted to RMB 640 million and 12.6 million units, up by 41.1% and down by 37.6% year-on-year, respectively.
On 24 October 2016, China Display Optoelectronics Technology (Huizhou) Co., Ltd ("CDOT Huizhou"), an indirect wholly-owned subsidiary of the Company, entered into a joint venture agreement with Wuhan China Star Optoelectronics Technology Co., Ltd ("Wuhan CSOT", together with its parent, Shenzhen China Star Optoelectronics Technology Co. Ltd. ("Shenzhen CSOT"), collectively, the "CSOT", a fellow subsidiary of the Group, and Wuhan China Display Optoelectronics Technology Company Limited ("Wuhan CDOT") for the investment in Wuhan CDOT. In March 2017, Wuhan CDOT was duly registered by CDOT Huizhou and Wuhan CSOT. The production plant of Wuhan CDOT was set up in the proximity of Wuhan CSOT's production plant for the 6th generation LTPS LCD panels under the Project t3. It mainly operates the fully automated production lines of LTPS LCD modules with an average annual production capacity of 50 million units of laminated display modules for mobile phones, which is expected to officially commence mass production in the second half of 2017. As the Project t3 of Wuhan CSOT has begun mass production since the fourth quarter of 2016, the supply of LTPS display panels from Wuhan CSOT to the Group gradually increased during the Review Period, which helped the Group further seize the market share of high-end products.
In addition, on 27 April 2017, High Value Ventures Limited, an indirect wholly-owned subsidiary of Shenzhen CSOT acquired 53.81% shares of the Company. The acquisition will effectively combine panel technology of Shenzhen CSOT and display module technology of the Group, and will facilitate the profound cooperation between Shenzhen CSOT and the Group in manufacturing, supply chain, product mix and customer mix and after-sales service where both parties will standardise and upgrade their systems. At the same time, both parties will continue to work together with the aim to actively expand overseas market and further capture market share.
In order to align with the Group's new corporate identity following the change of name of the Company, the Company's logo has been changed with effect from 26 July 2017.
Looking ahead, Mr. LI Jian, Chief Executive Officer of Ch Display Opt, expressed, "The global economic outlook still faces challenges in the second half of 2017. As penetration of high-end LTPS panels in global smartphone market is on the rise, the Group expects that Wuhan CDOT will provide the Group with a prime opportunity to reduce the costs and expenses of purchasing LTPS display panels, such as logistics and agency fees, develop the high-end market, stimulate business growth and enlarge the Group's market share in the industry. In addition, as the global smartphone brands are shifting their focuses to full-screen products, the Group has already started to adjust its product mix in the Review Period in order to capture the market in advance."
Mr. Li added "We will further collaborate with CSOT to generate synergies and leverage on Wuhan CSOT's panel resources and expertise to develop the high-end products on the basis of stable upstream panel supply. At the same time, we will capitalise on Shenzhen CSOT's clientele to actively explore customers, secure potential new top-tier brand customers and build a stronger customer base to generate higher profitability and value for the Group and its shareholders."
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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 engaged primarily in the research and development, manufacturing, sales and distribution of LCD modules mainly for handheld mobile devices on an ODM basis. Smartphone LCD module products of Ch Display Opt are welcomed by domestic and overseas manufacturers with sales volume ranking among the top.
For more information, please visit its website at www.cdoth8.com.
27/07/2017 Dissemination of a Financial Press Release, transmitted by EQS Group.
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