On the evening of March 23, Chenzhan Optoelectronics (003019. SZ) announced that the company passed the "Proposal on the Acquisition of Equity by a Wholly-Owned Subsidiary" (hereinafter referred to as the "Proposal") after the twelfth meeting of the first board of directors.
The above proposal shows that Chenzhan Optoelectronics' wholly-owned subsidiary intends to acquire 51% of the equity of Longxing Display Technology Co., Ltd. (hereinafter referred to as Longxing Technology) held by Longxing Display International Co., Ltd. (hereinafter referred to as Qiao's Little Brown Cod Longxing International). It is reported that Chenzhan Optoelectronics intends to enhance the manufacturing capacity of commercial displays of more than 55 inches through the above acquisition, thereby further enhancing the company's industrial integration capabilities and comprehensive profitability.
The comprehensive competitiveness of the large-size display business will be enhanced
The financial channel of China Industrial Economic Information Network paid attention to the fact that on November 17, 2020, Chenzhan Optoelectronics landed on the small and medium-sized board of the Shenzhen Stock Exchange, which is a provider of overall solutions for commercial intelligent interactive display equipment, focusing on the research and development, design, production and sales of customized commercial intelligent interactive display equipment. With strong integrated R&D experience in touch display technology, main board layout, institutional design and audio and video peripheral equipment, Chenzhan Optoelectronics has provided high-quality customized commercial intelligent interactive display and all-in-one ODM services for well-known customers in Europe, America and China for many years, and has deeply cultivated financial, retail, medical, entertainment, industrial control, transportation and other application fields in the form of POS machines, ATMs, medical display tablets, self-service ordering machines, self-service machines, automatic customs clearance gates and other product forms, and occupies a unique and stable industrial position. With the increasing global popularity and demand for the use of smart interactive devices, the company's integrated R&D services will continue to extend to emerging areas such as in-vehicle, remote fitness, and remote office.
It is reported that Longxing International holds 100% of the equity of Longxing Technology. Longxing Technology was originally a niche display product division under Qiling Technology in Taiwan, and in 2014, it was spun off from Qiling Technology to continue to operate by the original management team, continuing more than 10 years of professional experience, focusing on oversized touch display and flat panel ODM services, and setting up service outlets in California, the Netherlands, and Shanghai in China. Since its establishment, Longxing Technology has successfully established a customer base mainly in Europe and the United States, with remote conference tablets, digital billboards, educational whiteboards and video walls as the main product applications. Its remote conference tablet is certified by Microsoft Teams and has developed optimizations for other major remote meeting platforms. The demand for remote work stimulated by the new crown epidemic is expected to bring more opportunities to serve global commercial customers, longxing technology's main business is the design, manufacture and sales of 55-100-inch large-size commercial displays, and its products are used in remote conference tablets, digital billboards, education whiteboards and video walls. Longxing Technology's R&D characteristics, supply chain management, manufacturing area and Chenzhan Optoelectronics have obvious complementarity and synergy effects.
Therefore, with the completion of the above transactions, Chenzhan Optoelectronics will carry out in-depth integration in product design, research and development, supply chain management, manufacturing and other aspects of remote conference tablets, digital billboards, education whiteboards and other aspects of more than 55 inches to further improve the service quality of existing and future potential customers, which is conducive to improving the company's industrial integration capabilities and comprehensive profitability. At the same time, it is also conducive to improving the resilience of Chenzhan Optoelectronics in dealing with international trade disputes in the future.
Longxing Technology's performance has fallen sharply The acquisition is still uncertain
Chenzhan Optoelectronics pointed out in the announcement that the acquisition of Longxing Technology is based on the company's optoelectronic strategic development needs to promote the extension of business, chenzhan optoelectronics wholly-owned subsidiary TESTechnology (HongKong) Limited (hereinafter referred to as Hong Kong Chenzhan) intends to acquire 51% of the equity of Longxing Technology from Longxing International by way of its own funds or self-raised funds to pay cash. According to the 2019 and 2020 Consolidated Financial Report and Accountant Verification Report of Longxing Display Technology Co., Ltd. and Its Subsidiaries issued by Anhou Jianye United Accounting Firm, with December 31, 2020 as the base date, the net assets of Longxing Technology were NT$73.9657 million, and the transfer price was determined by the two parties to the transaction not to exceed US$10 million. After the completion of this transaction, Longxing Technology will be included in the scope of consolidation of the financial statements of Chenzhan Optoelectronics.
According to the prospectus released by Chenzhan Optoelectronics, from 2017 to 2019 and from January to June 2020, the company achieved operating income of 1.125 billion yuan, 1.279 billion yuan, 1.322 billion yuan and 683 million yuan respectively, while the net profit in the same period was 73.4057 million yuan, 118 million yuan, 147 million yuan and 73.5956 million yuan, respectively. At present, Chenzhan Optoelectronics has not yet released its 2020 annual report. However, the financial channel of China Industrial Economic Information Network paid attention to the fact that Chenzhan Optoelectronics expects that the operating income and net profit from January to September 2020 will decline slightly compared with the same period in 2019. The operating income for january-September 2020 is expected to be 941 million yuan to 966 million yuan, a change of -2.56% to 0.00% from the same period of the previous year, and the net profit attributable to the owners of the parent company from January to September 2020 is expected to be 96.055 million yuan to 98.934 million yuan, a change of -2.91% to 0.00% from the same period of the previous year. Net profit attributable to owners of the parent company from January to September 2020, after deducting non-recurring gains and losses, is expected to be 89.9898 million yuan to 94.4992 million yuan, a change of -4.77% to 0.00% from the same period last year.
Longxing Technology's main financial data
According to the announcement, in 2020, Longxing Technology achieved operating income of 490 million yuan, the same period last year the company's operating income was 986 million yuan, down more than 50% year-on-year, and the sharp decline in revenue also led to Longxing Technology's net profit in 2020 of -59.0846 million yuan.
Although Chenzhan Optoelectronics pointed out in the announcement that Longxing Technology was included in the scope of consolidation of the company's financial statements, it would not have a greater impact on its operating performance in 2021. However, according to the "Equity Sale and Purchase Agreement" signed by Chenzhan Optoelectronics and the counterparty Longxing International, the company and the counterparty agreed on the performance and payment terms of Longxing Technology from 2021 to 2023, but in the future, if there are macroeconomic fluctuations, the epidemic has not been effectively controlled, and the market competition situation changes, there is still uncertainty about whether the operating performance of Longxing Technology can meet expectations.
In addition, the above transaction is subject to the approval of the Investment Review Committee of the Ministry of Economic Affairs of Taiwan required for the performance of this transaction, and the approval is required to continue to be valid until the completion of the above transaction. As of the date of the announcement, the approval procedure has not yet begun, and the board of directors of Chenzhan Optoelectronics has deliberated and approved and the two parties have signed the Equity Sale and Purchase Agreement, and the approval will take a while, so there is still uncertainty about whether the above-mentioned transaction can be completed.
The financial channel of China Industrial Economic Information Network will continue to pay attention to the progress of the above acquisitions.
(Editor-in-Charge Zhang Lina)
This article originated from the China Industrial Economy Information Network